Ticketmaster, Live Nation: Obama's Antitrust Test

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Paul Sakuma / AP

Ticketmaster tickets and gift cards at a box office in San Jose, Calif.

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Ticketmaster chairman Barry Diller ultimately apologized and blamed computer glitches for the ticketing mishap. But industry heavyweights snickered. "That stuff has gone on all the time. When he said it was a computer glitch — ha-ha — I nearly fell off my chair," said Randy Phillips, CEO of AEG Live, the country's second largest concert promoter. "I could not believe it. I mean, these are sophisticated businessmen — my God, a computer glitch?" Not surprisingly, Phillips opposes the merger and has even suggested he may cancel his seven-year contract with Ticketmaster if the deal goes through.

All of this puts a cloud over Ticketmaster's merger plans. "I think [the merger] would be a catastrophe for the entertainment business," said Representative Bill Pascrell, a New Jersey Democrat who demanded congressional hearings into the matter. "Given Ticketmaster's recent mishandling of Bruce Springsteen's tour and other shows, it is clear that this company's questionable business practices warrant sharper scrutiny." Earlier this week, the Congressman introduced a bill, named the Boss Act, that calls for ticketing companies to disclose how many tickets are being withheld in primary public ticket sales and a 48-hour waiting period before tickets can be sold in the secondary market, among other things.

Azoff said he supports efforts to clean up the ticket-reselling business, which he calls "the Wild, Wild West of the business" and hints that Ticketmaster may sell its TicketsNow resale entity if the merger goes through. "The furor about the secondary market really has nothing to do with this merger," he said. Azoff said he would ultimately like to see the merged entity offer dynamic pricing, whereby front-row seats are offered in the primary market at prices well above the average — possibly up to $1,000 — while nosebleed seats are sold below the average price for as little as $20 a pop.

Aside from Springsteen, most artists are reluctant to bad-mouth the merger. Experts speculate artists fear retaliation and recall the losing battle Pearl Jam fought against Ticketmaster in the mid-1990s. But Ticketmaster has its fans — Smashing Pumpkins' Billy Corgan sent Congress a letter gushing support for the proposed merger. The letter was an about-face for Corgan, who in the past was critical of Ticketmaster's system and opted to use Jam Productions instead of Live Nation for some of his tours. However, Corgan is now a client of Azoff's Front Line artist-management company within Ticketmaster.

Can the merger result in lower ticket prices for the public? Phillips said Live Nation has a history of being "aggressive" with pricing. "We walked away from bidding on Fleetwood Mac because we thought the guarantee was too high and what we'd have to charge the public would be too much," he said. Mickelson noted that Live Nation's new ticketing company introduced service fees that were even higher than Ticketmaster's: "A Coldplay ticket at a Ticketmaster building had a $15 service charge, and the same Coldplay ticket at a Live Nation ticketing venue had a $21 service charge."

Still, vertical mergers historically tend to benefit consumers, according to Antoine. "Anytime you have a vertical merger, it creates efficiencies," he said. "Whether this is helpful to the artist or consumer or ticket buyers is another debate."

"Putting all that power together may be good in some way for the companies in the long run," said Landau. But "I don't believe it's going to be good for the artist and I don't believe it's going to be good for the public."

Azoff, who has been in the business for 43 years, believes the merger is necessary for the future of the music industry. "I've spent most of my life in this business. My son, daughter and son-in-law work in this business. It is our family passion," he said when addressing a congressional committee. "I want it to thrive for generations to come."

A decision by the Justice Department is expected by the end of the summer.

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