The world's largest ticketing giant, Ticketmaster, and concert promoter, Live Nation just tackled a huge barrier to their planned merger. The two companies have reached agreements with the Department of Justice so the new "Live Nation Entertainment" is just around the corner.
The Justice Department is demanding some key concessions to keep the deal from crushing competition -- a key concern of smaller rivals as well as consumers. Ticketmaster will have to license its ticketing software to the runner up in the space, AEG (AEGXY.PK), which would allow it to "self ticket" and provide ticketing services. Another way the DOJ is fostering the growth of another rival: Ticketmaster must sell its ticketing software company Paciolan, to Comcast-Spectator or another buyer. Venues that work with Paciolan can lower their ticketing fees, which will give Paciolan's a new advantage.
The DOJ is doing everything it can to prevent the merged behemoth from being unstoppable. The companies have to agree to court-ordered restrictions to their behavior, which includes "anticompetitive bundling," firewalls to prevent information from ticketing to be used in promotions and artist management decisions. And the new company is under a 10-year court order barring retaliation against venues that sign ticketing contracts with its rivals.
Wall Street was thrilled-- Live Nation gained nearly 15 percent, Ticketmaster up 16.5 percent. The stocks got a dramatic boost despite the fact that bundling of services and cross-pollination of information would be among the primary reasons to merge these two companies.
This says a lot about the Obama Administration's antitrust policy. It's a big deal that the DOJ approved this merger that's been so harshly criticized by consumer groups. But the administration is trying to present the deal as actually promoting competition. Assistant Attorney General says that by creating two viable new competitors this should eventually bring prices down. We'll see how AEG and Comcast-Spectator absorb the spin-offs, and if it really creates a more robust market among ticket dealers. But we should know pretty soon -- now that this hurdle has been cleared we can expect the deal to close quickly, before the busy summer concert season heats up.
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