Barry Diller: Trust Me–You’re Going to Love the Ticketmaster/Live Nation Deal
by Peter Kafka
Posted on February 10, 2009 at 11:03 AM PT
This will be a fun one to handicap. One side: Struggling Ticketmaster, which holds a near-monopoly on concert ticket sales, and struggling Live Nation, the biggest concert promoter in the world. On the other side: Just about everyone who’s ever bought a concert ticket and grumbled about the experience later.
Ticketmaster (TKTM) and Live Nation (LYV) formally rolled out their merger agreement today, which calls for Live Nation to buy out Ticketmaster shareholders for $575 million in stock. But the financials here are less important than the public relations: To get this deal done, the two companies are going to have to convince regulators that they come in peace and mean no harm–no matter how loudly their constituents disagree.
So far, we’ve only heard the carping about the deal, but it’s been loud, and prominent: Bruce Springsteen has weighed in. So has the New York Times. And now Congress is getting warmed up, too.
Today, argues Ticketmaster chairman Barry Diller, the companies get to start making their case, which they couldn’t do until the deal was formally announced. Now “we are going to really explain and explain and explain and make all of this clear to all our constituencies.”
Diller gave a preview of his talking points during this morning’s conference call:
Argument 1: Don’t blame us for high ticket prices–blame Madonna, or U2, or Phish.
“Ticketmaster does not set prices,” Diller said. “Live Nation does not set ticket prices. Artists set ticket prices.”
That’s true. And then Ticketmaster and Live Nation add supplementary charges, which can jack up the price by 30 percent or more. That’s standard operating procedure for all sorts of transactions–check the invoice for your last plane ticket or give your hotel bill a once-over–but it doesn’t seem to inspire the same rage as it does in concert ticket buyers.
The other problem with this argument: Live Nation is run by Irving Azoff, who is one of the sharpest dealmakers in the music business and who also runs one of the biggest management companies in the business. And since managers are now the most powerful players in the business, they’ve got a great deal to say about how their clients price concert tickets. See the problem here?
Argument 2: Don’t blame us if you can’t get tickets for that Hannah Montana show your kids are demanding. But if you do want a ticket for a sold-out show, we can help you–at a price.
This is what Bruce Springsteen was complaining about. In addition to its core business, Ticketmaster also runs “TicketsNow,” a “secondary marketplace” for tickets. The other word for that is scalping, which is now a legal and booming business on the Web.
But when a concert ticket company also sells “aftermarket” tickets, it makes people feel queasy in a way that they don’t about eBay’s (EBAY) Stubhub, which only does resale.
That feeling is exacerbated when people suspect that Ticketmaster is directing buyers away from its regular tickets and toward its marked-up TicketsNow inventory, which is what happened to Springsteen ticket buyers this month.
Diller says the Springsteen incident was a “technological glitch.” Which may well be true. But you’re going to hear about that one a lot in the coming months.
Argument 3: Whaddaya gonna do? We sell tickets. People are never going to send us thank you cards.
Diller: “This is such a sexy issue. Ticketmaster is never perceived to be on the side of the angels.”
Remember when Pearl Jam testified against Ticketmaster in Congress in the ’90s, convinced the Department of Justice to investigate the company and led a boycott against any venue that did business with them? Those were the days.
Except that Pearl Jam ended up playing small venues, the DOJ (that’s the Clinton-era DOJ, mind you) gave Ticketmaster a pass, and by the end of the decade Eddie Vedder and crew were working with Ticketmaster again.
So maybe this one goes through, too. I’ve heard from plenty of folks who hate the proposed merger (”These two companies SHOULD NEVER be allowed to merge and reproduce,” a former Live Nation employee tells me via email), but I’d love to hear someone who knows both the music business and antitrust law make a cogent defense: You can reach me directly at peter@allthingsd.com and I’ll give you an open forum.
Until then, here’s the slideshow Live Nation is using to explain the deal:
live nation dek – Get more Business Documents
[Eddie Vedder image credit: sick of goodbyes]
Comments
I love monopolies as they consistently lower prices and work for the betterment of mankind.
Posted by Dave Barnes at February 10th, 2009 at 11:30 amConcerts are for teenagers and twentysomethings. What do I care.
Posted by Bjorn Tipling at February 10th, 2009 at 12:19 pmBjorn! You should know better than that. Concerts are for old people!
They’re the ones who buy the tickets to golden oldies like the Rolling Stones, The Eagles, Madonna, etc, at really steep prices. And they’re the ones who buy Hannah Montana tickets for their kids, at really steep prices.
Posted by Peter Kafka at February 10th, 2009 at 1:13 pmI guess that is true. Hrm I guess that means I’ll be handing out the dough when my daughter becomes a teenager. (if I have any at that point). :O I can’t complain though, because I’d just be giving back my boss the money he gave me.
Posted by Bjorn Tipling at February 11th, 2009 at 7:12 amI tried to get bruce tickets this time around just like many others and I was disgusted just like everyone else for being directed to ticket center where I could buy upper level tickets for $200 plus dollars. Unfortunitly this came right after I had an aweful time at a Metallica concert where I spent $80 for last row seats and was subjected to the worst sounding concert I have ever been to. i am tired of over priced tickets and crappy shows. I believe I will be bailing on ticketmaster event
Posted by Daren Clancy at February 11th, 2009 at 7:56 pm