Music concerts are no longer our thing, but there was a time when they were, and peeking at a variety of angry young music bloggers, the take on the merger of Clear Channel live event refugee Live Nation and Ticketmaster is that we should get ready for music events tickets to double in price, as an irresistible monopoly is formed.
Many such blogs also point out that the deal is Obama friendly and that people close to Obama are also close to people on the board of Live Nation, so expect the deal to go sailing through.
Live Nation made $499.3 million in revenues last quarter, but a loss of $84.4 million, mostly in promoting music events. It paid out $368.6 million to talent (that’s the rock stars) in the process. Ticketmaster showed revenues of 384 million for its last reported fourth quarter, with an operating profit which would not be good enough to turn Live Nation positive, and that’s if it hadn’t written off $1.1 billion in goodwill itself.
So the resulting company would be loss making with revenues of around $3.5 billion, with a total stranglehold on live events throughout the US and stretching off into Europe.
Which is perhaps why it is no surprise that one leading US Congressman has called on colleagues to put a stop to the $1.5 billion merger of the two companies saying it would lead to a dangerous monopoly and a massive rise in ticket prices to live events.
At the moment Ticketmaster admits to its costs add around $7.84 to each ticket, but historical evidence says that ticket prices are falling, after rising aggressively up to around 2004 with a high at that time of around $67.33 for the top 100 touring shows. Last year they were down to just over $50, down 6.1% from the previous year.
However if there are closer dealings between the event promotion side of the business and ticket sales, i.e. they become the same company, that might all change.
Republican Bill Pascrell says the deal violates both horizontal and vertical anti-trust principles, and will undoubtedly lead to higher ticket prices for the average fan. The problem is not just the two’s influence across the market, but up and down the logistical supply chain of music promotion from artist management, to record sales, event promotion, licensing, venue control, parking and ticket sales.
The Justice Department is looking at the deal, so we are not really sure what a lone, but vocal Congressman is going to achieve, as the head of the Justice Department has a reputation for not being big business friendly.
If the deal doesn’t go through Live Nation has to find a way of turning a profit after a long period of losses. Perhaps it will just increase ticket prices.