The U.S. Department of Justice filed a lawsuit against Live Nation Entertainment Inc., alleging the company and its subsidiary Ticketmaster LLC were a monopoly that has driven up the cost of concert and sporting events tickets.
The announcement on May 23 sent the stock price of the Beverly Hills ticketing and live performance company down by just about 8% to close that day at $93.48, or a nearly $8 decline from the previous day’s close of $101.40.
But the drop was short lived. The stock price went up by almost 3% to close at $95.99 on May 24. Shares closed at $93.32 on May 30.
In a 128-page complaint, the Justice Department – joined by 29 state attorneys general, including California’s Rob Bonta – laid out its claims against the Beverly Hills companies, including blocking venues from using multiple ticketers, locking out competition with exclusionary contracts and restricting artists’ access to venues.
“Taken individually and considered together, Live Nation’s and Ticketmaster’s conduct allows them to exploit their conflicts of interest— as a promoter, ticketer, venue owner, and artist manager—across the live music industry and further entrench their dominant positions,” the lawsuit said.
“Because Live Nation and Ticketmaster control so much of the concert-going experience, would be rivals must compete at scale across different levels of the concert ecosystem, raising barriers to competition even further and requiring multi-level entry by existing and would-be competitors,” it added.
In a statement released on May 23, Live Nation said that the lawsuit wouldn’t solve the issues that fans care about related to ticket prices, service fees and access to in-demand shows.
“Our growth comes from helping artists tour globally, creating lasting memories for millions of fans and supporting local economies across the country by sustaining quality jobs,” the company said. “We will defend against these baseless allegations, use this opportunity to shed light on the industry, and continue to push for reforms that truly protect consumers and artists.”
The Justice Department is looking to break up the two companies which merged in 2010 to form Live Nation Entertainment.
In a conference call from May 2 to discuss first quarter earnings with analysts, company Chief Financial Officer and President Joe Berchtold addressed the potential of a lawsuit.
“Based on the issues we know about, we don’t believe a breakup of Live Nation and Ticketmaster would be a legally permissible remedy,” Berchtold said. “Live Nation and Ticketmaster came together lawfully from a merger that the DOJ reviewed and approved subject to divestitures and other remedies. The DOJ has repeatedly stated in court filings that the merger and settlement were in the public interest.”
In a release from May 23, Dan Wall, executive vice president of corporate and regulatory affairs for Live Nation, said that the ticketing marketplace is confusing for consumers.
“It infuriates them that tickets sell out on Ticketmaster and are then available by the hundreds on secondary online sites at double and triple the cost,” Wall said in the release.
But the government has not done anything about that, he added.
“Instead, it has filed a case which misleads the public into thinking that ticket prices will be lower if something is done about Live Nation and Ticketmaster,” Wall said.