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SXSW: Department of Justice defends Ticketmaster/Live Nation merger

March 18, 2010 |  5:42 pm

Arguably the biggest music story of the last 14 months, the merger of Live Nation and Ticketmaster to form Live Nation Entertainment, largely has been absent at the annual South by Southwest music conference, with nary a mention last March and continued no-shows from the top execs at each company. Yet if President/Chief Exec Michael Rapino and Executive Chairman Irving Azoff don't appear ready to present their new company to the industry in Austin, Texas, the Department of Justice was on hand to defend its recent decision to approve the mega-merger

Derided by small promoters around the country, including Spaceland Productions head Mitchell Frank, who declared it "unfair competition," the merger will create a sort of one-stop shop for artists and promoters, boasting a direct line to venues, tickets and, via management company Front Line, major artists such as the Eagles. The Department of Justice's assistant attorney general for antitrust, Christine Varney, was put on the defensive Thursday at SXSW, noting time and again that the vertical integration of the company was not grounds for an antitrust suit. 

Varney noted that the department sought to create more competition in the ticketing space, and that while  the access Live Nation Entertainment will have to competitor data and artists was a concern, it was not grounds for dismissing the merger. With Live Nation having attempted to enter the ticketing business, Varnery said the department's interest was in facilitating greater competition in the ticket market rather than forcing Live Nation Entertainment to divest of its management and venue holdings. 

"I know it's not a satisfying answer," Varney told an increasingly contentious audience toward the end of the panel on music and government policy. "We are constrained by the law. The overlap that we found was in ticketing. That's why the remedy rests in ticketing."

Under the agreement, Ticketmaster will give Anschutz Entertainment Group access to its technology so that AEG, which owns and manages nearly 100 venues including Staples Center, can create its own ticketing service. Varney said AEG is allowed a "five-year window to decide if it's going to get into ticketing." 

Varney also credited the department for instilling multiple "behavioral remedies." As part of the agreement, the DOJ is calling for a "firewall" to prevent the sharing of information between departments. Additionally, should a competing promoter opt not to renew with Live Nation Entertainment, Varney said the new conglomerate will be forced to surrender all the data the company has accumulated on its former partner. 

"We've tried to create some competitive ground for you all to move around the industry and see to which extent you can shake things up," Varney said.

While Varney stayed on point, and calmly handled even the most contentious questions, she wasn't at SXSW to sell the merger to participants. If anything, she urged those in attendance to speak up if they disagree with the decision. The Justice Department has formed a compliance committee, which will be accepting statements in opposition to the merger until May 3. The collected comments will then be vetted and analyzed to see whether further court action is required. 

"We're talking to bands, managers, promoters, a lot of people, understanding how our proposed consent decree is working, not working," Varney said. "But the only way we know if it's working is to hear from you."

The Justice Department has been talking to SXSW attendees, and it was stated that opposing comments have just now started to land at the department. Pressed on why the the 1948 U.S. Supreme Court antitrust decision against Paramount Pictures, which essentially stated that Hollywood studios could not also own the theaters that had exclusive rights to show their films, was not cited in the approval of the new company, Varney reiterated that the merger was only seen as limiting competition in the ticketing space. 

"The only thing I can tell you to do is to continue to try and work your deals and let us know if you think the consent decree is being violated," she said.

-- Todd Martens

Stay tuned to Pop & Hiss for more updates from SXSW. There's plenty more that happened on Thursday afternoon, but the impending start of evening showcases means there's now a backlog of post topics in the wings. 


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