Live Nation's stock falls after DOJ seeks company's breakup in antitrust suit

By Bill Peters and Mike Murphy

Attorney general says company uses 'anticompetitive conduct to exercise its monopolistic control over the live-events industry in the United States'

The Justice Department on Thursday sued Ticketmaster parent Live Nation Entertainment and will seek to break up the concert-ticketing and promotions giant, alleging that the company wielded its monopoly power to squash competition in the live-events industry.

Shares of Live Nation Entertainment Inc. (LYV) fell 6.6% on Thursday. Live Nation, in a statement, called the allegations "baseless," and said it faced increasing competition, adding the lawsuit wouldn't lower prices or fees.

Numerous district attorneys and state attorneys general joined the agency in filing the antitrust lawsuit on Thursday. The complaint was filed in U.S. District Court for the Southern District of New York.

"We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters and venue operators," U.S. Attorney General Merrick Garland said in a statement announcing the antitrust suit.

"The result is that fans pay more in fees, artists have fewer opportunities to play concerts, smaller promoters get squeezed out and venues have fewer real choices for ticketing services," he continued. "It is time to break up Live Nation-Ticketmaster."

Live Nation and Ticketmaster, which merged in 2010, have faced years of complaints that the combined company was too big and typically saddled concertgoers with junk fees on tickets. That criticism intensified after Ticketmaster's website crashed in 2022, following an avalanche of demand for Taylor Swift's "Eras Tour" tickets.

Live Nation owns or controls some 265 concert venues in North America, controls a majority of concert promotions in the U.S., and manages hundreds of artists. The company - which makes money from promoting shows, selling tickets, running venues, and via advertising - brought in $22.7 billion in sales last year, a 36% jump, following a massive rebound in concerts after the pandemic shut down a large swath of the live-entertainment industry. Concert-ticket prices, in turn, have risen.

The Justice Department on Thursday alleged that Live Nation threatened to retaliate against venues that worked with its rivals, used exclusionary contracts with concert venues to keep competition away, and kept venues from using multiple ticketing providers. The agency also alleged that the company only allowed artists to perform in its venues if the artists also agreed to use Live Nation as a promoter.

The department also said Live Nation hindered competition by buying up smaller promoters, limiting what artists can make on shows. And it alleged that Live Nation abused its relationship with Oak View Group, which it described as a "potential competitor-turned-partner." Oak View, it said, "avoided bidding against Live Nation for artist talent and influenced venues to sign exclusive agreements with Ticketmaster."

The lawsuit will likely be a complicated case against an unpopular company, said Rebecca Allensworth, an antitrust law professor at Vanderbilt University.

"The allegation is basically, there's two levels of the market: You've got ticketing and you've got promotion services united in this big company, and the company uses its power in one market to solidify its power in the other," she said.

However, she said the Justice Department could struggle with defining that market and monopoly power. And she said that Live Nation and Ticketmaster's control over that market, despite its size, still might not clear the bar for a monopoly. Others raised questions about whether the lawsuit would actually lower prices.

News of a potential lawsuit emerged on Wednesday, following reports of possible legal action earlier in the year. The DOJ announced the lawsuit as the Biden administration tries to take a tougher stance on mergers and acquisitions in an election year.

Live Nation, in a statement, argued that artists set prices for tickets, while venues set fees. It said that higher production costs, scalpers and artist popularity were to blame for driving ticket costs higher.

"The DOJ's lawsuit won't solve the issues fans care about relating to ticket prices, service fees, and access to in-demand shows," Live Nation said in a statement.

"Calling Ticketmaster a monopoly may be a PR win for the DOJ in the short term, but it will lose in court because it ignores the basic economics of live entertainment, such as the fact that the bulk of service fees go to venues, and that competition has steadily eroded Ticketmaster's market share and profit margin," it continued.

The Justice Department has been investigating Live Nation for anticompetitive practices since 2022, the Wall Street Journal previously reported, with the probe gaining traction following the "Eras"-induced meltdown of Ticketmaster.

Since then, Live Nation has defended its business practices.

"Tickets are actually priced by artists and teams," Dan Wall, executive vice president for corporate and regulatory affairs at Live Nation, said in March. "It's their show, they get to decide what it costs to get in."

The Biden administration has made antitrust enforcement a key component of its economic policy, including cases against Google parent Alphabet Inc. (GOOGL) (GOOG), Amazon.com Inc. (AMZN) and Apple Inc. (AAPL). The Federal Trade Commission in February sued to block the merger between grocery chains Kroger Co. (KR) and Albertsons Cos. Inc. (ACI), saying the deal would raise grocery prices and harm competition.

Similar to the way concertgoers face higher ticket prices, musicians have faced higher touring costs. United Musicians and Allied Workers, a musicians' advocacy group, praised the Justice Department's action.

"This is an important step toward establishing a sustainable live-music industry where all music workers are paid fairly," the group said in a statement.

-Bill Peters -Mike Murphy

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05-23-24 1847ET

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