The U.S. Department of Justice (DOJ) is reportedly preparing to take legal action against Live Nation Entertainment Inc. (NYSE: LYV) for violating the terms of a 2010 merger agreement. The DOJ has accused Live Nation of pressuring concert venues to use Ticketmaster, which is a subsidiary of Live Nation. The DOJ believes the company’s actions violate terms of a merger agreement in which Live Nation agreed not to retaliate against venues that chose another ticketing or promotional service.
When Live Nation and Ticketmaster were allowed to merge in 2010, they had to agree to multiple conditions set by the DOJ to maintain competition within the ticketing business. The merger consolidated two powerful music industry companies and critics were worried that the merger would create anti-competitive market conditions. Today, the sharp rise in ticket prices have led some to wonder if the terms of the settlement worked as the government had intended.
At the time of its 2010 merger with Ticketmaster, Live Nation owned 140 concert venues globally. The company would promote 22,000 shows and sell 140 million tickets every year. Today, Live Nation works on 30,000 shows and more than 100 festivals, and it sells 500 million tickets annually. Its revenue for 2018 was $10.8 billion, capping the company’s eighth straight year of growth.
People familiar with the matter say the Justice Department will ask a judge to extend the agreement by several years past its 2020 expiration and ban the conduct alleged. Live Nation’s chief executive denied that the company violated the terms of the agreement and said the company has been in talks with the DOJ without a resolution. Shares of Live Nation fell 7.3 percent after the reports of DOJ action emerged. The drop shaved about $1 billion off Live Nation’s market cap, which sits around $13.8 billion.
