Reuters - U.S. seen opposing LiveNation, Ticketmaster deal

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U.S. seen opposing LiveNation, Ticketmaster deal

Friday, Jun 26, 2009 11:11PM UTC

By Diane Bartz - Analysis

WASHINGTON (Reuters) - Ticketing giant Ticketmaster's <TKTM.O> deal to buy concert promoting giant Live Nation <LYV.N> will most likely be opposed by the Justice Department, which means that its fate would rest with the courts and the companies' willingness to litigate.

The deal has been criticized by superstar Bruce Springsteen, politicians like Senator Charles Schumer, and legions of music fans commenting in Internet chatrooms.

"This deal's not going through if antitrust laws mean anything," said David Balto, a former FTC policy director and antitrust lawyer.

Some state attorneys general also have shown an interest in the merger, with Ohio leading the way, said a source who is familiar with the situation but reluctant to be named because of its sensitivity.

Add to its woes, a promoter filed suit in Maryland accusing Live Nation of "unlawful anticompetitive, predatory and exclusory practices." The promoter, Seth Hurwitz, accuses Live Nation of booking artists only in venues that it owns or operates.

Ticketmaster and Live Nation had no immediate comment for this story.

And the Justice Department's new antitrust chief, Christine Varney, has said she would take a tougher look at mergers than her predecessors in the Bush administration.

The best that Live Nation and Ticketmaster could hope for in the approximately $400 million deal is a tough fight with the Justice Department, said Marc Schildkraut, a former assistant director of the FTC's Bureau of Competition and antitrust lawyer with Howrey LLP.

"I just always thought the merging parties had a tough row to hoe. The lawyers for those parties are going to have to be pretty good," said Schildkraut.

Varney is taking a tough stance on vertical mergers, where one company buys another in the same supply chain. In this case, Live Nation primarily promotes concerts and Ticketmaster sells the tickets.

But each company has reached into the other's area of expertise, so the merger also has elements of a horizontal deal. Live Nation launched its own ticketing service on January 1 after it ended a 10-year relationship with Ticketmaster and Ticketmaster last year bought Front Line Management, which manages the affairs of more than 200 artists.

Live Nation chief executive Michael Rapino said last month that he expected the deal to close in the third or fourth quarter. Antitrust regulators outside the United States are also looking into it.

Antitrust experts Steve Axinn of Axinn, Veltrop and Harkrider LLP and Andre Barlow of Doyle, Barlow and Mazard PLLC predicted that the Justice Department would sue to stop the merger, but could not agree on the outcome if Ticketmaster and Live Nation opted to battle regulators in court.

"I think they (the Justice Department) probably uncovered evidence that Live Nation wanted to compete against Ticketmaster," said Barlow, who added: "I think Ticketmaster would win in court."

Axinn didn't agree, saying. "I think that their odds of winning in such a challenge are impossible to predict."

(Reporting by Diane Bartz; editing by Carol Bishopric)