Live Nation Inc. and Ticketmaster Entertainment Inc. unveiled their merger Tuesday and immediately drew fire for trying to create a live-entertainment behemoth with influence over nearly every aspect of the business -- managing artists, booking concerts, selling tickets and even peddling popcorn at events.
The all-stock deal would bring together the world's largest seller of concert tickets with the largest producer of live performances -- two companies that had started to compete over ticket sales. The new operation would be called Live Nation Entertainment, which would generate revenue of about $6 billion a year.
"I have to pause on this one. This one bothers me," said Stephen Happel, an Arizona State University professor who has studied the economics of ticket scalping. "It looked like Live Nation was going to go its own way and kind of slug it out with Ticketmaster. This to me is further monopolization of the primary market."
Ticketmaster already is a formidable force, selling tickets for more than 80% of major arenas and stadiums in the U.S., tracking firm Pollstar said.
Live Nation Chief Executive Michael Rapino defended the deal, saying the merger would generate great efficiencies, saving about $40 million by consolidating ticketing, marketing, data centers and other back-office functions.
Ticketmaster and Live Nation executives say the merger, valued at $2.5 billion, represents an opportunity to stimulate the concert business, getting more cash into the hands of musicians more efficiently at a time when CD sales and other conventional business lines are collapsing.
For consumers, they said, the combination would mean cheaper tickets and lower service fees, the latter of which has been concert-goers' bane.
"Our industry needs a revolution here," said Rapino, who would take on the same role at the combined company. "The music business needs some innovation on all fronts. . . . This will help get us to the next level quicker."
The announcement follows a dust-up over tickets that went on sale Feb. 2 for Bruce Springsteen concerts. A woman sued Ticketmaster, alleging that the company's website redirected fans to its resale site TicketsNow, where prices were marked up hundreds of dollars over face value.
Springsteen posted an open letter to fans on his website, condemning the practice and saying, "Ticketmaster has made us as furious as it has made many of you." The New Jersey attorney general's office launched an investigation after hundreds of fans contacted its consumer affairs agency.
