Wednesday, April 22, 2009
Posted by D. Daniel Sokol
David Balto (Center for American Progress) has posted Monopoly Building: Why the Justice Department Must Block the Ticketmaster/LiveNation Deal.
ABSTRACT: By combining, Ticketmaster and Live Nation will create an entertainment giant that:
- Sells most of the concert tickets in this country through its contracts with venues
- Manages a significant number of the marquee performers in the world or controls their tours
- Owns most of the amphitheatres in the US and owns more 'club' venues, as well as controlling (through owning/leasing) a large amount of other clubs and theatres
- Owns two of the major resellers of tickets
- Owns various sources of competitively sensitive data
Ticketmaster claims that this deal is pro-competitive for everyone: artists, venues and consumers. It claims by putting everything under one roof—artists, concert promotion, venues, and ticketing—everyone will do better. Certainly one can conceive how that might be true. But at the Senate hearings when asked about the alleged efficiencies, Ticketmaster could present claims of only $40 million in savings, a truly paltry amount for a merger combining two companies with billions in revenues. What, then, is the real incentive for the merger? Moreover, why should we assume any of those costs savings would benefit consumers? It is rivalry that leads to the incentive to cut costs and become more efficient. It is rivalry that forces competitors to pass on cost savings by reducing prices.