The Obama administration may soon face the first major test of its approach to antitrust policy if Live Nation lyv and Ticketmaster Entertainment tktm try to merge, creating a concert colossus.
Investors seem to believe that a deal is likely. Ticketmaster shares soared 13% on Wednesday to $6.96, and Live Nation rose 5% to $5.22, after The Wall Street Journal, citing anonymous sources, said the companies are close to an agreement to merge as equals. USA TODAY was not able to confirm the report.
A pact to blend the largest owner of concert venues and the dominant ticket seller "could be the biggest, most important deal that's ever happened in the music industry," says Ray Waddell, who tracks live entertainment for Billboard. Antitrust officials would determine if a merger might diminish competition, potentially driving ticket prices up or performer payments down.
"This saga has only begun. We do not think that regulatory approval is going to be a slam-dunk," analyst David Joyce of Miller Tabak wrote in a report.
The two have good reason to end their battle for supremacy in live entertainment, which generated $2.8 billion in domestic ticket sales last year. Their stock prices have plummeted in recent months as each struggled to enter the other's business.
The war began last year after Live Nation said that it would handle its own ticket sales beginning in January when its deal with Ticketmaster expired. The company also has cut far-reaching promotion agreements with stars including Madonna, Nickelback, Jay-Z, Shakira and U2.
Facing the loss of its biggest customer, Ticketmaster bought a controlling stake in a firm run by legendary manager Irving Azoff, whose clients include the Eagles, Christina Aguilera, Steely Dan and Aerosmith. He also became CEO of Ticketmaster, which was spun off last year from Barry Diller's IAC/InterActiveCorp.
Some music executives say it's a pointless battle. "What went through my mind" upon hearing about a possible deal "was: It's about time," says Robert F.X. Sillerman, who built — and, in 2000, sold — the company that has evolved into Live Nation. It "is still not the size it was when we operated it. They shed quite a few businesses."
And Primary Wave Music Publishing CEO Larry Mestel says that in this difficult economy, "Ticket prices will be based on supply and demand."
Yet antitrust experts say that it will be difficult to show that rivals such as AEG Live could compete against so much entertainment firepower. "The big question you want to ask is how upset will other concert promoters and the artists be?" says Joseph Simons, co-chair of the antitrust group at law firm Paul Weiss.