The boards of Live Nation lyv and Ticketmaster Entertainment tktm unanimously agreed on Monday to merge their companies — potentially creating a concert and live entertainment behemoth.
In announcing the deal Tuesday morning the companies said they plan an all-stock merger of equals. The combined company will be called Live Nation Entertainment.
Under terms of the deal, Ticketmaster shareholders will receive 1.384 shares of Live Nation stock for each share of Ticketmaster they hold. The companies estimated the value of the combined business at about $2.5 billion and said the deal will help them save about $40 million annually.
"Being able to put Live Nation and Ticketmaster into an equal partnership will allow the companies to get through this difficult period and be able to expand live entertainment options to audiences throughout the world," Ticketmaster Chairman Barry Diller said.
But regulatory experts have said the deal could be delayed by an antitrust review because of the companies' dominant role in the entertainment business.
Ticketmaster sells tickets for more than 80% of the major arenas and stadiums in the U.S., according to concert tracking firm Pollstar. Live Nation is the world's No. 1 concert promoter and owns more than 140 venues. It has comprehensive deals to the tours of such artists as Madonna, Jay-Z, U2, Nickelback and Shakira — and recently developed its own ticketing service.
The ticketing-service move brought the companies closer to an all-out scramble for ticketing deals. A merger heads that off, but experts say snuffing out that competition could draw close scrutiny from regulators wary of the company building a concert industry monopoly.
On the other hand, the deal could end up benefiting concertgoers by giving the combined company more bargaining clout with artists, potentially reducing performers' stakes in ticket sales and thus lowering ticket prices.
The deal already has at least one prominent detractor, however.
Bruce Springsteen, already furious with Ticketmaster for directing fans to a subsidiary selling tickets for above-face value, recently posted a statement on his website saying a deal with Live Nation could end up "returning us to a near-monopoly situation in music ticketing."
The deal will put under one roof some of the USA's biggest concert venues, its dominant ticket sales company, and wide-ranging management and promotion deals with hitmakers including the Eagles, Christina Aguilera, Madonna, and Jay-Z.
The companies are poised to say that consumers will benefit. For example, it might be easier for ticket buyers to pick the seats that they want, and avoid the confusion and sticker shock that sometimes comes when people see ticket handling fees tacked on to the admission price.
By eliminating duplication, the companies expect to see $40 million in cost savings a year.
Live Nation, which sells more than 45 million concert tickets a year, launched its own ticket sales service in January after its deal with Ticketmaster expired. Ticketmaster, which handled more than 141 million tickets in 2007, countered by acquiring a controlling interest in Front Line Management — a firm run by long-time music executive Irving Azoff.