In January, Live Nation launched its own ticketing service. That brought it and Ticketmaster closer to an all-out scramble for ticketing deals.
Now, Diller said Tuesday, the tough economy has increased the urgency to put the companies together.
"I have been trying and mostly consistently failing to put these companies together for many years now," he said. "Now is the time to do this."
After the Grammy Awards ended Sunday, Neil Portnow, president of the National Academy of Recording Arts and Sciences, took a balanced view of the deal.
"I think it's not a black and white issue," he said. "Music's had a tough time obviously. So to the extent that there can be some efficiencies and you can run a better business, that's something that we have to look at as something pragmatic. On the other hand, the question becomes, 'Does this create too much authority and power and control under one roof?'"
Irving Azoff, Ticketmaster's CEO, who would be executive chairman of the new company, told analysts on a conference call that other artist promoters would be given a fair shake in dealing with the new entity.
"We think that it will be a more level playing field, and there's no real barrier of entry for anybody to expand their promotion areas," said Azoff, the longtime manager of the Eagles. "The goal of this company is going to be to get more artists to work and fill more venues and fill more seats."
Live Nation shares fell 30 cents, or 5.7%, to $4.99 in afternoon trading Tuesday, while Ticketmaster shares dipped 27 cents, or 4.1%, to $6.30.
Both companies are well below their 52-week highs: $18.75 for Live Nation and $27 for Ticketmaster.