Visa Disputes Ticketmaster Reason For Boss Snafu As Justice Dept. Probes Merger
February 11, 2009 at 1:39 PM (PT)
One day after announcing their intention to merge, LIVE NATION and TICKETMASTER ENTERTAINMENT parties have come out swinging against those who believe the union constitutes a monopoly. However, one reason that they gave for the BRUCE SPRINGSTEEN "secondary market ticket diversion" snafu (NET NEWS, 2/9) was quickly repudiated by TICKETMASTER's own business partner.
At the same time, the JUSTICE DEPT. announced that it will investigate the LIVE NATION/TICKETMASTER merger. The AP quoted JUSTICE DEPT. spokeswoman GINA TALAMONA saying that, Federal antitrust lawyers are "committed to vigorous enforcement of the merger antitrust laws and will conduct a thorough investigation of the proposed TICKETMASTER/LIVE NATION transaction."
The incident in question -- where SPRINGSTEEN fans who wanted to purchase tickets to concerts being automatically diverted to TICKETMASTER affiliate TICKETSNOW, which sold the same basic seats at five to 10 times the original price -- prompted public rebukes from SPRINGSTEEN and NY Sen. CHARLES SCHUMER, a lawsuit in CANADA and two investigations from the Attorneys General of NEW JERSEY and CONNECTICUT.
TICKETMASTER CEO IRVING AZOFF penned a public letter of apology over the snafu, but when that didn't do much to quell the uproar, which was reignited by news of the merger, TICKETMASTER Chairman BARRY DILLER revisited the topic during an investor conference call regarding the class action lawsuits being readied against TICKETMASTER and TICKETSNOW.
BUSINESS WEEK quoted DILLER responding to a question about the class action lawsuits as saying "What can I say about them that have no merit, but are just chasing cars down the road? ... What really happened there was an actual glitch, a technical glitch in the system that had nothing to do with availability. It had to do with VISA, I think, which couldn't process data and so it kinda froze the system for a bit. When it froze, what the TICKETMASTER screen said was it couldn't process anything. And another screen came up and said, ‘you can go back and try again, you can modify [the order],’ and the other side of the screen said you can go to TICKETSNOW.
"TICKETMASTER is never perceived to be on the side of the angels because there are only so many tickets. ... That’s part of the life of being in that kind of service business. But the noise all around this was wildly overdone and it was of course, the timing unfortunately. That’s what happens in life. A computer glitch gets ... promoted, let’s say."
Yet VISA, the company that processed the tickets, disputed DILLER's assertion. In its own statement, spokesperson JOE CARBERRY said:
We were surprised by the comments of TICKETMASTER CEO BARRY DILLER regarding their recent ticket issues. ... TICKETMASTER's characterization that an earlier technical 'glitch' impacting its online ticket sales was related to VISA's systems is inaccurate. VISA's processing network was fully functional on FEBRUARY 2nd with no authorization issues. In fact, VISANET has run with nearly 100% reliability for the past decade.
We operate four processing centers on three continents that are fully synchronized and operate identical authorization platforms. This enables VISA to reroute transaction volume from one data center to another as needed. Our multiple and redundant systems help ensure that VISANET can continuously meet the processing demands of all our customers worldwide.
...And The Debate Begins
Meanwhile, other principals sounded off on the deal. LIVE NATION CEO MICHAEL RAPINO told the FINANCIAL TIMES said the merger would produce "measurable benefits to consumers." TICKETMASTER CEO IRVING AZOFF added that it would strengthen the bond between artists and fans "to unsurpassed levels."
JOE COHEN, CEO of SEATWAVE, a competitor to the merged entity, predictably wasn't as bullish on the merger. "I cannot see how this is good for consumers," he told FT. "I think 12 months from now we'll be looking at higher prices."