Rapino, Azoff Face Crossfire At Senate Panel
February 24, 2009 at 4:14 PM (PT)
LIVE NATION CEO MICHAEL RAPINO and TICKETMASTER CEO IRVING AZOFF came to CAPITOL HILL TODAY to pitch the viability of the proposed LIVE NATION/TICKETMASTER merger. According to several media sources, they were met with considerable scrutiny from not only panelists representing competing interests, but antitrust experts and the Senators themselves.
According to CNNMONEY.COM, RAPINO said the merger's goal is to consolidate "the fragmented pieces of the business - marketing, promotion, concerts, and ticketing -- to create a full-service connection." Furthermore, a merger is key to the company's future success. as almost 40% of all concert seats go unsold. "Clinging to old ways and fighting change is not the answer," he said. "If we don't find a solution, we could be bought by a foreign-owned conglomerate like the majority of the record labels."
What does Live Nation's decision to merge with its competitor rather than fight it in the market tell us about any company's ability to compete with Ticketmaster? If Live Nation can't compete, who can?"
AZOFF asserted that ticket prices would go down, because the merger would eliminate about $40 million of "obvious inefficiencies." in the entertainment supply chain. "It is designed to address the obvious inefficiencies in the supply chain -- the large volume of unsold tickets to events, higher costs, surcharges and the explosion of the resale market," he said. "We cannot just cling to old ways ... The entire entertainment industry is looking for ways to integrate ticketing and other related businesses with the rest of their supply chain."
Those sentiments did little to persuade many Senators on the Committee. Committee chairman Sen. HERB KOHL said their justification of the merger "strain[s] our sense of common sense ... Your goal is to be bigger, better and more profitable. I'm disturbed by your unwillingness to discuss the real reasons for this merger."
"You would not be talking with each other unless you were getting bigger and more profitable," he continued. "What does LIVE NATION's decision to merge with its competitor rather than fight it in the market tell us about any company's ability to compete with TICKETMASTER? If LIVE NATION can't compete, who can?"
Sen. CHARLES E. SCHUMER described the merger as "monopolistic behavior plain and simple," because the new entity "would be a behemoth that would operate the majority of concert venues" and "have a hand in every step of the process of going to see a concert."
Witnesses For The Merger
BLOOMBERG.COM reported that LIVE NATION/TICKETMASTER trotted out a few musical superstars to advocate for the merger. VAN HALEN, SEAL, JOURNEY, SHAKIRA and SMASHING PUMPKINS all sent letters to the Committee.
Wrote EDDIE VAN HALEN, "There are so many problems facing the music industry today. VAN HALEN succeeded based on our record sales and the many tours that we did to increase our record sales. But that business model just doesn't work anymore. Today, the majority of artists earn their living from playing live. What my son -- and any future band he plays in -- needs are new and innovative approaches to the problems facing the live entertainment industry. And I believe that the merger of TICKETMASTER/LIVE NATION is one of those solutions."
REUTERS quoted from SEAL's letter: "The record business is not what it used to be. That is why I support the LIVE NATION/TICKETMASTER merger, because not only would it benefit established acts like myself, but the up-and-coming acts who are trying to build a following, as well.
"As an artist, I'm constantly searching for new and better ways to connect with fans, get my music to more people, and be fairly compensated for my work in the process. The merger will help me and countless other artists do that."
Witnesses Against The Merger
The CHICAGO TRIBUNE reported that CHICAGO-based JAM PRODUCTIONS Chairman
JERRY MICKELSON described the proposed $575 million merger as "Vertical integration on steroids ... This merger is much larger than just the ticketing business ... [It could] "monopolize the entire music industry ... Our competitors would be receiving income from every ticket we sell."
Added WASHINGTON, D.C. in die promoter SETH HURWITZ, co-owner of I'M PRODUCTIONS: "If this merger is allowed to happen my biggest competitor will have access to all my sales records ... It would be like forcing Pepsi to use Coke as its distributor."
DAVID BALTO of the CENTER FOR AMERICAN PROGRESS disputed IRVING AZOFF's claim that the merger would bring down concert ticket prices. "Nothing after this merger is going to force them to lower prices," he said. "Only rivalry does that."
...About That TicketsNow Springsteen "Glitch"
The SPRINGSTEEN ticket snafu with TICKETSNOW (see story below) was brought up as another reason to not sign off on the merger. PC MAGAZINE reports that AZOFF said he was "angered and embarrassed by the incident" and promised to "never let something like this happen."
AZOFF testified that he wouldn't have "personally suggested that the company buy TICKETSNOW, but would not commit to selling it when pressed by SCHUMER."