Risk, returns & timeframes illustration
6 min read
May 28, 2024
by
Belinda Nash

The US vs Live Nation; stocks fall nearly 8% in a day

Following Ticketmaster’s Taylor Swift ticketing blunder, Tay-Tay's fans united fans to sue music event behemoth Live Nation. Now, after two years of investigation, the US Department of Justice has banded together with nearly 30 US states and have sued parent, Live Nation Entertainment. So what do they allege, and can they win?
US vs Live Nation boxing gloves surrounded by Ticketmaster tickets
6 min read
May 28, 2024
by
Belinda Nash

The US vs Live Nation; stocks fall nearly 8% in a day

Following Ticketmaster’s Taylor Swift ticketing blunder, Tay-Tay's fans united fans to sue music event behemoth Live Nation. Now, after two years of investigation, the US Department of Justice has banded together with nearly 30 US states and have sued parent, Live Nation Entertainment. So what do they allege, and can they win?
6 min read
May 28, 2024
by
Belinda Nash

The US vs Live Nation; stocks fall nearly 8% in a day

Following Ticketmaster’s Taylor Swift ticketing blunder, Tay-Tay's fans united fans to sue music event behemoth Live Nation. Now, after two years of investigation, the US Department of Justice has banded together with nearly 30 US states and have sued parent, Live Nation Entertainment. So what do they allege, and can they win?
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Is it time for Live Nation Entertainment to break up… with themselves? 💔 US Department of Justice (DOJ) and around 30 US states say yes. They’re suing the self-titled ‘largest live entertainment company in the world’ for violating the Sherman Antitrust Act, and - despite expecting complicated legal arguments - they’re seeking a jury trial following years of investigating the multinational conglomerate. 

‘Our complaint makes clear what happens when a monopolist dedicates its resources to entrenching its monopoly power and insulating itself from competition rather than investing in better products and services. We allege that Live Nation has illegally monopolised markets across the live concert industry in the United States for far too long. It is time to break it up.’ — Merrick Garland, US attorney general 

In their lawsuit, the DOJ alleges that Live Nation Entertainment’s ‘monopolistic control’, as ‘gatekeeper’ of live music events, is anti-competitive and illegal, and has led to widespread industry ‘harm’. They say Live Nation’s sustained antitrust behaviour has been ‘at the cost of fans, artists, smaller promoters, and venue operators.

It’s not just the US feeling the brunt of Live Nation’s might. New York attorney general Letitia James summarises their complaint:

‘For too long, Live Nation and Ticketmaster have unfairly and illegally run the world of live events, abusing their dominance to overcharge fans, bully venues, and limit artists. Everybody agrees, Live Nation and Ticketmaster are the problem and it’s time for a new era.’ — Letitia James, New York attorney general 

Clipping the ticket. 🎟️ Garland said Live Nation has been ‘ubiquitous’ in the US, and with Ticketmaster, which the parent company owns, they control ‘at least 80% of primary ticketing at major concert venues, directly manages more than 400 artists, and controls 60% of concert promotions across the country, and owns or controls at least 60% of large amphitheatres in the United States’

Live Nation Entertainment has also benefited from ticket resales on their Fan-to-Fan Resale site. In 2019, Live Nation admitted the resale site aided scalpers - with Live Nation also taking a resale fee. And a leaked phone call revealed that Live Nation had placed tickets on resale sites, which at the time they reframed as ‘a unique distribution strategy that used the secondary market as a sales distribution channel for select high-end tickets’. 

Live Nation’s stock drop 📉

Immediately following the DOJ’s legal suit announcement, Live Nation Entertainment’s (LYV) stock fell 7.8%, down from US$99.77. They have since rebounded to US$95.99, a total post-announcement drop of 3.78%. Live Nation has a market cap of US$22.216 billion. Year-to-date (YTD) their stock has risen 6.66%, year-over-year (YOY) it’s climbed 16.95%, and is up 51.69% over five years.

Live Nation’s alleged monopolistic tactics

The DOJ accuses Live Nation of a laundry list of ‘tactics to eliminate competition and monopolise markets’. This includes:

  • Exploiting their relationship with competitor-turned-partner Oak View Group - with Live Nation once saying, ‘let’s make sure we don’t let [the artist agency] now start playing us off’
  • Retaliating against firms that might compete
  • Threatening and retaliating against venues that work with rivals
  • Blocking venues from using multiple ticketers
  • Restricting artists’ access to using only Live Nation’s venues
  • Acquiring smaller and regional promoters that they identified as threats

Kiwis feeling Live Nation’s dominance

Some Kiwis are being freezed out too. 🥶 As long ago as 2017, promoter group New Zealand Entertainment Operators Association (NEOA) said they were ‘most concerned about the rise of Ticketmaster Resale’, where people were reselling tickets for ‘vastly inflated prices’.

Now, Kiwi concert goers are increasingly finding Live Nation’s events are out of reach. Last month, Radio New Zealand’s Jogai Bhatt asked why. She found that Live Nation Entertainment - owners of our largest venue, Spark Arena, and Ticketmaster, and the team bringing Coldplay to Eden Park, where tickets are available from $259.90 - $1,249.90 (excluding Ticketmaster’s fees) - is ‘a dominant player’ here. She queried how Live Nation sets ticket prices.

‘It's hard to say exactly how the price for these events is determined, but it's no secret they fall into a price range inaccessible to the general public.’ — Jogai Bhatt, Radio New Zealand

Live Nation was widely criticised for introducing dynamic pricing through their Ticketmaster In Demand. They explain on their site the goal was ‘to give fans fair and safe access to the best tickets while enabling artists and other people involved in staging live events to price tickets closer to their true market value’. In other words, supply-and-demand pricing, which in 2022 saw ticket prices for Bruce Springsteen soar to US$5,000 on Ticketmaster Resale, which included Ticketmaster’s US$1001 service fee. 🤯

How did Live Nation gain so much control? 💪

A brief history. 🗓️ Ticketmaster launched in 1976 with machine-printable tickets. In 1982 the company introduced computer-based ticketing systems, then acquired competitor Ticketron in 1991, launching their e-commerce on new site, Ticketmaster.com, in 1995. This marked the beginning of the end for overnight camping in queues to get concert tickets. 

Live Nation began life in 1996 as SFX Entertainment, before becoming Clear Channel Entertainment in 2000 after being sold to Clear Channel. They then spun off in 2005, becoming Live Nation. 

In 2009, Live Nation announced their plan to merge with Ticketmaster to become Live Nation Entertainment. This prompted academic research by antitrust scholars whose aim was ‘to inform the debate’, with the paper’s authors concluding that ‘the merger generates competitive advantages’ that ‘appear to be procompetitive adaptations that the antitrust laws should encourage and not condemn’. In 2010, the DOJ approved Live Nation’s merger with Ticketmaster

Little more than a decade after the merger, in 2022, Live Nation was called out by US Federal Trade Commission chair Lina Khan, who said that Ticketmaster ‘converted more Gen Z’ers into antimonopolists overnight than anything I could have done’

This was after Ticketmaster’s unprecedented Taylor Swift Eras Tour ticket blunder in 2022. According to Ticketmaster data, their Verified Fan site received 3.5 billion requests for the US leg of Swift’s tour, but sold just 2.4 million tickets. The debacle led some fans - many who ‘reported waiting in online queues for up to eight hours’ - to sue Ticketmaster for ‘fraud, price-fixing, and antitrust violations’, claiming the company intentionally deceived fans by allowing scalpers to buy the majority of tickets, something Live Nation largely blamed on bots.

What could happen to Live Nation?

Live Nation hit back at the DOJ. 🥊 Last week, Live Nation defended their position, throwing jabs at the Department of Justice. They said: ‘Calling Ticketmaster a monopoly may be a PR win for the DOJ in the short term, but it will lose in court because it ignores the basic economics of live entertainment’. Rutgers Law School professor Michael Carrier suggested however that legal proceedings may reveal more about Live Nation’s operations than they might want. He added that there may be a possibility of Live Nation and Ticketmaster consciously uncoupling if antitrust allegations are proven.

‘The DOJ showed how Live Nation really has its tentacles in each element of the supply chain, which means that it has a lot more control than it is letting on. And, in terms of justifications, there is really very little that (Live Nation) can offer in terms of how they’re helping the consumer.’  — Michael Carrier, professor, Rutgers Law School, NZ Herald

But for now, the jury’s out. 👩‍⚖️

Like this? 👍 Then you might like: McDonald’s feeling the squeeze… or are they really? 🍔

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Belinda Nash
Finance writer
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We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.

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