Live Nation deserves to face the antitrust music

Swifties — as Taylor Swift fans are called — are a force to be reckoned with. Their ire over how Ticketmaster botched presale tickets for the pop star’s Eras Tour has triggered a Congressional hearing. It has also prompted lawmakers in both red and blue states to introduce so-called “Taylor Swift” bills aimed at reining in the ticketing giant.

Now, the Department of Justice is reportedly preparing to sue Ticketmaster’s parent company Live Nation Entertainment over anti-competitive practices. An unwinding of the deal that created the company no longer looks far-fetched.

Even before Ticketmaster’s 2010 merger with concert promoter Live Nation, concert goers and sports fans complained about the platform’s high processing fees, surcharges and failure to crack down on ticket touts. Its dominance over the live events ticketing business has only strengthened post-merger. 

The tie-up created a vertically integrated business, an area of focus for more aggressive antitrust watchdogs. The combined group not only controls an estimated 70 per cent of the market for ticketing and live events but it also manages artists and either owns or has exclusive contracts with major concert venues.

Venues can feel pressured to use Ticketmaster as its ticket vendor: Live Nation could use its promotional power to prevent the venue from getting shows. Artists have a similar issue, with little choice but to use Ticketmaster in order to play at certain venues. 

Depending on what charges are filed, the DoJ could seek to unwind the merger, to encourage more competition in live ticketing. But that would not alone be enough to stop touts from price gouging. If a reseller buys the ticket, and then sells it again to the end user, Ticketmaster gets paid twice. Addressing the problem of touts and bots would require a ban on the resale of tickets for more than face value.

Barring such a move, Ticketmaster — arguably Live Nation’s crown jewel — may be better off as a solo act. While the ticketing business generated just 13 per cent of group revenue last year, it accounted for 60 per cent of total adjusted operating income (AOI). By contrast, concert promotion, by far Live Nation’s biggest division with 82 per cent of group revenue, pulled in only 17 per cent of total AOI.

Ticketmaster could well command a better valuation as a standalone company. Vivid Seats, a much smaller ticket reselling platform, trades on an EV/ebitda multiple of over 13 times. Live Nation is on just 12 times.

Live Nation investors might find — like Swift herself — that a break up doesn’t have to be all bad news.

pan.yuk@ft.com