Sen. Charles Schumer urged Ticketmaster Entertainment Inc. on Tuesday to sell off its TicketsNow resale subsidiary that was at the core of an uproar over Bruce Springsteen concert tickets.
Schumer, speaking at an antitrust hearing on Tickemaster’s proposed merger with leading concert promoter Live Nation Inc., accused Ticketmaster of redirecting Springsteen fans to higher priced tickets on TicketsNow, despite cheaper tickets being available on the main site.
What the company has called a glitch, Schumer said was “more about moneymaking than malfunction.” He noted Ticketmaster collected $7 in fees for every Springsteen ticket sold on Ticketmaster, but $30 for every ticket sold on TicketsNow.
“You, Ticketmaster, need to sell TicketsNow and make them independent of you in every way,” said Schumer, D-N.Y, in the hearing that was Webcast live.
Irving Azoff, Ticketmaster’s chief executive, replied that he never would have bought TicketsNow, the No. 2 reselling site behind eBay Inc.’s StubHub, if he had been in charge when the deal closed in February 2008.
“The whole secondary area is a mess,” Azoff said. “I would never have bought it.”
“I don’t believe there should be a secondary market at all.”
On Monday, Ticketmaster agreed with New Jersey’s attorney general, Anne Milgram, to not link to the TicketsNow site from Ticketmaster for a year and to only do so after that in a way that received her office’s approval. The changes apply to all Ticketmaster sales nationwide.
The formal testimony at the U.S. Senate’s antitrust subcommittee kicked off what promised to be a long review of the proposed merger of Ticketmaster, the world’s top ticket-selling company, with Live Nation.
The companies hope their all-stock merger of equals, valuing the combined entity around $2.2 billion, will close in the second half of 2009. They said the deal would help them save about $40 million annually.
But a string of independent promoters lined up to testify against the deal, saying the two companies’ combined dominance in ticketing, concert promotion, venue operations and outdoor amphitheatres would choke off competition.
The senators also noted the merger deal came only after Live Nation launched its ticketing platform in January, threatening to siphon 15 per cent of Ticketmaster’s revenues and putting the two in a head-to-head fight for new contracts.
Seth Hurwitz, a promoter and co-owner of the 9:30 live music club in Washington, said the merger would allow Live Nation to access its confidential sales information because its tickets are sold through Ticketmaster.
“My biggest competitor will have access to all of my sales records, customer information,” he said. “This will put all independent promoters at an irreparable competitive disadvantage. This would be like Pepsi forcing Coke to use its services as a distributor.”
In response, Live Nation Chief Executive Michael Rapino said he understood the concern and would forbid sharing information between the divisions.
The subcommittee’s chairman, Sen. Herb Kohl, D-Wis., asked if Rapino would support an information firewall between the businesses. Rapino replied: “In theory, yes.”
“We would absolutely have the concert division not have access to the ticketing division data,” he said.
In testifying for the deal, Rapino called the music industry “broken” and outlined a list of ills, from rampant music piracy and his company’s own falling stock price, to the computerized ticket brokers that prevent fans from buying tickets fairly online.
He said the merger was key to survival.
“If we don’t make changes to the business model and we don’t build new structures, we may be back here in the future for another hearing, on the death of the American music industry,” he said.
Kohl rejected the claim, noting that Sirius and XM were in far worse shape before their merger into Sirius XM Radio Inc. was approved last year.
“By contrast, your two companies are doing just fine,” Kohl said. “Mr. Rapino, you strain our common sense.”
The companies next testify before a House subcommittee on Thursday.
