In 2009, Live Nation completed its merger with Ticketmaster in a deal valued at $2.5 billion. This brought together the world’s largest concert promoter with the dominant ticketing platform, creating a new live entertainment giant called Live Nation Entertainment.
The Deal Between Live Nation and Ticketmaster
The merger between Live Nation and Ticketmaster was announced in February 2009. Under the terms of the all-stock deal, Ticketmaster shareholders received 1.384 shares of Live Nation stock for each share of Ticketmaster stock they owned. This valued each Ticketmaster share at $8.20 based on Live Nation’s stock price at the time, putting the total deal value at approximately $2.5 billion.
The combined company took on the Live Nation name but maintained headquarters in both Beverly Hills and Los Angeles. Michael Rapino, previously the CEO of Live Nation, remained in charge as CEO of the merged entity. Irving Azoff, then-CEO of Ticketmaster, became executive chairman of Live Nation Entertainment.
The deal brought together Live Nation, the world’s top concert promoter and owner of major venues and festivals, with Ticketmaster, which sold tickets through its primary website along with partnerships with stadiums, arenas and theaters. This created a vertically integrated live entertainment company that managed events, owned venues, and controlled the dominant ticketing platform.
Why Live Nation Acquired Ticketmaster
There were several key reasons why Live Nation sought to merge with Ticketmaster:
- Gain control of ticketing platform – Owning Ticketmaster allowed Live Nation to handle ticketing logistics in-house for its promoted shows and venues rather than working with a third-party vendor.
- Expand ticket business – Live Nation could expand Ticketmaster’s ticketing deals with additional venues and promoters.
- Lower costs – Bringing ticketing in-house was expected to lower Live Nation’s ticketing fees and costs in the long run.
- Cross-selling opportunities – The combined company could cross-sell concert tickets and other live entertainment products to Ticketmaster’s large customer base.
- Data analytics – Live Nation would gain access to Ticketmaster’s data and analytics on event sales, customer preferences and behavior.
For Ticketmaster, the deal provided greater scale, resources and stability by becoming part of the world’s largest live events company.
Details of the $2.5 Billion Valuation
Based on the exchange ratio of 1.384 Live Nation shares for each Ticketmaster share, here is how the approximate $2.5 billion valuation was calculated:
- Ticketmaster had around 248 million shares outstanding before the merger.
- At the exchange ratio of 1.384 Live Nation shares for each Ticketmaster share, this equated to 343 million Live Nation shares needed to be issued to Ticketmaster shareholders.
- With Live Nation trading at around $7.41 per share at the time, those 343 million shares had a market value of approximately $2.5 billion.
In summary, with the set exchange ratio, the number of Ticketmaster shares outstanding, and Live Nation’s market price per share, Ticketmaster was valued at roughly $2.5 billion in the all-stock deal.
Ticketmaster’s Financials Prior to the Deal
In the years leading up to the merger with Live Nation, Ticketmaster had grown rapidly through acquisitions and expanding partnerships:
- Revenue increased from $845 million in 2005 to $1.2 billion in 2008.
- Operating income rose from $147 million to $183 million in that period.
- In 2008, Ticketmaster sold 141 million tickets worth $8.9 billion in gross transaction value.
- It had clients across venues, arenas, professional sports teams and theaters.
- Ticketmaster acquired several companies including Paciolan in 2008 to expand offerings.
So in the years prior to the merger, Ticketmaster had been growing sales and profits, which translated into higher valuation for the company when Live Nation came courting.
Live Nation’s Motivations for the Deal
For Live Nation, there were a few key factors driving its interest in acquiring Ticketmaster:
- Ticketmaster had long held exclusive ticketing deals with many major venues and promoters, making it hard for Live Nation to avoid using its platform.
- Owning Ticketmaster could save Live Nation money through lower ticketing costs over the long run.
- It gave Live Nation access to Ticketmaster’s customer data and analytics.
- The merger could head off ongoing complaints about Ticketmaster’s fees and competitive practices since venues and promoters now shared ownership.
Essentially, Live Nation wanted to gain control of ticketing for its events rather than relying on a third-party provider. The merger helped insulate Live Nation from Ticketmaster’s high fees and gave it a more direct relationship with customers.
Concerns Raised by the Merger
While Live Nation and Ticketmaster argued the deal would benefit consumers, it also raised significant anti-competitive concerns, including:
- Live Nation would have outsized power over ticketing and could raise fees for competitors using Ticketmaster.
- The combined company could require venues to use Ticketmaster as their exclusive ticketing service.
- Smaller promoters and venues would be disadvantaged versus the merged giant.
- Without competition, there would be little incentive to innovate or improve service.
- The merged company could bundle services, locking in clients.
These concerns led the U.S. Department of Justice to initially oppose the merger on antitrust grounds before eventually approving it with certain conditions meant to maintain competition.
Justice Department Review and Conditions
Given the anti-competitive issues raised by the Live Nation-Ticketmaster merger, the U.S. Department of Justice conducted an extensive review of the deal.
Initially, the DOJ aimed to block the merger entirely based on anti-trust law. But Live Nation and Ticketmaster ultimately reached an agreement with regulators in January 2010 to allow the merger while addressing competitive concerns.
Under the terms of the DOJ agreement, the merged Live Nation Entertainment would abide by the following conditions for 10 years:
- It cannot threaten to withhold concerts from venues that don’t use Ticketmaster for ticketing.
- It cannot take retaliatory actions against venues that choose another ticketer.
- The company must license its ticketing software to two direct competitors.
- Firewall restrictions must be in place between Ticketmaster and the rest of Live Nation’s businesses.
By imposing these conditions, the DOJ tried to maintain competitive pressure from other ticketing companies even while the industry leaders merged into a single entity.
Changes Since the Merger
In the decade-plus since Live Nation and Ticketmaster combined, some of the key changes have included:
- The ticketing market remains consolidated, with Ticketmaster maintaining its commanding position despite competitor entry.
- Live Nation Entertainment is by far the largest player in live events promotion and ticketing with $15 billion in revenue in 2019.
- Consumers continue to complain about high Ticketmaster fees often adding 25%-30% to ticket prices.
- Both the DOJ and some musicians have scrutinized Live Nation Entertainment for anti-competitive practices.
- The company has expanded offerings in live streaming and virtual events.
While Live Nation Entertainment’s dominance of live entertainment has continued to grow, the conditions imposed by regulators have helped maintain some competition in ticketing. However, high service fees remain a major pain point for consumers.
Key Takeaways
Here are some of the key points on Live Nation’s acquisition of Ticketmaster:
- Live Nation bought Ticketmaster for around $2.5 billion in an all-stock deal in 2009.
- The deal combined the world’s top concert promoter with the leading ticketing platform.
- It allowed Live Nation to control ticketing for its venues and shows rather than relying on a third-party vendor.
- The merger raised significant anti-competitive concerns and was almost blocked by regulators.
- It ultimately went through after agreeing to conditions to maintain competition in ticketing.
- Over a decade later, the combined company dominates live entertainment but high ticket fees remain an issue.
The blockbuster deal created a new giant in live events. While it has paid off for Live Nation Entertainment’s growth, consumers are still living with the consequences through Ticketmaster’s stubbornly high fees.
Year | Live Nation Revenue | Ticketmaster Revenue |
---|---|---|
2005 | $2.9 billion | $845 million |
2006 | $3.6 billion | $953 million |
2007 | $4.2 billion | $1.1 billion |
2008 | $4.2 billion | $1.2 billion |
2009 | $5.1 billion | Merged into Live Nation Entertainment |
This table shows the rising revenues for Live Nation and Ticketmaster in the years leading up to their merger in 2009, demonstrating the growth trajectories of both companies.
Conclusion
The merger of Live Nation and Ticketmaster marked a major consolidation in the live entertainment industry. It combined complementary businesses to create a new giant with unmatched control over events promotion, venues, and ticketing. While the deal raised anti-competitive issues, conditions imposed by regulators helped maintain some competition in ticketing. Over a decade later, the merged company continues to dominate the industry, for better or worse. The outsized ticket fees charged by Ticketmaster remain a sore point for consumers, even as Live Nation Entertainment has delivered strong growth and profits.