February 10February 10thth, 2009, 2009Ticketmaster Live Nation

The PlayersThe Players TicketmasterTicketmaster

Largest primary ticketing Largest primary ticketing provider in the U.S. (80%)provider in the U.S. (80%)

Host, Paciolian, Frontline Host, Paciolian, Frontline ManagementManagement

Live Nation Live Nation Largest concert promoter Largest concert promoter

in the U.S.in the U.S.

Merger CaseMerger Case 11.5 months long11.5 months long 250 interviews250 interviews 2.5 million documents2.5 million documents 12 CID’s to merging parties and third parties 12 CID’s to merging parties and third parties

Horizontal & Vertical Issues Horizontal & Vertical Issues • Horizontal

• Ticketmaster’s contract with Live Nation ends in Dec 31st, 2008

• Live Nation does not renew the contract for primary ticketing with Ticketmaster

• Dec 2008, Live nation purchases European CTS software and enters the market for primary ticket sales• Ticketmaster profits fell 78% in first quarter• Feb 10th, 2009 Live Nation agrees to merge with

Ticketmaster Vertical• Vertical

• Control over all aspects of the live entertainment industry

Market DefinitionMarket Definition

Product Level: the sale of Product Level: the sale of primary primary ticketing ticketing services to services to major major concert venuesconcert venues

Geographic Level: venues with the U.S.Geographic Level: venues with the U.S.

Market ConcentrationMarket Concentration

Ticketmaster dominated primary ticketing Ticketmaster dominated primary ticketing for the last 20 yearsfor the last 20 years

Other players in the market: Tickets.com, Other players in the market: Tickets.com, New Era Tickets, and Front Gate TicketsNew Era Tickets, and Front Gate Tickets

All rivals have less than 4% share of the All rivals have less than 4% share of the marketmarket

Pre-Live Nation Entry

Post-Live Nation Entry

HHIHHI Market for primary ticketing to major Market for primary ticketing to major

concert venues is highly concentratedconcert venues is highly concentrated

Pre-Merger HHI: 4,710Pre-Merger HHI: 4,710

Post-Merger HHI: 6,900Post-Merger HHI: 6,900

Post-Merger increase of 2,190 pointsPost-Merger increase of 2,190 points

Theories of HarmTheories of Harm

Major concert venues most affectedMajor concert venues most affected Classic market powerClassic market power

Lessens competition in market for primary ticket Lessens competition in market for primary ticket sales as Live Nation was beginning to be only sales as Live Nation was beginning to be only viable competitorviable competitor

Lessens incentive for innovationLessens incentive for innovation Exclusionary market powerExclusionary market power

High barriers to entryHigh barriers to entry Merged firms potential ability to bundle all Merged firms potential ability to bundle all

aspects of concert going experience and exclude aspects of concert going experience and exclude competitorscompetitors

EfficienciesEfficiencies

Defendant argued for:Defendant argued for: Efficiencies created by vertical integrationEfficiencies created by vertical integration Price will pass to the consumerPrice will pass to the consumer

Plaintiff argued for:Plaintiff argued for: U.S. does not fully credit this claimU.S. does not fully credit this claim Same efficiencies can be achieved without Same efficiencies can be achieved without

the merger the merger

EntryEntry•Ticketmaster has dominated the market for over two decades•Existing ticketing companies do not have the qualities required to compete in the market.•New entry is costly and time-consuming

•A substantial amount of money and over two years would be required to develop similar qualities to Live Nation Entertainment

•Not likely to occur in a timely or sufficient basis on a scale that would raise competition

Final JudgmentFinal Judgment

Structural remediesStructural remedies AEG’s entry to primary ticket sales marketAEG’s entry to primary ticket sales market

• Ticketmaster Host Platform for 5 years with Ticketmaster Host Platform for 5 years with royalties to Ticketmasterroyalties to Ticketmaster

• Option to license their own copy of host for a feeOption to license their own copy of host for a fee Divestiture of Paciolian to Comcast-SpectatorDivestiture of Paciolian to Comcast-Spectator

Behavioral remediesBehavioral remedies No exclusionary conductNo exclusionary conduct 30 day notification for new aquisitions30 day notification for new aquisitions

Opinions/ConclusionsOpinions/Conclusions

Live Nation was beginning to compete Live Nation was beginning to compete when merger occurredwhen merger occurred

Same vertical integration efficiencies could Same vertical integration efficiencies could be achieved without merging as they were be achieved without merging as they were both beginning to verticaly integrate both beginning to verticaly integrate anywayanyway

Entry will be too difficult post-mergerEntry will be too difficult post-merger