Following the bold footsteps of UK regulators who earlier this month issued a preliminary challenge to the Ticketmaster-Live Nation proposed merger, US anti-trust regulators are following suit, not going as far as to rule out the merger entirely, but making it quite clear that in its current form the deal will not likely go through. According to an article in Bloomberg, the vertical integration of the various segments of the music industry pose a direct threat in affording a competitive marketplace for ticket sales.

Regulators are concerned the combined company’s presence in nearly every piece of live entertainment — including artist management, venue operation, concert promotion and ticketing — will undermine the ability for rivals to emerge and create competition that would bring down ticket prices, another person said.

Among concessions under consideration may be finding a way to allow a viable competitor in primary ticketing, one of the people said.

Now, in order to make concessions and ease some of the concerns regarding the concentration of power with regard to the ticketing element of the deal, reports show that the two companies are weighing their options with regard to possible divestitures, the leading candidate being a sale of Pacolian – a Ticketmaster acquisition from 2007 aimed to beef up the Ticketmaster client base. READ ON for more…

Frankly, in looking at the Pacolian website, I cannot even determine what this company does or why this would make the faintest difference in alleviating anti-trust concerns. Realistically, the crux of this merger aims to exploit anti-competitive synergies, hence slicing off small segments of either company would likely not make the combined entity any less monopolistic. A recent article in the Atlantic put this in perspective quite well…

I’m not sure how you get around a merger providing close to 80% control of concert ticketing and promotion. In order to do so, I’d imagine there are some pretty creative minds trying to find concessions that will trick satisfy the Justice Department so that the merger can go through.

Finally, as pointed out in the big Wall Street Journal article last week about the merger, this high profile doozy represents the first under the Obama administration and falls right in their wheelhouse for a case whereby they can showcase the changing of the guard.

The merger, formally proposed in February, is the first high-profile combination to come up for antitrust review during the Obama administration, and it is attracting attention far beyond the confines of the music business. Under President George W. Bush, the Justice Department rarely blocked mergers based on antitrust concerns, but the Obama administration has signaled it will take a tougher stance.

Not to get ahead of ourselves too much here, but it looks as though Uncle Sam might just take care of us music fans this time and keep these two behemoths from mating. Sources say a decision will not likely be reached before the end of 2009 or possibly delay into 2010, but if I were a betting man, I’d guess this thing drags on and on and ultimately just fizzles out.

Ryan Dembinsky

Ryan Dembinsky is a contributing editor for Hidden Track, where he focuses primarily on longer-form content and interviews. Ryan has contributed to a wide variety of music and sports publications such as Sports Illustrated, AOL Fantasy Football, Jambase, and Relix to name a few.

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