Neither company has issued a statement confirming or denying the talks, which can be interpreted as a form of confirmation they are talking. A Live Nation spokesman told Pollstar the company does not comment on “market speculation” and a Ticketmaster spokesman had a similar response. But if a merger deal does come to fruition, it would signify the next step in the continuing transformation of the entire music industry.
But let’s take a different tack and dumb it down. Which of the following raises stock prices and which lowers them: Talks of merger – or, instead, Live Nation announcing it is abandoning its ticketing system and becoming, once again, a Ticketmaster client?
The timing of the announcement comes so soon after Live Nation’s new ticketing system melted down during its first major on-sale, it begs the question of what’s driving the talks.
The Phish tour went on sale January 30 with a system Live Nation thought could handle high demand levels. Instead, the on-sale created incredible ill will as fans grew increasingly frustrated with their inability to complete transactions without error messages. The tickets reportedly all got sold but, because of the number of times the system crashed, many are wondering if anything got lost or duplicated along the way and if an accurate audit trail exists.
The Live Nation ticketing system failure may not have been as bad as the rumors made it out to be – but even a minor glitch would have been enough to make agents and managers very nervous about how it might impact their clients.
Live Nation has more high profile ticket launches on the horizon for Jonas Brothers and U2, along with their shed season inventory. Yet, less than a week after the Phish crash, word floated around that Live Nation was asking (or being told to ask) for Ticketmaster’s help on Jimmy Buffett’s ticket sales. By that same evening, a source told the WSJ of the merger talks.
For the two companies it could be a win-win. Live Nation and Ticketmaster could form a massive new company that just might get a better reception from the stock market. Or, if the Department of Justice nixes the merger, Ticketmaster could end up as “just” Live Nation’s ticketing portal. Live Nation can return to TM while saving face, and TM has an important client back. All this while the rest of the industry was busy chattering about the “big merger.”
That’s the simplest scenario. Here are the some of the more complicated ones.
The merger is real. And the carrot is simply access to Ticketmaster’s customer database, which was reportedly a prime reason for the split in the first place. (There was also a rumor that the final straw was when Live Nation insisted TM tack on $20 surcharges and take the heat – a rumor that doesn’t seem so farfetched now that LN has followed a similar model on its own.)
Here’s another: Ticketmaster Entertainment was said to be in talks to purchase 50 percent of AEG Live, but the TM board balked, likely because of the asking price. AEG is not going to be sold for fire sale prices if at all. Then came the Live Nation ticketing snafu and the light of leverage and opportunity illuminated the offices of Mr. Azoff. By threatening to merge with Live Nation, Ticketmaster could make AEG fidgety enough to reconsider the purchase. What if both happened? Could TM wind up with a stake in both companies? If so, anyone want to guess who’d call the shots?
Now here’s the rub: If Live Nation and Ticketmaster merge, how can any other promoter feel secure using TM as a neutral ticket seller? With Live Nation and Ticketmaster as one, Live Nation could have access to competitors’ ticket counts. If that doesn’t frighten every other promoter, what would?
There are certainly several other theories. The whole thing could just be smoke and no deal ever emerges. The Department of Justice may grow teeth and nix a deal, although the sinking economy could divert the Obama administration’s attention.
But any way you look at it, things will never be the same as they ever was.