This could be good news for the music industry, which suffers from steadily declining record sales and stands to benefit from more ticket sales for live performances. Or just another last-ditch measure to save itself from an inevitable death and rebirth.
According to Paidcontent, Live Nation and Ticketmaster have entered into a definitive agreement to merge into an entity called Live Nation Entertainment.
From the release:
The companies will be combined in a tax-free, all-stock merger of equals with a combined enterprise value of approximately $2.5 billion. Under the agreement, Ticketmaster shareholders will receive 1.384 shares of Live Nation common stock for each share of Ticketmaster they own, subject to certain adjustments defined within the agreement. Live Nation and Ticketmaster shareholders will each own approximately 50 percent of the combined company. The new company anticipates generating approximately $40 million of operating synergies through the combination of their ticketing, marketing, data centers and back-office functions.
Ticketmaster specializes in online ticketing whereas Live Nation focuses on concert promotions. They will still have to go through regularly review before the merger can be completed, and as Paidcontent points out, there will be those in the music industry that create stiff resistance to this consolidation of power (especially with Ticketmaster’s reputation for monopolizing ticket sales on its own).
Eliot Van Buskirk from Wired suggests that the merger “could lead to a dramatic change in how event tickets are sold: from the fixed price norm that often results in quick sellouts for popular shows to an auction-based model that legitimizes what scalpers have always done.” The rationale:
If Live Nation and Ticketmaster merge, the combined entity could bypass the primary ticketing system partially or completely, forcing fans to bid against each other for tickets in Ticketmaster’s TicketsNow secondary market rather than selling them at a fixed price in the primary ticket market, the way they have done in the past.
This is not the first time Live Nation and Ticketmaster will have worked together. According to Barry Diller, who’s Chairman of Ticketmaster, “It was less than two months ago that Ticketmaster ended its 10-year partnership with Live Nation.”
The Wall Street Journal first reported that the two companies were close to making a merger announcement early Monday morning.