UK clears Ticketmaster/Live Nation deal

 

The proposed merger of two live music giants, Live Nation Inc and Ticketmaster Inc, was given a huge boost on Tuesday when a British regulatory body dropped its objections and approved the deal.

The Competition Commission had said in October it was concerned about the move to combine the world's largest concert promoter with the leading ticketing group, saying fans could wind up paying more to see their favourite artists.

Shares in both companies rose more than 5 percent in early trading when markets opened in New York.

The provisional ruling had hit the share prices of both companies in October and fuelled expectations that a deal frequently criticised by artists, fans and politicians could be scuppered.

But in a shot in the arm for the Los Angeles-based firms' hopes of gaining regulatory clearance in the United States and Canada, the British body on Tuesday reversed its earlier position.

Officials at the U.S. Department of Justice have had "serious competitive concerns" that the combined company will have too much control over ticket prices. The companies have been discussing concessions in recent weeks, including divesting some of the operations in the U.S.

However, Britain's Competition Commission said it now believed the new entity would not have the incentive to hurt rivals, and it was satisfied the deal would not damage an existing partner of Live Nation's - CTS Eventim AG.

It concluded the merger "will not result in a substantial lessening of competition in the market for live music ticket retailing or in any other market in the UK, including live music promotion and live music venues." 

"The UK decision is surprising but it sets the stage that the deal could clear with U.S. regulators" said Tuna Amobi, equity analyst at Standard & Poor's. "The only question might be what conditions the Government might demand from the merged company."

Live Nation executives said last month they now expect the deal to close in the first quarter of 2010.

Ticketmaster makes much of its money by taking a fee for selling and marketing tickets for a host of live events including music, sports and the arts.

Shares in CTS Eventim were down 1 percent in Frankfurt on Tuesday in a broadly higher overall market.

U-TURN UNUSUAL, NOT UNIQUE

Live Nation announced plans to buy Ticketmaster Entertainment for about $400 million (251 million pounds) in stock in February, drawing almost immediate criticism from some U.S. politicians and artists who felt the combined group would have unrivalled power over music fans and the prices they would have to pay.

The UK Commission, which described its reversal as unusual but not unique, said it had looked into whether the combined group would try to harm competitors, for example by restricting the sale of tickets to other rivals.

"We found that, in most of these cases, the merged entity would suffer significant and immediate losses, with very uncertain prospects for long-term gain" it said.

"Therefore, we concluded that it was unlikely that the merged entity would harm other ticketing agencies, promoters and venues in these ways." 

The two groups said they remained optimistic there would be a similarly successful outcome in the U.S. and Canada. The deal has already won regulatory approval in Norway and Turkey.

Shares in Live Nation were up 4.2 percent at $8.49 on Tuesday morning on the New York Stock Exchange, while Ticketmaster Entertainment were up nearly 6 percent at $12.44 on the Nasdaq.