More Merger Mayhem

Who am I all of a sudden?  A headline writer for the NY Post?

The merger I’m referring to is the Live Nation-Ticketmaster one, and the ‘mayhem’ is the fact that CTS Eventim is suing Live Nation, saying that LN is not living up to the agreement it made before the merger to use CTS Eventim as its ticketing back end. (Ok, ‘mayhem’ may be overstating it a bit.  ‘Kerfuffle’ might be more accurate.)

Everyone knows about the merger, but many weren’t aware or have kinda forgotten about what came just before.  Up to 2007, Live Nation was Ticketmaster’s biggest client, using TM to ticket all its venues and shows.  When Live Nation’s master agreement with TM came up for renewal though, people started talking about the fact that they might not renew.

This was a very big deal because it struck another blow to Ticketmaster’s hegemony over the ticketing business (which was already eroding in the face of things like the Tickets.com acquisition by Major League Baseball and the rise of the secondary market).

And then the two companies went to war.

TM bought Front Line Management as a way to compete with Live Nation’s aggressive moves to sign the famous “360 deals” with artists like Jay-Z and U2.  Live Nation made a deal with CTS Eventim (a German ticketing company) to replace TM in its venues as soon as the contract expired.  Basically, the two companies were in direct competition on every front, matching each other move for move.

And then the merger was announced.  I remember I was at TED 2009 and had given a presentation earlier that day about live entertainment, and at a reception afterwards, about 20 people came up to me and showed me emails on their cell phones with the breaking news that the two companies were merging.

Wow.

So suddenly instead of doing its own ticketing through CTS Eventim, Live Nation would obviously be using TM.  TM for its part wouldn’t be in the talent business anymore.  Then the merger got challenged and on it went for a year or more until it was finalized a few weeks ago. A lot of people didn’t like the merger, but from the point of view of TM and LN, it would avoid lots of costly competition with each other in areas where they had once been complementary.

But what about CTS Eventim?  Suddenly, at least in the US, they were no longer needed.

I have no idea about the merits of the suit or the nature of the relationship between LN and CTS Eventim.  The rollout of Live Nation’s ticketing wasn’t smooth, but it wasn’t ultimately a disaster either.

Live Nation claims “CTS has breached the CTS agreement by failing to provide a ticketing platform that meets the minimum contractual standards,” although it’s pretty clear that whatever system CTS Eventim had delivered, the intent of the merger would be to use TM as the core ticketing system.

My instanlysis is that this gets settled with money, not remedies, at least in the US.  In Europe, Live Nation may end up having to make more concessions to using the CTS Eventim system, but who knows?  This merger has had a lot of twists and turns, and it’s been pretty tough to predict, though from the start I was pretty sure the merger would occur.

I’ll keep an eye on where this goes.  Basically, everything that happens in this merger has an impact on the business so even if you’re not directly connected, it’s important to stay informed.