Antitrust Hurdles Could Tear Up Ticketmaster, Live Nation Merger

Brian Baxter

The American Lawyer

July 28, 2009

Lawyers from Latham & Watkins and Wachtell, Lipton, Rosen & Katz are nervously eyeing a call by the chair of the Senate Judiciary committee on Monday for antitrust review of the $2.5 billion merger between Live Nation and Ticketmaster.

The deal was criticized by both music fans and musicians when it was announced in February -- Bruce Springsteen posted this disparaging letter on his Web site -- for merging the concert-promoting operations of Live Nation and ticket-selling capacity of Ticketmaster into one industry behemoth.

Live Nation's lead M&A lawyer on the deal, corporate department co-chair James Beaubien in Los Angeles, jokingly told us a few months ago he didn't like Springsteen "criticizing our deal."

But now The Boss appears to be the least of Latham's problems.

Reuters reports that on Monday the chair of the Senate Judiciary Committee's antitrust subcommittee, Wisconsin Sen. Herb Kohl, asked the Justice Department's antitrust division to scrutinize the proposed merger. (Kohl, the second-wealthiest member of Congress because of his ties to the Kohl's department store chain, has an arena in Madison, Wisc., named after him that has hosted some Live Nation events.)

"It is clear that this merger raises serious competitive concerns warranting thorough scrutiny," Kohl wrote in a letter to antitrust chief Christine Varney. Fifty members of the House of Representatives also signed a letter written by Rep. Bill Pascrell Jr., of New Jersey expressing concern about the deal.

A call to Beaubien was not immediately returned and a Latham spokesman declined to comment.

Karen Silverman, a partner in Latham's global antitrust and competition practice group in San Francisco, is serving as lead antitrust counsel to Beverly Hills-based Live Nation. The firm got the M&A work through Beaubien, who has worked closely with Live Nation's in-house legal chief Michael Rowles for three years. (Beaubien told The Am Law Daily a few months ago that the two met through mutual friends.)

Wachtell Lipton corporate partner Pamela Seymon, antitrust partners Joseph Larson and David Schwartz, tax partner T. Eiko Stange and executive compensation partner Adam Shapiro are advising West Hollywood, Calif.-based Ticketmaster. The firm, through Seymon, has long represented Ticketmaster's former parent IAC/InterActiveCorp, which is owned by media mogul Barry Diller.

Reuters reports that Britain's consumer watchdog, the Office of Fair Trading, has already raised antitrust concerns over the planned merger and referred the deal to the country's competition regulator, the Competition Commission.

The concern among consumers is that the deal would allow the newly-merged company to shut out smaller ticket-sellers to Live Nation shows through Ticketmaster's auction resale system and thus raise prices.

Kohl put it more simply in his letter to antitrust chief Varney: "The combined entities would be a company of unparalleled size and scope without equal in the market."

On Sunday The New York Times reported that Varney, a former Hogan & Hartson partner, has had her attempts to rein in certain industries stymied by Obama administration officials who want to protect business interests in a time of economic crisis.

Varney was nominated to succeed Thomas Barnett, now of Covington & Burling, in January.

This article first appeared on The Am Law Daily blog on AmericanLawyer.com.