| 00:01:31 | Kohl, Herbert H. | WE HAVE GOOD REASON TO BE SKEPTICAL AS TO WHETHER MUSIC FANS WILL TRULY REALIZE THESE BENEFITS. CRITICS OF THIS MERGER ALLEGE THE DEAL WILL COMBINE TWO COMPETITORS IN THE EVOLVING ENTERTAINMENT BUSINESS BY CREATING AN ENORMOUS VERTICALLY INTEGRATED ENTERTAINMENT GIANT THAT WILL DOMINATE ALL ASPECTS OF THE BUSINESS. THEY ARGUE THAT THE STRENGTH OF THIS COMBINED COMPANY WILL MAKE IT IMPOSSIBLE FOR NEW COMPETITORS IN TICKETING OR CONCERT PROMOTION TO EMERGE AND THAT CONSUMERS WILL PAY HIGHER PRICES AS A RESULT. LIVE NATION OWNS OR HAS OPERATING AGREEMENTS WITH 140 AMPITHEATERS, CLUBS, THEATERS AND SMALL MUSIC VENUES, 30 MUSIC FESTIVALS AND 305 LARGE ARENAS. IT ALSO HAS EXCLUSIVE DEALS WITH MARQUIS ARTISTS, INCLUDING U2, MADONNA AND THE JONAS BROTHERS TO NAME A FEW. THE COMPANY RECENTLY LAUNCHED LIVE NATION TICKETING WHICH MAKES IT A VIABLE COMPETITOR TO TICKETMASTER. TICKETMASTER IS THE NATION'S DOMINANT TICKET SELLER, PROCESSING IN 2007 MORE THAN 280 MILLION TICKETS AND $8.3 BILLION IN SALES FOR THOUSANDS OF VENUES, INCLUDING MORE THAN 77 OF THE 100 LARGEST VENUES. BY SOME ACCOUNTS, TICKETMASTER CONTROLS 70% TO 80% OF ALL CONCERT TICKET SALES. LATE LAST YEAR, IT ACQUIRED A MANAGEMENT COMPANY THAT MANAGES 200 ARTISTS, FRONT LINE MANAGEMENT, AND A LEADING TICKET RESALE COMPANY. THE COMBINATION HAS THE POTENTIAL TO CREATE ONE COMPANY WITH A STRANGLEHOLD ON ALL SEGMENTS OF THE CONCERT BUSINESS. IT RAISES SERIOUS CONCERNS FOR INDEPENDENT CONCERT PROMOTERS WHO GIVE A PLATFORM TO NEW AND LESS ESTABLISHED ARTISTS. WHEN THESE PROMOTERS BOOK ACTS INTO HUNDREDS OF VENUES UNDER THE LIVE NATION TICKETMASTER UMBRELLA, THEY WILL HAVE TO USE THE MERGED COMPANY'S TICKETING SERVICE. WHAT THIS MEANS IS THAT THE INDEPENDENT PROMOTERS WILL HAVE TO REVEAL A TREASURE TROVE OF COMPETITIVE INFORMATION ABOUT THEIR TICKET SALES TO THE COMBINED COMPANY. THE VERY COMPANY WITH WHOM THEY WILL HAVE TO COMPETE FOR CONCERT PROMOTION. AT THE SAME TIME, INDEPENDENT CONCERT VENUES WILL BE UNDER ENORMOUS PRESSURE TO USE LIVE NATION FOR TICKETING IF THEY WISH TO BOOK THE HUNDREDS OF KEY ACTS CONTROLLED BY THE COMPANY. OUR CONCERNS ARE HEIGHTENED BY THE FACT THAT LIVE NATION RECENTLY ENTERED INTO THE TICKETING BUSINESS TO COMPETE WITH TICKETMASTER. THIS NEEDED COMPETITION WILL BE LOST IF THIS MERGER IS COMPLETED. WHAT DOES LIVE NATION'S DECISION TO MERGE WITH ITS COMPETITOR RATHER THAN FIGHT IT IN THE MARKET TELL US ABOUT ANY COMPANY'S ABILITY TO COMPETE WITH TICKETMASTER? IF LIVE NATION CAN'T COMPETE AFTER ALL, WHO CAN? ALL OF THIS COMES AT A TIME WHEN CONSUMERS ARE JUSTIFIABLY WEARY OF TICKETMASTER'S RECENT ACQUISITION OF A COMPANY THAT SELLS TICKETS IN THE SECONDARY TICKET MARKET. TICKETSNOW.COM. JUST THREE WEEKS AGO, THE CONSUMERS ATTEMPTING TO PURCHASE BRUCE SPRINGSTEEN TICKETS THROUGH TICKETMASTER'S WEBSITE WERE DIVERTED TO TICKETSNOW'S WEBSITE. THERE, THE TICKETS WERE PRICED TWO TO THREE TIMES HIGHER THAN FACE VALUE AS WELL AS A HEFTY PRICED SERVICE FEE. TICKETMASTER BLAMES TECHNICAL GLITCHES FOR THIS UNFORTUNATE INCIDENT BUT THE INCIDENT DOES RAISE A SERIOUS QUESTION. WILL THE COMBINED COMPANY BE TEMPTED TO DIVERT TICKETS TO THE RESALE MARKET AT INFLATED PRICES BECAUSE THERE ARE NOW NO COMPETITORS TO KEEP THIS BEHAVIOR IN CHECK. THIS DEAL RAISES MANY SERIOUS QUESTIONS REGARDING THE FUTURE OF COMPETITION IN THE CONCERT BUSINESS. THE BURDEN WILL BE ON TICKETMASTER AND LIVE NATION TO DEMONSTRATE THAT CONSUMERS WILL IN FACT BE BETTER OFF. THOSE OF US WHO ARE CONCERNED WITH MAINTAINING DIVERSITY AND COMPETITION IN THE CONCERT BUSINESS SHOULD INSIST THAT THESE ISSUES BE CLOSELY EXAMINED BEFORE THIS DEAL IS ALLOWED TO PROCEED. AT THIS TIME, I WOULD LIKE TO TURN TO SENATOR SCHUMER, WHO HAS, IF IT IS POSSIBLE, A PRESTATEMENT. |
| 00:05:32 | Schumer, Charles E. | THANK YOU, MR. CHAIRMAN. I WILL TRY MY BEST. HARD THOUGH IT MAY BE. I WANT TO SERIOUSLY THANK YOU VERY MUCH FOR HOLDING THIS HEARING AND FOR JUST RUNNING THE ANTITRUST COMMITTEE IN SUCH A PROFESSIONAL, BUSINESSLIKE AND EFFECTIVE WAY. I'M GLAD YOU'RE STILL THEccncwx MR. CHAIRMAN, I MADE NO SECRET OF MY OPPOSITION TO THIS MERGER. I HAVE TOLD THAT TO THE CEOs OF BOTH COMPANIES IN MY OFFICE THIS MORNING. FIRST, I WANT TO SAY A WORD, THOUGH, ABOUT TICKETMASTER'S RECENT ACTIONS IN THE SALE OF TICKETS FOR BRUCE SPRINGSTEEN'S CONCERT TOUR. WE ALL KNOW THE BASIC STORY, MANY FANS WERE TOLD THE SHOWS WERE SOLD OUT. WHEN IN FACT, THEY WERE NOT. THE FANS WERE THEN PROVIDED LINKS TO TICKETMASTER'S OWN TICKET RESELLING SITE, TICKETSNOW.COM, WHERE THEY WERE CHARGED MANY TIMES THE FACE VALUE OF THE TICKETS. TALK ABOUT A WAY TO HAVE YOUR CAKE AND EAT IT, TOO. BRUCE SPRINGSTEEN SAYS TICKETMASTER ABUSED HIS FANS AND I AGREE WITH THE BOSS. TICKETMASTER IS THE ONLY MAJOR PRIMARY TICKET SELLER IN AMERICA WITH A WHOLLY OWNED SECONDARY SELLER, AND IT TOOK ADVANTAGE OF THAT CORPORATE STRUCTURE, WHICH ALLOWED TICKETMASTER TO CHARGE MUCH HIGHER FEES WITH CUSTOMERS PAYING HUNDREDS OR THOUSANDS OF DOLLARS FOR TICKETS IN THE SECONDARY MARKET. THEY'VE SAID THAT THIS CLEVER ARRANGEMENT WAS CAUSED IN PART BY A MALFUNCTION. GIVEN WHAT TICKETMASTER STOOD TO GAIN BY DIRECTING CONSUMERS TO ITS OWN RESELL SITE, THE EPISODE SEEMS TO BE MUCH MORE ABOUT MONEY MAKING THAN ABOUT MALFUNCTION. NOW, IN FAIRNESS, TICKETMASTER HAS APOLOGIZED FOR THE INCIDENT, BUT TO MY KNOWLEDGE, IT STILL HASN'T PROVIDED ANY DETAILS AS TO HOW THIS HAPPENED, TO SIMPLY SAY IT WAS A MALFUNCTION IS NOT GOOD ENOUGH. WE NEED ANSWERS, NOT APOLOGIES, AND I HOPE THIS HEARING, WE CAN HEAR SPECIFIC ANSWERS AS TO WHAT HAPPENED HERE AND WHY IT WON'T HAPPEN AGAIN. BUT AS FAR AS I'M CONCERNED, TICKETMASTER NEVER SHOULD HAVE GOTTEN INTO THE SECONDARY TICKETING BUSINESS BY BUYING TICKETS NOW TO BEGIN WITH. AGAIN, IN FAIRNESS, THAT WAS BEFORE THE NEW MANAGEMENT CAME IN. AND I THINK IT NEEDS TO GET OUT OF THAT BUSINESS, ESPECIALLY IN LIGHT OF THIS MERGER PROPOSAL. SO I'M GOING TO ASK YOU THAT QUESTION AND I HOPE YOU WILL TELL ME THAT YOU AGREE THAT YOU, TICKETMASTER, NEEDS TO SELL TICKETSNOW AND MAKE THEM INDEPENDENT OF YOU IN EVERY WAY. NOW, ABOUT THE MERGER. AS THE CHAIRMAN OUTLINED, WE CAN'T FORGET WHAT THIS MERGER WILL MEAN TO THE MUSIC INDUSTRY. CONSIDER THAT TICKETMASTER IN 2007 SOLD 141 MILLION TICKETS WORTH $8.3 BILLION FOR ITS CLIENTS. IT'S ESTIMATED TICKETMASTER HAS 80% OF THE CONCERT TICKET MARKET IN AMERICA CORNERED BUT MOST TROUBLING OF ALL IS WHAT TICKETMASTER HAS CHOSEN TO DO TO PROTECT ITS MARKET DOMINANCE. ONCE LIVE NATION STARTED A RIVAL TICKET SELLING SERVICE THAT THREATENED TO TAKE AWAY 15% OF TICKETMASTER'S BUSINESS, TICKETMASTER CHOSE NOT TO COMPETE BUT TO GOBBLE IT UP. THIS IS NOT THE AMERICAN DREAM AS THE COMPANY'S WITNESSES MIGHT HAVE YOU BELIEVE. IT SEEMS TO BE MONOPOLISTIC BEHAVIOR, PLAIN AND SIMPLE. THE ONE COMPETITOR WHO HAD A CHANCE TO COMPETE IS TAKEN OUT OF THE PICTURE. LIVE NATION ALSO OF COURSE HAS A LOCK ON ITS SIDE OF THE MARKET AS CHAIRMAN KOHL OUTLINED. IT'S THE LARGEST CONCERT PROMOTER IN THE WORLD, MORE THAN DOUBLING ITS NEXT COMPETITOR IN NUMBER OF TICKETS SOLD WORLDWIDE. IT OWNS OVER 100 VENUES IN THE UNITED STATES, TO BOOT. SO THINK OF WHAT THIS MERGER WOULD MEAN IF THEY PUT BOTH THESE COMPANIES UNDER THE SAME ROOF. IT WOULD COMBINE THE LARGEST TICKET SELLER IN THE WORLD WITH THE LARGEST EVENT PROMOTER IN THE WORLD. THE RESULT WOULD BE A BEHEMOTH THAT WOULD OPERATE THE MAJORITY OF CONCERT VENUES IN AMERICA, SELL THE TICKETS TO THE EVENTS AT THOSE VENUES AND MANAGE MANY OF THE VERY TOP ARTISTS WHO PERFORM THERE. IN SHORT, THE NEW MERGED COMPANY WOULD HAVE A HAND IN EVERY STEP OF THE PROCESS OF GOING TO SEE A CONCERT. NOW, WHEN I TALK TO THE OWNERS, THEY SAID THE BUSINESS IS BAD, GIVEN THE ECONOMIC CLIMATE THESE DAYS, AND THE MERGER WILL MAKE THINGS MORE EFFICIENT. I SAY TWO THINGS. FIRST, TAKING AWAY COMPETITION IN THE LONG RUN ALMOST NEVER MAKES THINGS MORE EFFICIENT. THAT'S WHY WE HAVE THE SUBCOMMITTEE. AND SECOND, I WILL NOT FORGET IN THE DAYS OF THE CLINTON ADMINISTRATION WHEN OIL PRICES WERE VERY LOW THAT AT THE EXXONMOBIL MERGER WAS ALLOWED, AND IT WAS SAID WELL, PRICES ARE SO LOW, THEY CAN'T GET BY UNLESS THEY MERGE. LOOK WHAT HAPPENED. MUCH LESS COMPETITION AND ONCE THE MARKET CHANGED, THEY HAD THE CONSUMER BY THE NECK AND I WORRY ABOUT THE SAME THING WITH THIS MERGER. WE CANNOT LOOK AT JUST THE MOMENT AND TAKE A SNAPSHOT. WE HAVE TO LOOK AT THE LONG TERM EFFECTS AND GOOD OLD-FASHIONED AMERICAN COMPETITION IS THE BEST WAY TO PROTECT CONSUMERS. THAT COMPETITION WOULD BE SNUFFED OUT THE WAY I LOOK AT IT, SO I LOOK FORWARD TO SEEING HOW THE COMPANIES CAN EXPLAIN HOW THE PROPOSED MERGER COULD POSSIBLY BE GOOD FOR CONSUMERS AND THANK YOU FOR MY HOPEFULLY NOT THAT LONG STATEMENT. CAN'T SAY IT'S SHORT. |
| 00:11:17 | Kohl, Herbert H. | NOT THAT LONG BUT VERY GOOD. |
| 00:11:19 | Schumer, Charles E. | THANK YOU, MR. CHAIRMAN. |
| 00:11:20 | Kohl, Herbert H. | THANK YOU SO MUCH. NOW I WOULD LIKE TO INTRODUCE OUR DISTINGUISHED PANEL OF WITNESSES. OUR FIRST WITNESS, WHO WILL TESTIFY TODAY, IS MICHAEL RAPINO, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF LIVE NATION. BEFORE HIS POSITION WITH LIVE NATION, HE WAS CEO AND PRESIDENT OF GLOBAL MUSIC FOR THE CLEAR CHANNEL MUSIC GROUP. HE BEGAN HIS CAREER AS A CONCERT PROMOTER AND AN ENTERTAINMENT MARKETER. NEXT, WE WILL BE HEARING FROM IRVING AZOFF. HE IS THE CEO FOR TICKETMASTER ENTERTAINMENT. HE JOINED TICKETMASTER WHEN IT ACQUIRED FRONT LINE MANAGEMENT, THE ARTIST MANAGEMENT COMPANY THAT HE FOUNDED. HE CONTINUES TO SERVE AS CHAIRMAN AND CEO FOR THE FRONT LINE MANAGEMENT AND SERVES AS THE PERSONAL MANAGER FOR A NUMBER OF ARTISTS. OUR NEXT WITNESS WILL BE JERRY MICHAELSON. HE IS THE CHAIRMAN AND EXECUTIVE VICE PRESIDENT OF JAM PRODUCTIONS, WHICH HE CO-FOUNDED IN 1971. UNDER MR. MICHAELSON'S LEADERSHIP, JAM PRODUCTIONS HAS BECOME ONE OF THE COUNTRY'S LARGEST INDEPENDENT PRODUCERS OF LIVE ENTERTAINMENT. OUR NEXT WITNESS WILL BE SETH HER HERWITZ, CO-OWNER OF A CONCERT PROMOTION COMPANY AND THE 930 CLUB, A LOCAL MUSIC VENUE. HE HAS LED IMP PRODUCTIONS TO PRODUCE ALMOST 10,000 EVENTS OVER THE PAST 30 YEARS. OUR FINAL WITNESS WILL BE DAVID BALTO, SENIOR FELLOW AT THE CENTER OF AMERICAN PROGRESS FOCUSING ON COMPETITION POLICY, INTELLECTUAL PROPERTY LAW AND HEALTH CARE. HIS TESTIMONY TODAY IS ALSO BEING SUBMITTED ON BEHALF OF THE CONSUMER FEDERATION OF AMERICA. HE HAS OVER 20 YEARS OF EXPERIENCE AS AN ANTITRUST ATTORNEY IN THE ANTITRUST DIVISION OF THE DEPARTMENT OF JUSTICE, THE FEDERAL TRADE COMMISSION AS WELL AS THE PRIVATE SECTOR. WE THANK YOU ALL FOR BEING HERE TODAY AND BEFORE I SWEAR YOU IN, PRIOR TO YOUR TESTIMONY, I WOULD LIKE TO CALL ON THE RANKING MEMBER OF THIS COMMITTEE, SENATOR HATCH. |
| 00:13:24 | Hatch, Orrin | THANK YOU, MR. CHAIRMAN. I'M VERY HAPPY THAT WE WILL BE WORKING TOGETHER AGAIN ON THE ANTITRUST SUBCOMMITTEE DURING THE 111th CONGRESS. I HAVE ENJOYED WORKING WITH YOU. I'M ALSO GRATEFUL YOU HAVE EXPRESSED A WILLINGNESS TO WORK WITH ME IN WHAT I BELIEVE IS THE ANTITRUST ISSUE OF OUR TIME, OF COURSE, I'M REFERRING TO THE GROSS INJUSTICES THAT HAVE ARISEN FROM THE SO-CALLED BULL CHAMPIONSHIP SERIES. I THOUGHT YOU WOULD REALLY ENJOY GETTING INTO THAT WITH ME. I KNOW THAT WORKING TOGETHER IN A BIPARTISAN MANNER, WE WILL COLLEGIATE FOOTBALL TO AN HONORABLE STATE. ALAS, THAT IS A HEARING FOR ANOTHER DAY. TODAY'S HEARING IS VITAL TO ONE OF OUR MOST CREATIVE INDUSTRIES, THE LIVE MUSIC CONCERT BUSINESS. WITH THE RISE OF ILLEGALLY PIRATED BUSINESS, MORE AND MORE ARTISTS ARE TURNING TO LIVE CONCERT EVENTS AS THEIR PRIMARY SOURCE OF REVENUE. HOWEVER, LIVE CONCERT EVENTS IN LARGE VENUES ARE INCREASINGLY BEING CONTROLLED BY A SMALL LIST OF COMPANIES. TODAY, TWO OF THOSE COMPANIES ARE SEEKING TO MERGE IN A TRANSACTION THAT HAS BOTH HORIZONTAL AND VERTICAL IMPLICATIONS. FROM A HORIZONTAL PERSPECTIVE, BOTH LIVE NATION AND TICKETMASTER SELL TICKETS TO LIVE CONCERT EVENTS AT LARGE VENUES. THEREFORE, UNDERSTANDING THEIR RESPECTIVE MARKET SHARES AND THOSE OF THEIR COMPETITORS WILL BE OF GREAT IMPORT DURING THIS HEARING. HOWEVER, MORE IMPORTANT WOULD BE THE VERTICAL ASPECTS OF THIS TRANSACTION. TRUE, HISTORY IS OFTEN RELEGATED VERTICAL MERGER ENFORCEMENT TO SECONDARY STATUS BUT AS SULLIVAN AND GRIMES IN THEIR BOOK POINT OUT, VERTICAL MERGERS ARE SUBJECT TO THE SAME STATUTORY ENFORCEMENT AS ANY MERGER. WITH ANY SUCH PROPOSED MERGER, IT SHOULD BE EXAMINED CLOSELY. SPECIFICALLY LIVE NATION IS WIDELY KNOWN AS THE CORPORATION WITH OWNERSHIP OR EXCLUSIVE RIGHTS TO PLACE MUSIC ACTS AT MANY OF OUR NATION'S LARGEST VENUES. BUT THIS IS ONLY A PORTION OF LIVE NATION'S BUSINESS MODEL. ACCORDING TO STANDARD AND POOR'S, LIVE NATION IS ALSO IMPLEMENTING SO-CALLED 360 DEGREE DEALS. UNDER A 360 DEGREE DEAL, AN ARTIST IS PAID A CERTAIN AMOUNT FOR A CERTAIN PERIOD OF TIME. IN CONSIDERATION, LIVE NATION CONTROLS THE ARTIST'S MUSIC RIGHTS, TOURS AND MERCHANDISE. THEREFORE, LIVE NATION IS MORE THAN JUST A LEASING AGENT FOR VENUES. LIVE NATION OFFERS A COMPREHENSIVE PACKAGE OF SERVICES THAT INCLUDES THE MANAGEMENT OF TALENT. LIVE NATION'S PARTNERS, TICKETMASTER, IS RECOGNIZED AS THE LEADER IN SALES OF LIVE EVENT TICKETS. ACCORDING TO THE COMPANY LAST YEAR, IT SOLD 141 MILLION TICKETS VALUED AT APPROXIMATELY $8.3 BILLION. IN ADDITION, 77 OUT OF 100 OF THE NATION'S LARGEST VENUES HAVE EXCLUSIVE RELATIONSHIPS WITH TICKETMASTER. YET THE SALE OF TICKETS IS NOT THE ONLY ASPECT OF TICKETMASTER'S BUSINESS. RECENTLY, TICKETMASTER PURCHASED A LEADING ARTIST MANAGEMENT COMPANY, FRONT LINE MANAGEMENT GROUP. THEREFORE, ONE COULD ARGUE THAT THE COMPREHENSIVE PACKAGE OF SERVICES OFFERED BY LIVE NATION AND TICKETMASTER WILL GROW TO AN ALL IN ONE PACKAGE IF THE MERGERS ARE CONFIRMED. THE QUESTION THEN ARISES IF THE PROPOSED TRANSACTION WILL RUN AFOUL OF THE DEPARTMENT OF JUSTICE'S ENFORCEMENT POLICY, AS ARTICULATED IN THE 1984 GUIDELINES. MR. CHAIRMAN, I LOOK FORWARD TO EXPLORING THESE ISSUES IN GREATER D%Pahf#@ R$RgRR' INCLUDING PRINCE AND BOB DYLAN. MINNESOTANS LIKE THEIR MUSIC AND PARTICULARLY LIKE TO LISTEN TO LIVE MUSIC, WHETHER AT THE XCEL CENTER AT ST. PAUL OR SMALL VENUES LIKE FIRST AVENUE WHICH WAS MADE FAMOUS IN THE MOVIE "PURPLE RAIN." YOU SHOULD ALSO KNOW MY HOUSE, I LIVE ON SIXTH STREET WHICH IS TWO BLOCKS FROM FOURTH ET, AS IN POSITIVELY FOURTH STREET. SO I CARE VERY MUCH ABOUT THIS ISSUE. I'M PARTICULARLY INTERESTED IN THE PROPOSED MERGER OF TICKETMASTER AND LIVE NATION. LIKE MANY CONSUMERS, I WOULD LIKE TO KNOW WHETHER THIS MERGER WILL RAISE TICKET PRICES AND WHETHER THE PROPOSED MERGER WILL MAKE IT HARDER FOR INDEPENDENT CONCERT AGENTS TO MARKET AND PROMOTE LESSER KNOWN ARTISTS AT SMALLER VENUES. I WOULD ALSO LIKE TO HEAR ABOUT THE PROBLEMS ASSOCIATED WITH TICKET RESELLERS WHICH WERE BROUGHT TO MY ATTENTION ACTUALLY IN 2007, WHEN WITHIN MINUTES OF GOING ON SALE AT TICKETMASTER.COM, TICKET BROKERS SWOOPED UP HUNDREDS OF TICKETS FOR THE HANNAH MONTANA CONCERT AT THE TARGET CENTER IN MINNEAPOLIS. IN ORDER TO PURCHASE THESE HANNAH MONTANA TICKETS, FANS OR MOST LIKELY THE PARENTS OF HANNAH MONTANA FANS, YOU CAN COUNT ME AS ONE OF THOSE PARENTS, WERE FORCED TO GO ON THE TICKET RESELLER SITES WHERE THEY WOULD HAVE TO PAY BROKERS ANYWHERE BETWEEN $350 TO $2,000 FOR A $63 CONCERT TICKET FOR HANNAH MONTANA.E OUTCRY EVEN LED TO THE PASSAGE OF A STATE LAW IN MY HOME STATE CALLED THE HANNAH MONTANA LAW, WHICH BANS THE USE OF AUTOMATED SOFTWARE DESIGNED TO QUICKLY PURCHASE NUMEROUS TICKETS IN A MATTER OF SECONDS AND ACTUALLY ATTACHES CRIMINAL PENALTIES TO ANYONE THAT DOES THIS. BUT THE PROBLEMS AS I CAN SEE WITH TICKET RESELLERS CONTINUES. THE RECENT ISSUE WITH THE SPRINGSTEEN TICKETS IN NEW YORK AND NEW JERSEY FOCUSED ATTENTION ONCE AGAIN ON THE SALE OF TICKETS ON THESE RESELLER SITES FOR HUNDREDS, IF NOT THOUSANDS, OF DOLLARS MORE THAN THEY WERE ON TICKETMASTER.COM. SO I WOULD LIKE TO HEAR FROM OUR WITNESSES WHETHER THE PROPOSED MERGER WILL MAKE IT MORE OR LESS LIKELY THAT THIS AND SIMILAR ANTICONSUMER PRACTICES WILL GO UNCHECKED AND UNADDRESSED TO THE DETRIMENT OF CONSUMERS, TO CONCERT GOERS AND OF COURSE, TO THOSE HANNAH MONTANA PARENTS LIKE MYSELF. THANK YOU VERY MUCH. |
| 00:19:55 | Kohl, Herbert H. | THANK YOU, SENATOR. GENTLEMEN, WOULD YOU STAND AND RAISE YOUR HAND TO BE SWORN IN. DO YOU AFFIRM NA THE TESTIMONY YOU'RE ABOUT TO GIVE TODAY WILL BE THE TRUTH, THE WHOLE TRUTH AND NOTHING BUT THE TRUTH, SO HELP YOU GOD? THANK YOU. MR. RAPINO, WE WILL HEAR FROM YOU FIRST AND WE HOPE YOU WILL HOLD YOUR INITIAL STATEMENTS TO FIVE MINUTES. |
| 00:20:20 | >> | THANK YOU FOR THE OPPORTUNITY TO SPEAK TODAY. I'M GLAD WE HAVE A CHANCE TO EXPLAIN SOME OF THE RATIONALE BEHIND THIS MERGER. I GOT IN THIS BUSINESS BECAUSE I LOVE MUSIC AND LOVE WORKING WITH ARTISTS. WE DIDN'T HAVE CONCERTS IN MY SMALL TOWN, BUT I TOOK A SIX HOUR BUS TRIP TO MINNEAPOLIS TO SEE PRINCE, AS ONE OF MY FIRST CONCERTS. I WAS HOOKED AND I KNEW I WANTED TO WORK IN THE BUSINESS. I STARTED BY WORKING WITH BANDS IN COLLEGE AND WORKED MY WAY UP TO CEO OF LIVE NATION IN 2005. LIVE NATION IS A DECENTRALIZED BUSINESS, OFFERS LIVE MUSIC THROUGH A COLLECTION OF LOCAL ENTREPRENEURS. WE EMPLOY OVER 17,000 EMPLOYEES ACROSS THE COUNTRY, INCLUDING MORE THAN 100 HERE IN WASHINGTON. THE CONCERTS WE BRING TO CITIES AND TOWNS HELP SUSTAIN COUNTLESS JOBS FROM THE STAGE HANDS TO SECURITY GUARDS TO NEARBY HOTELS. AN ECONOMIC IMPACT STUDY OF A TWO-DAY LIVE NATION SHOW AT APPLE VALLEY IN TROY FOUND THAT A MULTIPLIER EFFECT, A SINGLE WILL WEEKEND GENERATED OVER $5 MILLION $5 MILLION FOR THE LOCAL ECONOMY. OUR BIGGEST STARS LIKE MADONNA, YOU 2 AND THE JONAS BROTHERS GET MOST OF THE ATTENTION. LIVE NATION PROBABLY DOES MORE THAN ANYONE TO PROMOTE YOUNG ARTISTS. WE PUT ON OVER 7,000 CLUB SHOWS LAST YEAR. WE ARE PROBABLY THE LARGEST ARTIST DEVELOPMENT COMPANY IN THE BUSINESS RIGHT NOW. WE WILL CONTINUE TO WORK WITH THESE INDEPENDENT VENUES, PROMOTERS IN SEARCH OF THE NEXT BRUCE STRING STEEN. WE'VE GROWN THE COMPANY THE OLD FASHIONED WAY BY STICKING TO OUR BASICS. OUR EMPLOYEES ARE HARD WORKING AND COMMITTED. WE AREN'T OVERLEVERAGED. WE SPENT THREE YEARS REBUILDING THIS COMPANY FROM THE CLEAR CHANNEL ENTERTAINMENT DAYS. WE'RE FOCUSED ON OUR CORE BUSINESS. WE MANAGE OUR BALANCE SHEET CAREFULLY AND GROWN OUR BUSINESS THREE YEARS IN A ROW THROUGH THE HARD OLD VALUES. UNFORTUNATELY, THE ECONOMIC TIMES HAVE TAKEN ITS TOLL. OUR REAL ESTATE HOLDINGS ARE GUTTED AND OUR HARD WORK IS NOT PRODUCING THE REWARDS IT SHOULD. I HAVE TWO CHOICES, I CAN HOPE THE ECONOMY GETS BETTER OR SICK SEEK A MORE PROACTIVE APPROACH TO PROTECT OUR EMPLOYEES, REWARD OUR SHAREHOLDERS AND BET SERVICE ARTISTS AND FANS. THAT IS THE MOTIVATION BEHIND THE MERGER. THE MUSIC INDUSTRY THAT EXISTED WHEN I ENTERED THE BUSINESS IS BROKEN. AND THE OLD MODEL, THE RECORD LABEL SUPPORT THE ARTISTS, RECORD SALES WERE THE HUB AND EVERYTHING ELSE FROM CONCERTS AND MERCHANDISING FLOWED FROM THAT. TOWER RECORDS MTV, LOCAL RADIO STATIONS WERE THE INDUSTRY STORE FRONTS. THAT MODEL IS OBSOLETE AS AN EIGHT TRACK TAPE TODAY. MTV DOESN'T PLAY VIDEOS, AND RADIO STATIONS ARE ON A DOWNWARD SPIRAL. SALES HAVE FALLEN BY HALF SINCE 2000. ARTISTS ARE SUBJECT TO RAMPANT PIRACY THAT STEALS CREATIVITY. 90% OF THE SONGS DOWNLOAD REASONABLE DOUBT DONE SO ILLEGALLY. 40% OF CONCERT SEATS GUN SOLD. COMPUTER DRIVEN BULK PURCHASES SUCK TICKETS OUT OF THE MARKET AND DENY FANS A CHANCE TO SEE THEIR FAVORITE PERFORMERS. FANS PAY MORE, BUT THE PROMOTERS IN THE VENUES DON'T GET A DIME AND FAN WHO'S NEVER GET A CHANCE TO BUY A TICKET AT FACE VALUE ARE RIGHTFULLY ANGRY. THE SCALPERS OF TODAY ARE THE PIRACY OF YESTERDAY. OUR BUSINESS IS BLEEDING AND THE REAL VICTIM IS THE ARTIST. THE ARTISTS MAKES MUSIC AND OTHERS STEAL IT. CLINGING TO THE OLD WAYS AND FIGHTING CHANGE IS NOT THE ANSWER. TOGETHER WITH ARTISTS LOCAL PROMOTERS, VENUE AND MY NEW PARTNER IRVING, WE WANT TO OFFER SOLUTIONS. I'M NOT CLAIMING WE HAVE ALL THE ANSWERS BUT WE CAN BE ON THE LEADING EDGE OF CHANGE IN OUR INDUSTRY. WE HAVE AN OPPORTUNITY TO CREATE A TRULY MODERN BUSINESS BY PUTTING THESE COMPANIES TOGETHER. SOMETHING THAT WE CAN'T DO ALONE AND CERTAINLY NOT QUICKLY. FAR FROM HARMING PROMOTERS OR ARTISTS, THIS DEAL WILL BENEFIT THEM AS WE SPUR COMPETITION AND INNOVATION, A SYSTEM THAT EMPOWERS ARTISTS BENEFITS EVERYONE BECAUSE THAT'S WHERE THE VALUE CHANGE STARTS. OUR BUSINESS MODEL RISES OR FALLS ON THE ABILITY TO SERVICE AN ARTIST. IF OTHERS CAN DO IT BETTER, THE ARTIST WILL GO ELSEWHERE. I'M CONFIDENT THIS PLAN WILL WORK BUT AS AN EXPERIMENT. IT'S A NEW APPROACH FOR AN AILING AMERICAN INDUSTRY. WE WANT A CHANCE TO TRY IT, AND I KNOW THIS. IF WE DON'T MAKE SIGNIFICANT CHANGES TO THE BUSINESS MODEL AND DON'T BUILD NEW STRUCTURES, WE MAY BE BACK FOR ANOTHER HEARING ON THE DEATH OF THE AMERICAN MUSIC INDUSTRY. THANK YOU FOR ALLOWING ME TO VOICE THESE CONCERNS. |
| 00:24:49 | Kohl, Herbert H. | THANK YOU, MR. RAPINO. MR. AZOFF? |
| 00:24:52 | >> | FIRST I'D LIKE TO THANK CHAIRMAN COAL AND THE SUBCOMMITTEE FOR THE OPPORTUNITY TO SPEAK ABOUT THE MERGER. BOTH COMPANIES ARE EXCITED ABOUT OUR PLANS FOR LIVE NATION ENTERTAINMENT AND BELIEVE THE COMBINATION OF OUR TWO COMPANIES WILL BENEFIT ARTISTS, FANS, THEATER GOERS, SPORTS TEAMS MUSEUMS AND ALL OF THE OTHER FACILITIES, PERFORMERS AND SPECTATORS WHO USE OUR SERVICES. AS A KID GROWING UP IN DANVILLE, ILLINOIS, MY FIRST CONCERT WAS THE BEATLES IN COMISKEY PARK. I WAS BITTEN BY THE MUSIC BUG BUT SOON REALIZED I'M NO MUSICIAN. I WAS REJECTED BY THE SCHOOL CHOIR AND THE ONLY BAD GRADES I GOT IN SCHOOL WERE WHEN I TRIED TO MASTER THE SAXOPHONE. MY INSTRUMENT OF CHOICE IS THE TELEPHONE. I'VE SPENT 43 YEARS IN THE MUSIC BUSINESS AND FOCUSED ON ONE THING, SERVING ARTISTS AND FANS. I PUT MYSELF THROUGH COLLEGE AT THE UNIVERSITY OF ILLINOIS BOOKING BAR BANDS. TOGETHER WITH MY LATE FRIEND DAN FOGELBURG AND THE ROCK BAND AIRIOL SPEED WAGON, WE HEADED WEST TO PURSUE THE AMERICAN DREAM. WHEN I STARTED MANAGING THE EAGLES, THEY WERE PLAYING VENUES NOT MUCH LARGER THAN THIS ROOM. I'M PROUD TO SAY THEY ARE STILL MY CLIENTS. I CAME TO TICKETMASTER FOUR MONTHS AGO WHEN IT ACQUIRED A MAJORITY TRT IN FRONTLINE AND BECAME CEO OF TICKETMASTER. TICKETMASTER HAS DEDICATE IT HAD SELF FOR 30 YEARS TO REACHING FANS OF LIVE ENTERTAINMENT. MY JOB NOW IS TO USE THE RESOURCES OF BOTH COMPANIES TO ENHANCE THE ARTIST AND FAN EXPERIENCE. WE CONSTANTLY STRIVE TO IMPROVE ONLINE TECHNOLOGY BUT CONTINUE TO SERVE FANS WHO DO NOT HAVE INTERNET ACCESS OR CREDIT CARDS. OUT LETS STILL ARE CROWDED ON WEEKEND MORNINGS WHEN TICKETS GO ON SAY FOR BANDS THAT ATTRACT A TEENAGE AUDIENCE. WE EMPLOY 6700 PEOPLE WHO HAVE WORKED HARD TO BRING US SUCCESS WE'VE SEEN AS A COMPANY. ALL OF THEM HAVE A STAKE IN THE MERGER. AS HARD AS WE TRY TROL SERVE CLIENTS, TECHNOLOGY IS NOT PERFECT. FOR EXAMPLE, I FULLY UNDERSTAND THE FRUSTRATION AND ANGER CREATED BY THE PROBLEMS WE EXPERIENCED IN THE RECENT SALES FOR THREE BRUCE SPRINGSTEEN SHOWS. THE COMPUTER MALFUNCTION TEMPORARILY AFFECTED SALES ON OUR WEBSITE FOR THESE SHOWS ABMANY FANS WERE FRUSTRATED BY THE RAPID SELLOUT OF THE SHOWS COMBINED WITH BEING GIVEN THE OPPORTUNITY TO PURCHASE TICKETS ON THE RESALE MARKETPLACE TICKETS NOW.COM. I HAVE PERSONALLY APOLOGIZED TO MR. SPRING TEEN AND HIS FANS. I WAS EMBARRASSED BY THE INCIDENT AS THE STILL NEW CEO OF TICKETMASTER, I PLEDGE AND REITERATE NOW WE WILL NEVER LET SOMETHING LIKE THIS HAPPEN AGAIN. THE MERGER WILL LET US FULLY INTEGRATE OUR COMPLIMENTARY STRENGTHS AND ELIMINATE ABOUT $40 MILLION IN INEFFICIENCIES, MONEY THAT COULD BE INVESTED IN INNOVATION. IT IS DESIGNED TO ADDRESS THE OBVIOUS INEFFICIENCIES IN THE ENTERTAINMENT SUPPLY CHAIN, THE LARGE VOLUME OF UNSOLD TICKETS, SURCHARGES AND ESPECIALLY IS THE EXPLOSION OF THE RESALE MARKET. THE MESSAGE I WANT TO LEAVE YOU WITH IS THIS BUSINESS IS IN FAR WORSE SHAPE THAN PEOPLE REALIZED. THE FOUNDATION IS CRUMBLING. PIRACY IS THREATENING THEIR LIVELIHOOD. SECONDARY TICKETING IS DRIVING UP PRICES FOR FANS WITH ABSOLUTELY NO BENEFIT TO THE ARTIST. WE CANNOT CLING TO THE OLD WAYS. THERE IS NOTHING MORE ELECTRIFYING IN THE INDUSTRY THAN WATCHING A GIFTED ARTIST PERFORM IN A SOLDOUT HOUSE. THAT'S WHY I STILL GO TO WORK EVERY DAY. BUT THE LIVE PERFORMANCE IS ONLY PART OF THE STORY. IF WE CAN'T FIGURE OUT HOW TO ENSURE THEY REAP THE FINANCIAL REWARDS FOR THEIR CREATIVITY, THE STAGE WILL GO DARK FOR MANY WHO DESERVE A CAREER IN MUSIC. THANK YOU VERY MUCH. THANK YOU. MR. MICHAEL SEN. |
| 00:28:41 | >> | THANK YOU MEMBERS OF THE SENATE JUDICIARY SUBCOMMITTEE FOR ALLOWING ME TO APPEAR BEFORE YOU TO HEAR MY TESTIMONY ABOUT THE COMPETITIVE HARMS THAT WILL ARISE IF THE PROPOSED MERGER OF TICKETMASTER AND LIVE NATION IS ALLOWED TO GO THROUGH. I AM HERE TODAY SPEAKING ON BEHALF OF CONCERT FANS AS WELL AS MANY OTHER INTERESTED AND CONCERNED STAKEHOLDERS IN THE MUSIC INDUSTRY. ALSO HERE TODAY ARE TWO GIANTS IN OUR BUSINESS, BOTH MR. AZOFF REPRESENTING TICKETMASTER AND MR. RA PIN KNOW REPRESENTING LIVE NATION ARE ALREADY THE TWO MOST POWERFUL PEOPLE IN CONTEMPORARY MUSIC. THEIR COMPANIES ARE BOTH GOLIATHS SO THE UNIFICATION WILL CREATE A BUSINESS WITH EXTRAORDINARY MARKET POWER AND CLOUT UNLIKE ANY THAT I'VE EVER SEEN IN MY LIFETIME. THIS CAUSES ME TO HAVE SERIOUS CONCERNS ABOUT THE BUSINESS I WORK IN AND I LOVE. BECAUSE THIS NEW COMPANY HAS THE ABILITY TO CONTINUE TO STRENGTHEN THEIR HOLD ON THE ENTIRE MUSIC INDUSTRY EVEN FARTHER THAN WHAT CURRENTLY EXISTS TODAY. IF THIS MERGER IS ALLOWED TO PROCEED, THE COMBINED ENTITY WILL HAVE THE ABILITY TO SUPPRESS OR ELIMINATE COMPETITION IN MANY SEGMENTS OF THE MUSIC INDUSTRY. INCLUDING RIVAL CONCERT PROMOTERS, PRIMARY AND SECONDARY TICKETING COMPANIES, ARTIST MANAGEMENT FIRMS, TALENT AGENCIES, VENUE MANAGEMENT COMPANIES, RECORD COMPANIES, ARTIST MERCHANDISE IT, MUSIC APPAREL AND LICENSING COMPANIES AND SPONSORSHIP COMPANIES. IT IS MY BELIEF THIS MERGER IS VERTICAL INTEGRATION ON STEROIDS. THE AMALGAMATION OF THESE TWO COMPANIES INTO ONE SHOULD MAKE THEM THE POSTER CHILD ILLUSTRATING WHY THIS COUNTRY HAS AND NEEDS ANTI-TRUST LAWS. THE SIZE AND SCOPE OF THIS NEW COMPANY WILL BE UNMATCHED AND POSE A FORMIDABLE CHALLENGE TO ANYONE TRYING TO COMPETE IN THE MUSIC BUSINESS. LIVE NATION IS THE LARGEST PRODUCER OF LIVE CONCERTS AND CONTROL THE SUMMER SEASON OF OUTDOOR CONCERTS. THEY OWN, AS YOU'VE SAID, MANY NUMBERS, HUNDREDS OF VENUES. THEY PURCHASE A MAJORITY OF THE NATIONAL INDOOR ARENA TOURS. THEY PAY SOME PERFORMERS OVER 100% OF THE GROSS TICKET SALES. LIVE NATION OWNS THE RECORDING TO MADONNA AND JAY-Z AND OWNS THE TOURING RIGHTS TO NICKELBACK, SHAKIRA AND MANY OTHERS. TICKETMASTER REPRESENTS NEARLY 200 PERFORMERS HANS MORE THAN 80 EXECUTIVE MANAGERS WORKING FOR THEM. LIVE NATION AND TICKETMASTER ALREADY VERY SUBSTANTIAL MARKET POWER IN THEIR RESPECTIVE BUSINESSES. BUT THIS MERGER COULD ENABLE THEM TO HAVE AN EVEN GREATER COMPETITIVE ADVANTAGE. LET ME BE VERY CLEAR. WHAT WE ARE DISCUSSING TODAY WILL IMPACT AND AFFECT EVERY PART OF THE ENTIRE@@@@@ BINED MARKET DOMINANCE TO MO NO APPLIES THE ENTIRE MUSIC INDUSTRY. THIS IS A VERY COMPELLING REASON TO VIGOROUSLY ENFORCE ANTI-TRUST LEGISLATION BUT MAKE NO MISTAKE ABOUT IT, THIS CAN BE VERY DIFFICULT BECAUSE OF THE ENORMOUS POLITICAL POWER THESE COMPANIES HAVE ATTAINED. JUST LOOK AT THEIR BOARD OF DIRECTORS TO UNDERSTAND THE RESOURCES THEY HAVE AVAILABLE TO SUPPORT AND LOBBY ON BEHALF THEIR EFFORTS TOE PROCEED WITH THIS PROPOSED ANTI-COMPETITIVE MERGER. THE ENFORCEMENT OF ANTI-TRUST LAWS OVER THE YEARS HAS BEEN UNEVEN DEPENDING ON THE PARTY IN POWER RATHER THAN PRESERVING THE INTERESTS OF OUR FREE MARKET ECONOMY TO SUSTAIN AND FOSTER COMPETITION IN ORDER TO PROTECT CONSUMERS AND COMPANIES FROM UNFAIR AND HARMFUL BUSINESS PRACTICES. I HOPE AND PRAY THAT THE ISSUES I HAVE RAISED TODAY WILL LEAD POLICY MAKERS AND OUR ENFORCEMENT AGENCIES TO CONCLUDE THAT A LARGE PART OF THE NATION'S LIVE ENTERTAINMENT INDUSTRY WOULD BE SERIOUSLY IF NOT IRREPARABLY IMPAIRED BY A LIVE NATION/TICKETMASTER MERGER. THANK YOU FOR YOUR TIME. |
| 00:33:27 | Kohl, Herbert H. | THANK YOU, MR. MICHAELSEN. MR. HERWITZ. |
| 00:33:29 | >> | HAVE I BEEN AN INDEPENDENT PROMOTER FOR THE LAST 30 YEARS BURKS THE FREE MARKET SYSTEM THAT ALLOWED ME AND OTHER PROMOTERS TO THRIVE AND OFFER THE MUSIC TO FANS OF THIS COUNTRY SO MANY DIFFERENT CHOICES FOR ENTERTAINMENT IS IN TROUBLE. WHILE I AM HONORED TO PARTICIPATE IN THE PROCEEDINGS BUT DEEPLY SORRY IT HAS TAKEN THIS LONG TO START FIGURING OUT WHAT'S GOING ON HERE. APPARENTLY IT TOOK SOMETHING AS SIMPLE AS NOT BEING ABLE TO GET SPRINGSTEEN TICKETS TO WAKE THE PUBLIC UP. I'M GOING TO START WITH A SHORT HISTORY OF HOW WE GOT HERE. THE MARKET USED TO BE HEALTHY. PROMOTERS HAD THEIR OWN AREAS AND COMPETED IN THE INDIVIDUAL MARKETS. THE PROMOTERS THAT DID THE BEST JOBS WITH THE BEST VENUES AND LOWEST TICKETS PRICES GOT THE SHOWS. THE CUSTOMERS THEN GOT CONCERTS IN THE BEST PLACES WITH THE LOWEST TICKET PRICES. BUT THEN A ROLL UP ARTIST NAMED ROBERT SILLER MAN SHOWED UP WITH A PLAN AND CONSOLIDATED AS MANY PROMOTERS AND VENUES AS COBUY UNDER ONE ROOF AND TOUTED HIS PLAN AS WHAT WAS BEST FOR THE CONSUMER AND THE INDUSTRY AND PAID WHATEVER IT TOOK TO SIGN UP THE ACTS FOR THE TOURS ALL TO GIVE THE APPEARANCE OF AN UNDENIABLE JUGGERNAUT AND SO WOULD THE CONGLOMERATION TO A COMPANY CALLED CLEAR CHANNEL UNDER THE VEIL OF GAINING CONTROL OF THE INDUSTRY THROUGH RADIO. THEY OWNED OVER 1,000 RADIO STATIONS. IT DIDN'T TAKE TOO LONG FOR FOLKS TO FIGURE OUT HOW ROT THEN NEW CLEAR CHANNEL SITUATION WAS. IN FACT, ONE OF MR. AZOF'S OWN CLIENTS DON HENLEY OF THE EAGLES TESTIFIED AGAINST IT. THERE WERE ACCUSATIONS OF BEING DENIED AIR PLAY. BILLS WERE PILING UP AND A LAWSUIT FROM AN INDEPENDENT PROMOTER IN DENVER THAT COULDN'T BUY AIRTIME OR GET PROMOTION FOR HIS INDEPENDENT CONCERTS. WITH ANTI-TRUST ALLEGATIONS MOUNTING, CLEAR CHANNEL SPUN OFF THE COMPANY AND CALLED IT LIVE NATION. SAME PRINCIPLES, SAME BUSINESS MODEL, BUT IT WASN'T DRAGGING CLEAR CHANNEL DOWNYMORE. BY NOW OVERPRICING HAD BECOME THE ORDER OF THE DAY. EVEN BIGGER OFFERS WERE PUT IN FRONT OF BANDS WITH THE TICKET PRICES THAT JUSTIFIED THEM AND THE MORE MONEY IT TOOK TO LOCK THESE TOURS UP, THE HIGHER THOSE TICKETS WENT. YES, OF COURSE, THE BANDS COULD HAVE SAID NO, JUST LIKE MY KIDS COULD SAY NO IF I PUT ICE CREAM IN FRONT OF THEM FOR DINNER. THE IDEA OF BLAMING THE ARTIST FOR TICKET PRICES IS OUT OF CONTEXT. THE OFFERS COME FROM PROMOTERS WHO ARE SUPPOSED TO KNOW THEIR MARKET. IN LIVE NATION'S CASE, THEY ARE THE SELF-PROCLAIMED LEADER OF THE CONCERT WORLD TO CLAIM TO KNOW WHAT'S BEST FOR EVERYONE. AT THIS POINT, THERE WERE ONLY A FEW COMPETITORS LEFT. THEY BOUT THE LAST REMAINING PIECE, HOUSE OF BLUES CONCERTS WHICH HAD CLUBS THAT PEOPLE PREFERRED TO PLAY. WITH EACH PURCHASE, THEY COULD SQUELCH COMPETITION AND CONFUSE THE INVESTOR ABOUT THE COMPANY'S LACK OF FINANCIAL HEALTH BY TOUTING THE ADDED GROSSES AS GROWTH AND HERALDING THE MOUNTING LOSSES AS INVESTMENTS AND THEIR NEXT STEP TO DOMINATE THE INDUSTRY IS TO CONTROL THE TICKETING. THEY ANNOUNCED THEIR OWN TICKET SYSTEM AND SPENT MILLIONS TO DEVELOP IT. IT LASTED ABOUT A MONTH. ONE MONTH. SO WHAT'S THEIR NEXT MOVE? SAME AS IT EVER WAS, BITE COMPETITIONS AND ASK EVERYONE TO TRUST THEM TO SERVE THE NEEDS OF THE PEOPLE. I SUPPOSE IT COULD HAPPEN. I'M SURE THERE WAS A DICTATOR SOMEWHERE IN HISTORY WHO HONORED THAT BLIND TRUST. I CAN'T THINK OF HIM NOW. SO THE QUESTION IS, HOW MUCH CONTROL IS TOO MUCH? WHEN DO THEY GET TOLD TO STOP? BUT WHY WOULD THEY WILL IF THEY DON'T HAVE TO? YOU CAN'T BLAME LIVE NATION AT THIS POINT ANY MORE THAN YOU CAN BLAME A SHARK FOR EATING PEOPLE. AS FAR AS USING ANOTHER SERVICE THERE ARE SIMPLY SITUATIONS WHERE IT WILL NOT BE POSSIBLE TO BRING IN A NEW TICKETING SYSTEM WITHOUT A STEEP, PAINFUL EXPENSIVE LEARNING CURVE THAT NO MAJOR ACT WILL BE WILLING TO ENDURE. LIVE NATION HAVE ADMITTED THIS AND THAT'S WHY WE'RE HERE TODAY. HAVE I NEVER HAD A PROBLEM WITH TICKETMASTER I COULDN'T WORK OUT. THAT'S BECAUSE WE HAVE COMPETITION HERE IN D.C. I USE TICKETS.COM FOR THE 9:30 CLUB AND TICKETMASTER FOR AMPHITHEATER AND ARENA SHOWS. IT IS IMPORTANT TO KEEP BOTH IN PLAY FOR COMPETITION'S SAKE. WHICH BRINGS ME TO SOME OTHER BEDS ABOUT TO BE MADE HERE. IF THIS MERGE SER ALLOWED TO HAPPEN, MY BIGGEST COMPETITOR WILL HAVE ACCESS TO ALL OF MY SALES RECORD IS, CUSTOMER INFORMATION, ON SAY DATES TORE SHOWS, MY TICKET COUNTS AND CAN CONTROL WHICH SHOWS ARE PROMOTED AND MUCH MORE PUTTING ALL INDEPENDENT PROMOTERS AT AN IRREPAIRABLE DISADVANTAGE. THIS WOULD BE LIKE PEPSI FORCING COKE TO USE ITS SERVICES AS DISTRIBUTOR. LET'S TALK ABOUT THE ACTS AGAIN. YES A COUPLE OF THEM WHO LANDED 70 MILLION PAYCHECKS FINALLY SOAK UP LAST NIGHT IN SUPPORT. BUT OUTSIDE OF THOSE FEW, WHY HAVE WE NOT HEARD FROM ANYONE BESIDES SPRINGSTEEN? BECAUSE THEY FEAR FOR THEIR CAREERS AND DON'T DARE CROSS THE LARGEST PROMOTER AND VENUE OPERATOR, ESPECIALLY IF THEY END UP BEING THE TICKETMASTER, AS WELL. SOMEONE SAID COMPETITION IS A WIN-WIN SITUATION BECAUSE IT'S GREAT FOR CONSUMERS. ANTI-TRUST HE CONTINUED HELPS TO KEEP THAT SYSTEM IN FORCE AND ADDRESSES THE TEMPTATION THAT SOME BUSINESSES WILL SOMETIMES EXPERIENCE TO MERGE WITH KEY RIVALS INSTEAD OF OUTPERFORMING THEM TO AGREE NOT TO COMPETE TOO HARD OR SABOTAGE RIVALS EFFORTS TO SERVE CONSUMERS INSTEAD OF REDOUBLING THEIR OWN. THAT SOMEONE WAS BARACK OBAMA. I HOPE HE BACKS IT UP AND I HOPE YOU DO. |
| 00:38:50 | Kohl, Herbert H. | THANKS MR. HURWITZ. |
| 00:38:52 | Balto, David A. | CHAIRMAN KOHL, I WANT TO THANK YOU ON BEHALF OF THE CONSUMERS OF THE UNITED STATES FOR THE IMPORTANT MISSION OF THIS COMMITTEE. LAST YEAR YOU HELD HEARINGS ON THE JBS NATIONAL MERGER WHICH INVOLVED BEEF PROCESSING AND THE HIGH MARK IBC MERGER. IN BOTH CASES YOU ADVISED ENFORCERS JUST TO SAY NO AND THAT'S WHAT THEY DID. IN THE PAST MONTH, BOTH OF THOSE MERGERS HAVE BEEN DROPPED. BECAUSE OF THAT, MILLIONS OF CONSUMERS OF HEALTH INSURANCE AND BEEF IN THE UNITED STATES WILL RECEIVE THE BENEFITS OF COMPETITION. I HAVE A SIMPLE MESSAGE FOR YOU TODAY. TICKETMASTER AS PRESERVED ITS MENOPLY POWER NOT BY CREATING BETTER PRODUCTS AND SERVICES BUT THROUGH EXECUTIONRY ARRANGEMENTS TO EXCLUDE RIVALS. NOW FACED WITH THE FIRST SIGNIFICANT THREAT IN A DECADE TO THAT MARKET DOMINANCE IT'S TRYING TO BUY THAT FIRM OUT OF THE MARKET. IT'S A CORNERSTONE PRINCIPLE OF THE ANTI-TRUST LAWS THAT A DOMINANT FIRM CANNOT USE ACQUISITIONS SUCH AS THIS ONE TO PRESERVE ITS MONOPOLY POWER. JUST AS DID YOU LAST YEAR, YOU SHOULD SAY NO AND THE ANTI-TRUST ENFORCERS SHOULD DO THE SAME. CONSUMERS PAY A LOT FOR TICKETMASTER TICKETMASTER'S DOMINANCE. IT HAS BEEN NOTED TICKETMASTER CHARGES CAN INCREASE PRICES BY 20% AND THAT DOESN'T INCLUDE THE ADDITIONAL $2.50 IF YOU WANT TO PRINT YOUR TICKETS AT HOME. I CAN PRINT LOTS OF TICKETS AT HOME. ONLY TICKETMASTER CHARGES ME FOR THAT HONOR. FROM A STRAIGHTFORWARD HORIZONTAL CONCERN THIS MERGER IS ANTI-COMPETITIVE. THEY MAY SAY THAT WILL LIVE NATION WON'T HAVE DONE MUCH. WELL, INDUSTRY ANALYSTS SAID THEY WOULD TAKE 22 MILLION TICKETS. I'VE BROUGHT TO YOU A PRINTOUT FROM A WEBSITE THAT MONITORS HITS ON TICKETING WEB SITES, AND IT SHOWS YOU THAT TICKET MASSER IS NOW THE LIVE NATION IS NOW THE NUMBER TWO WEBSITE IN TERMS OF TICKET HITS ON THE WEB. THAT SHOWS YOU THE TYPE OF INNOVATION AND COMPETITION THAT WOULD ARISE IF THIS MERGER IS PREVENTED IF LIVE NATION CONTINUES TO COMPETE AND BE IN THE MARKETPLACE. BUT THIS MERGER AS MR. HAD YOURWITZ AND MR. MICKELSON BOTH ARTICULATELY POINTED OUT RAISES SEVERE VERTICAL CONCERNS BY COMBINING THE DOMINANT PROMOTER WITH THE MONOPOLY TICKET FIRM. THERE ARE THREE ANTI-COMPETITIVE EFFECTS. FIRST, IT WILL DIMINISH COMPETITION IN PRIMARY TICKET DISTRIBUTION. THE ONLY REASON LIVE NATION CAN MOUNT THIS CHALLENGE IS BECAUSE IT HAS THIS CONTROL OVER CONCERT VENUES. NO ONE ELSE IS GOING TO HAVE THAT. THAT WILL PREVENT ANY ENTRY FOR THE FUTURE. IT WILL DIMINISH COMPETITION IN TERMS OF INDEPENDENT CONCERT PROMOTERS. THESE INDEPENDENT CONCERT PROMOTERS OFFER AN IMPORTANT SOURCE OF INNOVATION AND CREATIVITY IN THE MARKETPLACE THAT WILL BE LOST IF YOU ALLOW ITS RIVALS TO BASICALLY BE ABLE TO RANSACK THE FILES AND CONTROL THEIR FWILT COMPETE. IT WILL REDUCE COMPETITION AMONG TICKET RESELLERS. SUCH AS STUB HUB BY PUTTING TICKETMASTER IN A POSITION WHERE THEY CAN CONTROL ACCESS TO TICKET RESELLERS. THE FUNDAMENTAL QUESTION HERE IS ONE OF EFFICIENCY AND THE PARTIES THAT TELL YOU CONSUMERS WILL BE BETTER OFF, LET'S BE CLEAR ABOUT THIS. EFFICIENCY UNDER THE ANTI-TRUST LAW MEANS SOMETHING THAT MEANS TO LOWER PRICES OR BETTER PRODUCTS FOR CONSUMERS. DID THEIR ACQUISITION OF TICKETS NOW LEAD TO LOWER PRICES OR BETTER PRODUCTS FOR CONSUMERS? NO, IT LED TO MARKET MAN IPULATION AND PRIOR PRICES TO CONSUMERS. IT'S TICKETMASTER'S BURN TO DEMONSTRATE THOSE EFFICIENCIES THE OUTWEIGH THE COMPETITIVE HARM. THEY SAY IN THEIR TESTIMONY TODAY THAT THE EFFICIENCIES ARE $40 MILLION. GO BACK, LOOK AT PAST MERGERS WHERE PEOPLE HAVE TESTIFIED BEFORE YOU. WILL YOU SEE THAT FIGURE IS PALTRY COMPARED TO THE AMOUNT OF SALES. BUT THE LESSON IS SIMPLE HERE. VERTICAL INTEGRATION IS A MEDIUM FOR HARM. LOOK AT FOOTNOTE 6 OF MY TESTIMONY THAT DETAIL PAST EXAMPLES WHERE IT HAS BEEN HARMFUL. BUT THE COMMITTEE SHOULD GO FURTHER THAN RECOMMENDING THE OPPOSITION TO THIS DEAL. THIS IS A COMPETITIVELY AND HEALTHY MARKET. I HAVE THREE RECOMMENDATIONS FOR THIS COMMITTEE. FIRST, ADVISE THE FTC'S BUREAU OF CONSUMER PROTECTION TO INVESTIGATE THE SPRINGSTEEN INCIDENT AND DETERMINE WHETHER TICKETMASTER VIOLATED SECONDS 5 OF THE FTC ACT. SEC SECOND, ADVISE THE DIVISION TO LOOK AT PAST ACQUISITIONS BY TICKETMASTER. IF THOSE PAST ACQUISITIONS LIKE THE TICKETS NOW ACQUISITION HAVE LED TO COMPETITIVE HARM, THOSE ACQUISITIONS SHOULD BE UNDONE. THIRD, THE KEY TO TICKETMASTER'S MONOPOLY POWER AND THE REASON WHY THIS MARKET IS HEALTHY IS TICKET MASSER'S EXCLUSIVITY AGREEMENTS. UNFORTUNATELY, TEN YEARS AGO, THE ANTI-TRUST DIVISION DIDN'T STEP UP TO THE PLATE AND CHALLENGE IT. FORTUNATELY ECONOMIC THEORY AND THE LAW HAS EVOLVED. WE NOW REALIZE HOW THOSE ARRANGEMENTS CAN BE ANTI-COMPETITIVE AND TEN YEARS OF EXCESSIVE PRICES ALSO DEMONSTRATES HOW THESE AGREEMENTS ARE ANTI-COMPETITIVE. THE DIVISION SHOULD INVESTIGATE THOSE AGREEMENTS AND CHALLENGE THEM IF THEY DETERMINE THEY'RE ANTI-COMPETITIVE. THANK YOU BALTO. |
| 00:44:01 | Kohl, Herbert H. | THANK YOU VERY MUCH. WE'LL HAVE QUESTIONING NOW ROUNDS OF FORGAVE TO SEVEN MINUTES. MR. RAPINO AND MR. AZOF, YOU'RE BOTH OPERATE VERY FINE ON GOING PROFITABLE BUSINESSES. YOU HAVE A HISTORY OF MAKING PROFITS AND THAT'S IN THE AMERICAN WAY, AND WE CERTAINLY COMMEND YOU FOR THAT. JUST A FEW MONTHS AGO, WE WERE DISCUSSING THE COMPETITIVE ASPECTS OF A MERGER BETWEEN SATELLITE YOU THE RADIO COMPANIES XM AND SIRIUS, AND THEIR ARGUMENT WAS EVENTUALLY IT PREVAILED THAT SEPARATELY, THEY WERE GOING TO GO OUT OF BUSINESS BECAUSE THEY COULDN'T FUNCTION UNLESS THEY WERE ALLOWED TO MERGE. WE CHALLENGED THAT, AND THEY PREVAILED. AND AS THINGS TURNED OUT, THEY PROBABLY WERE NOT TOTALLY INCORRECT. IF YOU FOLLOWED THE HISTORY OF THEIR BUSINESSES OVER THE PAST SIX MONTHS OR A YEAR, THEY'VE, YOU KNOW, THEY REALLY HAVE INDICATED THAT THEY NEED TO MERGE OR THEY NEEDED TO HAVE MERGED IF THEY HAD ANY CHANCE OF SUCCEEDING AND THAT OVERCAME THE QUESTION OF COMPETITION BETWEEN THE ONLY TWO SATELLITE RADIO COMPANIES, XM AND SIRIUS AND THEY WERE ABLE TO MERGE AND STILL HAVE A LOT OF PROBLEMS BECAUSE THEY CAN'T SEEM TO MAKE IT WORK. BY CON FRAST YOUR TWO TWO COMPANIES ARE DOING JUST FINE, TWO SUCCESSFUL COMPANIES. SO WHY SHOULDN'T WE SAY TO YOU GO ON, COMPETITION IS WHAT SPURS IN OUR COUNTRY EFFICIENCY AND COMPETITIVENESS AND THE BEST VALUES FOR CONSUMERS ALL THE THINGS THAT CAPITALISM IS SUPPOSED TO BRING TO CONSUMERS BY WAY OF COMPETING COMPANIES FOR THEIR SERVICES? THAT'S WHAT YOU REPRESENT AND SO WHY SHOULD WE SAY TO YOU WE'LL THROW THAT OUT THE WINDOW, WE WON'T BELIEVE THAT WILL COMPETITION IS WHAT BRINGS OUT THE BEST IN COMPANIES AND SERVING THEIR CUSTOMERS AND WE'LL BELIEVE A WHOLE NEW DOCTRINE ON YOUR PART WHICH IS TO SAY LET US MERGE, LET US REALLY BE NOT ONLY STRONG AND DOMINANT BUT THE OVERWHELMING COMPANY IN THAT INDUSTRY, MAKING IT VERY DIFFICULT FOR ANYBODY TO COMPETE WITH YOU AND BELIEVE THAT THAT IS GOING TO BRING ONCE YOU HAVE THAT DOMINANCE AND THAT MONOPOLY, THAT IS GOING TO BRING THE BEST SERVICE TO CONSUMERS AT THE BEST PRICES? MR. RAPINO, YOU STRAIN OUR SENSE OF, YOU KNOW, OF COMMON SENSE, MR. AZOFF. I'M SURE YOU FEEL @D%F#%)%gR AT LEAST THREE-PARTY MINIMUM COMPETITION. SO COMPETITION IN THE CONCERT BUSINESS IS HEALTHY. THE DEBATE I'M HAVING AS I'VE TALKED TO ARTISTS AND FANS IS SO HOW ARE WE GOING TO CHANGE THE MODEL AND SERVICE THEM BETTER? HOW ARE WE GOING TO PROVIDE A BETTER PLACE FOR ARTISTS TO PROMOTE THEIR MUSIC TO TAKE ADVANTAGE OF THE SITUATION WHERE THE LABELS HAVE LET THEM DOWN? HOW DO WE PROVIDE A NEW MODEL FOR THE ARTISTS OF THE FUTURE? WHO WILL PROVIDE ALL THOSE YOUNG ARTISTS THE NEW BUSINESS MODEL AND PROVIDE THE FAN A BETTER MODEL? WE DON'T HAVE THE MODEL FIGURED OUT. IS THE MODEL RIGHT NOW IS BROKEN FOR THE FAN. THEY ARE NOT OVERWHELMED AT THE TICKET PRICES AT THE ACCESS AND HOW THEY CAN ACCESS TO TICKETS. SO THE CHANGE NEEDS TO BE MADE IN THIS BUSINESS WHETHER IT'S US, WHETHER IT'S OTHERS, WHOEVER HAS GREAT IDEAS WE'RE OPEN TO THEM. THIS INDUSTRY IS NOT GOING TO EXIST IN A PROFITABLE WAY OR DELIVER ANY OF THESE FAN AND CUSTOMER NEEDS IN ITS CURRENT CONFIGURATION. VERTICAL HAS HAPPENED IN THE RECORD LABEL. MOST LABELS NOW WOULD BE INVOLVED IN ALL AREAS OF THE BUSINESS FROM RECORD LABEL TO PUBLISHING TO CONCERTS TO T-SHIRTS TO RING TONES TO WEBSITES. SO WE ARE LOOKED AT A MODEL THAT SAID HOW CAN WE SERVICE THE FAN AND ARTIST OF THE FUTURE. THE MODEL NEEDS TO CHANGE AND WE BELIEVE THIS IS A GOOD START. |
| 00:48:41 | Kohl, Herbert H. | MR. AZOFF? |
| 00:48:42 | >> | I AGREE WITH EVERYTHING MICHAEL SAID. I'D ALSO LIKE TO ADD THAT THIS IS THE FIRST TIME IN THE HISTORY OF THE MUSIC BUSINESS THAT IT WOULD GIVE AL ARTIST CONTROL TO GET THEIR GOODS BUNDLED AND SOLD DIRECTLY TO THE FAN. YOU CAN NO LONGER BREAK A NEW ARTIST WITH RADIO. I THINK SOMEONE MENTIONED LACK OF VIDEO AIR PLAY. WE'RE NOT BREAKING ANY NEW ARTISTS. IF YOU LOOK AT WHO'S CURRENTLY BE SELLING TICKETS IT'S ALL THE OLDER ESTABLISHED ACTS IN MOST CASES. AND YOU KNOW, FOR THE FIRST TIME, YOU KNOW, THERE'S A COMPLETED INEFFICIENCY AND A COMPLETE LACK OF RESPECT FOR THE MUSIC SIDE OF THE BUSINESS FROM POTENTIAL SPONSORS AND ADVERTISERS THAT WE THINK TOGETHER THESE COMPLIMENTARY BUSINESSES WILL GET SOME OF THAT, YOU KNOW, THOSE AREAS AVAILABLE TO ARTISTS. WE REALLY RELY COMPLEMENTARY BUSINESSES. YOU KNOW, AS OF 30 DAYS AGO OR 45 DAYS AGO, WE SOLD EVERY LIVE NATION TICKET. SO WE'RE NOT GOING TO SELL ONE LESS TICKET THAN WE DID LAST YEAR. TO PAINT THE TICKETING SIDE OF THE BUSINESSES AS NOT COMPETITIVE IS JUST NOT ACCURATE. MAJOR LEAGUE BASEBALL OWNS TICKETS.COM. THERE'S A COMPANY CALLED VERITIX THAT HAS TAKEN THREE OF THE BIG ARENAS WITH NBA TEAMS. NEW ERA TICKETS IN PHILADELPHIA AND AND WE'VE BEEN TOLD AND WE BELIEVE THAT THIS MERGER WERE APPROVED, THAT MANY OF OUR LARGER CLIENTS WOULD OPT OUT. THE NEW TICKETING COMPANY IN COLORADO CALLED TICKET HORSE IS ACTUALLY THE OWNER OF THE DENVER NUGGETS HAS FORMED A TICKETING COMPANY. THE ENTRANCE INTO THE TECHNOLOGY ENTRANCE INTO TICKETING THESE DAYS IS NOT AS VAST AS ONE MIGHT THINK, AND THERE IS PLENTY OF COMPETITION OUT THERE. AND FROM HEARING ALL THE COMMENTS THAT I HEAR, I THINK SO MANY PEOPLE WOULD BE UPSET ABOUT THIS MERGER THAT I'M SURE A LOT OF THE OUR CLIENTS WOULD LEAVE. I DON'T REALLY PLAY THE MARKET SHARE GAME. WE DON'T CARE ABOUT OUR MARKET SHARE. WE CARE CAN WE DELIVER FOR ARTIST ARTISTS, FOR FANS, FOR CLIENTS WHETHER THEY IT BE TEAMS OR MUSEUMS OR WHATEVER. TICKETMASTER HAS I'M TOLD ABOUT 11,000 CLIENTS. WE SERVE A LOT OF MUNICIPALITIES AND NON-PROFITS. THIS BUSINESS IS NOT AS HEALTHY AS YOU WOULD THINK. I JUST CAME THERE RECENTLY, AND I ASSURE YOU THAT THERE ARE REAL POSSIBILITIES ESPECIALLY IN THIS ECONOMY THAT YOU KNOW, INSTEAD OF SITTING HERE TALKING ABOUT A MERGER, I MIGHT BE AT HOME THINKING ABOUT HOW MANY PEOPLE WE HAVE TO FIRE AND HOW MANY ACCOUNTS WE HAVE TO CUT. SO YOU KNOW, I THINK ON A NUMBER OF GROUNDS ESPECIALLY FROM ALLOWING RIGHTS HOLDERS TO PURSUE THEIR DREAMS THAT THIS MERGER MAKES SENSE. |
| 00:51:41 | Kohl, Herbert H. | YOU BOTH CERTAINLY DO EXPECT THAT YOUR COMPANIES TOGETHER WILL BE BIGGER, BETTER AND MORE PROFITABLE THAN EVER BEFORE, OTHERWISE, YOU WOULDN'T BE DOING THIS. YOU HAVEN'T ADDRESS THAT HAD AT ALL. I MEAN AND YOU'RE NOT SERVING YOUR SHAREHOLDERS' INTERESTING UNLESS YOU CAN MAKE THAT CLAIM BUT IN YOUR STATEMENTS YOU DON'T MAKE THAT CLAIM AT ALL. YOU WOULD NOT BE TALKING WITH EACH OTHER UNLESS THE COMBINATION WERE BIGGER, BETTER AND MORE PROFITABLE. THAN INDIVIDUAL BUSINESSES. AND HAVE YOU EVERY RIGHT TO DO THAT AND WE HAVE EVERY RIGHT TO CHALLENGE IT, BUT I AM DISTURBED I MUST SAY BY YOUR UNWILLINGNESS TO DISCUSS THE MAIN REEN FOR THE MERGER. THANK YOU SO MUCH. SENATOR HATCH. |
| 00:52:22 | Hatch, Orrin | THANK YOU, MR. CHAIRMAN. MR. AZOF, ACCORDING TO CHICAGO TRIBUNE UNDER LIVE NATION AND TICKETMASTER'S IS EXISTING MODEL LAST YEAR, TICKET PRICES FOR THE TOP 100 TOURS AVERAGED $67, MORE THAN DOUBLE THE 1998 AVERAGE, AS I UNDERSTAND IT. THIS IS FAR HIGHER THAN THE RATE OF INFLATION. THESE FIGURES ARE ESPECIALLY DISCONCERTING SINCE LIVE NATION AND TICKETMASTER ARGUE THAT THEIR TRANSACTION, YOUR TRANSACTION WILL CREATE EFFICIENCIES IN THE MARKETPLACE. AND GRANTED THAT THE MERGER WILL MOST LIKELY RESULT IN THE REDUCTION OF FEES AND COSTS ASSOCIATED WITH INDEPENDENT PROMOTERS AND MANAGEMENT. HOWEVER, THE BUSINESSES OF THESE INDEPENDENTS ARE ALREADY WIDELY CONSIDERED TO BE IN DECLINE. FOR EXAMPLE, JAM PRODUCTIONS WHOSE CHAIRMAN JERRY MICKELSEN IS HERE WITH US TODAY HAS TESTIFIED AND STATED IN HIS WRITTEN TESTIMONY THAT HIS COMPANY IN 1996 "PRODUCED 130 ARENA CONCERTS AND IN 2008 ONLY PRODUCED 35." THE SINGLE MOST PROFITABLE PART OF THE BUSINESS HAS BEEN DRAMATICALLY IMPACTED AND CONTINUES TO DECREASE UNQUOTE. THEREFORE THE QUESTION I NATURALLY HAVE IS HOW CAN THE SUBCOMMITTEE BELIEVE THAT TICKET PRICES WILL GO DOWN OR HOLD STEADY AS A RESULT OF THIS TRANSACTION IF THE INDEPENDENTS ARE ALREADY STRUGGLING? |
| 00:53:52 | >> | THANK YOU, SENATOR HATCH. FIRST OF ALL, THE DEMAND FOR ARENA SHOWS IS WAY DOWN FROM 1996 TILL NOW. THE INDUSTRY HAS NOT BEEN BREAKING ACTS. IN THE OLD DAYS WHERE AN ACT MIGHT PLAY FOUR DAYS IN A CITY, THEY MIGHT PLAY ONE OR TWO NOW. YOU THINK EVERY ARENA IN AMERICA HAS SUFFERED A REDUCTION IN THE NUMBER OF SHOWS OVER THE PAST TEN YEARS, A GREAT REDUCTION AND THERE'S BEEN A NARROW CASTING OUT TO SMALLER BUILDINGS AS PEOPLE JUST CAN'T DRAW THAT. EVERY ENTERTAINER I MANAGE WOULD LIKE TO CHARGE LESS FOR TICKETS. OKAY? THE -- YOU KNOW, YOU ACCURATELY STATED THAT THE REDUCTION IN THE AMOUNT OF MONEY THEY MAKE FROM RECORDED MUSIC HAS DRASTICALLY REDUCED, THEIR PUBLISHING ROYALTIES THEREFORE ARE DRASTICALLY REDUCED OFF THE MECHANICALS AND THE EXPLOSION OF THE SECONDARY RESALE MARKET WHICH ARTISTS IN MOST PART DON'T SHARE IN HAS DRASTICALLY INCREASED. SO IF THERE IS A MODEL WHERE YOU CAN SIT DOWN WITH AN ARTIST, THEY JUST WANT TO MAKE THEIR NUT AND THE PROFIT THAT THEY WANT. ARTISTS DON'T SIT AROUND AND SAY LET'S RAISE PRICES. IF WE'RE SUCCESSFUL IN DOING THIS I FOR SURE THINK THAT WE'LL BE ABLE TO SHOW THAT TICKET PRICES WILL GO DOWN BECAUSE IT WILL CREATE A BIGGER POT OF MONEY FOR ARTISTS FROM OTHER |
| 00:55:15 | Hatch, Orrin | OKAY. MR. RAPINO, I UNDERSTAND THAT ONE OF LIVE NATION'S MAJOR ARGUMENTS IN FAVOR OF THIS TRANSACTION IS THAT ARTISTS WILL HAVE A GREATER SAY IN SETTING CONCERT TICKET PRICES. HOWEVER, AT THE SAME TIME, LIVE NATION HAS BEEN IMPLEMENTING WHAT HAS BEEN REFERRED TO AS 360 DEGREE DEALS. YOU KNOW SUCH TRANSACTIONS ENTAIL PAY AGARTIST A CERTAIN AMOUNT FOR A CERTAIN PERIOD OF TIME IN, LIVE NATION CONTROLS THE ARTIST'S MUSIC RIGHTS, TOURS AND MERCHANDISE AT LEAST AS I UNDERSTAND IT. IN ADDITION, IF THE MERGE SER RATIFIED, THE RESULTING COMPANY WILL CONTINUE TO BE DOMINANT IN CONCERT TICKET SALES. THEREFORE, IF YOU'RE ABLE TO CONTROL AN ARTIST'S MUSIC RIGHTS WHEN AND WHERE THEY PERFORM AND THE MEANS BY WHICH TICKETS ARE SOLD, WHY WOULD AU LOU THE ARTIST TO INFLUENCE THE TICKET PRICE? |
| 00:56:14 | >> | TWO FRONTSZ. ON THE 360 DEGREES WHICH RECEIVED A LOT OF PRESS, WE HAVE FOUR OF THOSE ARRANGEMENTS. WE DO OVER 20,000 SHOWS A YEAR AROUND THE WORLD AND DEAL WITH 1500 ARTISTS. SO IT'S A VERY SMALLEST THAN 1% OF OUR STRATEGY. THERE ARE SOME ARTISTS WHO HAVE BEEN LOOKING TO FIND NEW PARTNER AND NEW REVENUE SOURCES AS THE LABELS HAVE SHIFTED THEIR BHOD DEL. THOSE FOUR ARTISTS WE DEAL WITH, THAT'S ALL WE HAVE ON THE 360s. WE HAVEN'T EXPANDED THAT IN THE LAST YEAR. WE'RE EXPERIMENTING WITH WHAT IS THE BEST BUSINESS MOD MODEL FOR THE FUTURE. AS FAR AS THE COMPETITION ON THE COMPETITIVE SIDE, YOU MENTIONED INDEPENDENTS. WE HAVE A 38% MARKET SHARE. I DO NOT BELIEVE OUR MARKET SHARE HAS INCREASED IN EIGHT YEARS STRAIGHT. SO WHATEVER MARKET SHARE THAT JAM OR SETH HAS LOST WAS PROBABLY A FUNCTION OF AEG ANOTHER LARGE COMPANY IN THE MARKET. AS FAR AS THE TICKET PRICE, AGAIN, IT'S A BIT OF EVERYTHING WE LEARNED IN BUSINESS SCHOOL DOESN'T APPLY TO THE MUSIC BUSINESS. I WANT THE LOWEST TICKET PRICE POSSIBLE. 40% OF TICKETS ARE UNSOLD. EVERY TIME A CONSUMER WALKS IN THE DOOR, I MAKE ABOUT 12 TO $14 PER HEAD ON THE ANCILLARY BUSINESS. I LOSE $80 MILLION ON THE DOOR. DO MAKE MONEY ON THE TICKET IN GENERAL. AN AVERAGE PROMOTE SISTER MAKES ABOUT $4 ON THE $100 TICKET PRICE. OUR MOTIVATION IS TO KEEP THE PRICE AS LOW AS POSSIBLE AND GET EVERYONE IN THE BUILDING. THE ARTISTS HAS HAD AN INCREDIBLE NEW MODEL, THEY HAVE 18 TRUCKS ON THE ROAD FROM THE U 2s TO THE MADONNA AND HAVE BECOME A BIG SPECTACLE. AN ARTISTS JOB IS TO FIGURE OUT HOW WHO MAXIMIZE HIS REVENUE ON THE ROAD. THE BIGGER THE TOUR, THE LONGER THE TOUR IT, TENDS TO BE THE BIGGER THE TICKET PRICE. THE TICKET PRICES ARE SET BY THE AGENT. THE AGENT CALLS UP SETH AND I AND SAYS, HERE'S IS WHAT THE GUARANTEE IS OR WOULD YOU LIKE TO BID ON THE SHOW. THEY HAVE A NUMBER THEY NEED TO GET TO. WE DON'T SET THE GUARANTEE OR THE TICKET PRICE. WE ONLY DECIDE AS PROMOTERS CAN WE AFFORD TO PROMOTE THAT SHOW AND MAKE ANY MONEY. AND OVER THE LAST TWO YEARS, LIVE NATION WOULD SHOW IN ALL OF OUR AMPHITHEATERS WE'VE INITIATED $9 TICKETS, THREE FOR FOURS. WE FOUND ALL THE WAYS WE CAN TO TRIAL TO GROW ATTENDANCE AT OUR VENUES AND I THINK WE'RE ONE OF THE LEADERS IN THE BUSINESS ACROSS THE NATION. |
| 00:58:41 | Hatch, Orrin | I APPRECIATE THE COOPERATION YOUR FIRMS AND REPRESENTATIVES HAVE EXTENDED TO US HERE ON THIS SUBCOMMITTEE. HOWEVER, THERE STILL REMAINS A LEVEL OF AMBIGUITY AS TO YOUR COMPANY'S RESPECTED MARKET SHARE AND THE HORIZONTAL ASPECTS OF THIS TRANSACTION. THEREFORE, I HOPE YOU'LL BEAR WITH ME MAYBE I DON'T HAVE TIME TO ASK ANY MORE QUESTIONS, BUT I'LL SUBMIT THESE QUESTIONS IN WRITING AND MAYBE YOU CAN ANSWER THEM FOR ME THAT WAY. I'M VERY CONCERNED BECAUSE YOU KNOW, I KNOW THAT THIS IS A TOUGH BUSINESS. AND I KNOW THAT YOU KNOW, THAT MOST MUSICIANS ARE HAVING SOME DIFFICULT TIMES AND LIKE YOU SAY, THERE ARE VERY FEW REAL HEADLINERS BUT THERE ARE A LOT OF YOUNG UPAND COMING PEOPLE WHO CAN BE HEADLINERS IF WE CAN KEEP A SYSTEM GOING THAT WILL GIVE THEM OPPORTUNITIES. SO I'M VERY CONCERNED ABOUT THAT, AS WELL. AND WE'LL JUST HAVE TO SEE. I'LL SUBMIT THE REST OF MY QUESTIONS IN WRITING SO THAT I DON'T TAKE ANY MORE OF THE COMMITTEE'S TIME. THANK YOU, MR. CHAIRMAN. |
| 00:59:47 | Kohl, Herbert H. | THANK YOU, SENATOR HATCH. |
| 00:59:48 | Kohl, Herbert H. | SENATOR SCOMOOUM SCHUMER. |
| 00:59:51 | Schumer, Charles E. | WE DID HAVE A GOOD MEETING IT EARLIER TODAY AND I TOLD YOU OF SOME OF THE CONCERNS I'D BE RAISING AT THIS HEARING TO GIVE YOU SOME TIME TO GIVE SOME ANSWERS. I WANT TO THANK BOTH OF YOU AND ALL THE WITNESSES FOR BEING HERE TODAY. FIRST AS I SAID IN MY OPENING STATEMENT, WE NEED TO GET TO THE BOTTOM OF WHAT HAPPENED WITH THE SPRINGSTEEN DEBACLE AND A DEBACLE IT WAS. AT 10:01 ON FEBRUARY 2nd AFTER THE NEW JERSEY CONCERT WAS SOLD OUT, VISITORS TO TICKETMASTER WERE PROVIDE TO ANOTHER SITE TICKETS NOW WHERE SUPPOSEDLY SOLD OUT CONCERTS TO THE SAME CONCERT WERE AVAILABLE AT SEVERAL TIMES THE PRICE. I HAVE A SERIES OF QUESTIONS SO HELP ME GET THROUGH IT. TRY TO ANSWER THEM YELL OR NO IF THEY DON'T NEED ELABORATION. FIRST, MR. AZOFF, YOU SUGGESTED THIS WAS A COMPUTER GLITCH. I THINK WE NEED A BETTER EXPLANATION, A MORE DETAILED EXPLANATION THAN THAT. SO FIRST, TICKETMASTER OWNS TICKETS NOW, ISN'T THAT CORRECT? |
| 01:00:46 | >> | CORRECT. |
| 01:00:50 | Schumer, Charles E. | AND TICKETMASTER EARNS MONEY THROUGH TICKETS SOLD IN THE SECONDARY MARKET THROUGH TICKETS NOW, RIGHT? |
| 01:00:56 | >> | NOT A LOT. |
| 01:00:58 | >> | YES. |
| 01:01:00 | Schumer, Charles E. | AM I CORRECT THAT TICKETMASTER IS THE ONLY SELLER THAT PROVIDES A LINK TO A SECONDARY SELLER THAT IT ALSO OWN OWNS? |
| 01:01:13 | >> | I BELIEVE THAT VERITIX ALSO HAS A SECONDARY SITE AND IT'S PRETTY COMMON IN THE BUSINESS FOR PRIMARY SITES TO SO-CALLED, I DON'T KNOW IF THE RIGHT WORD IS LINK BUT ALLOW BUYERS THE OPTION OF GOING TO THE SECONDARY SITE. UH-HUH. LET ME ASK YOU THIS BECAUSE THAT'S NOT QUITE RELEVANT AND WE'LL. |
| 01:01:30 | Schumer, Charles E. | OKAY. IN FACT, TICKETMASTER STANDS TO GAIN MORE IN FEES AND MARKUP FROM TICKETS SOLD ON TICKETS NOW, ISN'T THAT CORRECT? |
| 01:01:40 | >> | NO, BECAUSE I BELIEVE IT WOULD DEPEND SHOW TO SHOW BUT SO MANY FEWER TICKETS SELL ON THE SECONDARY SITE. |
| 01:01:46 | Schumer, Charles E. | TALKING ABOUT PER TICKET. YOU'D RATHER SELL A TICKET ON TICKETS NOW THAN TICKETMASTER. DO YOU MAKE MORE MONEY IN GENERAL? |
| 01:01:55 | >> | I DON'T -- NOT NET, NO, I DON'T THINK SO. THE COSTS OF RUNNING A SECONDARY SITE ARE EXTREMELY HIGH. |
| 01:02:06 | >> | RIGHT, BUT THE GROSS, T CHARACTERIZE THE NET AMOUNT. |
| 01:02:10 | Schumer, Charles E. | LIKE $70 COMPARED TO $30, IS THAT RIGHT, ON THE GROSS? |
| 01:02:14 | >> | COULD BE WAY MORE. |
| 01:02:15 | Schumer, Charles E. | GOOD. WHAT WERE THE TICKETMASTER FEES ON THE SPRING STE@@@ |
| 01:02:48 | Kohl, Herbert H. | WITHOUT OBJECTION. |
| 01:02:50 | Schumer, Charles E. | WHAT WERE THE TICKET FEES, THE TICKET NOW FEES FOR THE CONCERT? |
| 01:02:53 | >> | I DON'T BUT ALL TICKET RESELLERS ARE BASED ON USUALLY A PERCENTAGE OF THE SALES. |
| 01:02:58 | Schumer, Charles E. | WHAT MY UNDERSTANDING IS YOU MADE ABOUT $7 ON TICKETMASTER GROSS. I DON'T KNOW YOUR VERSUS $30 ON TICKETS NOW. OKAY? |
| 01:03:06 | >> | IT'S UNFAIR TO CHARACTERIZE. |
| 01:03:07 | Schumer, Charles E. | I UNDERSTAND BUT IS THAT |
| 01:03:09 | >> | NOT SURE. |
| 01:03:12 | Schumer, Charles E. | IT'S NOT 7 AND 30 OR CLOSE TO IT. |
| 01:03:13 | >> | I DON'T KNOW. I DON'T KNOW. I DON'T THINK THOSE ARE ACCURATE NUMBERS. |
| 01:03:17 | Schumer, Charles E. | YOU DON'T KNOW? |
| 01:03:18 | >> | I DON'T KNOW AND I DON'T THINK THOSE ARE ACCURATE NUMBERS. |
| 01:03:22 | Schumer, Charles E. | THAT'S EASILY VERIFIABLE. SUBMIT THAT IN WRITING. |
| 01:03:24 | >> | OKAY. |
| 01:03:26 | Schumer, Charles E. | WHO WAS RESPONSIBLE FOR THE SO-CALLED MALFUNCTION? WAS ANYONE FIREDED? WAS ANYONE DISCIPLINED? YOU DID APOLOGIZE FOR THIS SO-CALLED MALFUNCTION. |
| 01:03:34 | >> | THERE HAVE BEEN SOME PEOPLE REASSIGNED. IF YOU'D LIKE TO KNOW SPECIFICALLY WHAT HAPPENED, I'LL GET IT EXACTLY RIGHT. I HAVE A FEW COMMENTS I COULD MAKE TO THAT IF YOU'D LIKE TO HEAR THEM. |
| 01:03:45 | Schumer, Charles E. | SUBMIT THOSE IN WRITING, OKAY? BUT THE WRITINGS ARE UNDER OATH AND ALL OF THAT SO WE KNOW THEY'LL BE ACCURATE AND ALL |
| 01:03:51 | >> | OKAY. |
| 01:03:52 | Schumer, Charles E. | THESE GLITCHES HAVE HAPPENED BEFORE, ISN'T THAT RIGHT? |
| 01:03:58 | >> | GLITCHES ARE TECHNOLOGY. SOMETIMES IT BREAKS. |
| 01:03:59 | Schumer, Charles E. | BUT THE SAME TYPE OF SITUATION THAT WE SAW WITH SPRINGSTEEN. THIS IS NOT THE FIRST TIME IT HAPPENED? |
| 01:04:05 | >> | I THINK IT'S THE FIRST TIME THIS TYPE OF GLITCH HAPPENED. |
| 01:04:08 | Schumer, Charles E. | THAT, IN OTHER WORDS, IMMEDIATELY AFTER A CONCERT WAS SOLD OUT, TICKETMASTER DIDN'T REFER -- THERE'S NO OTHER INSTANCE WHERE TICKETMASTER DIDN'T REFER TO TICKETS NOW? |
| 01:04:18 | >> | LISTEN, THAT'S A PRACTICE THAT AS YOU KNOW, WE'VE ENDED. THAT'S A PRACTICE THAT I WAS GOING TO END PRIOR TO THE SPRINGSTEEN EVENT. |
| 01:04:25 | Schumer, Charles E. | BUT IT DIDN'T, BUT IT |
| 01:04:27 | >> | UH-HUH. |
| 01:04:29 | Schumer, Charles E. | OKAY. SEEMS TO ME YOUR ANSWERS OBVIOUSLY DON'T SATISFY ME. SO I WANT TO ASK YOU A $64,000 QUESTION. AND YOU COULD HELP YOURSELF WITH THIS, OBVIOUSLY, BUT MAYBE YOU DON'T WANT TO DO IT. |
| 01:04:41 | >> | RIGHT. |
| 01:04:43 | Schumer, Charles E. | FIRST, DIDN'T TICKETMASTER MAKE A MISTAKE IN GETTING INTO THE SECONDARY MARKET TO BEGIN WITH AND ISN'T THE ONLY REAL SOLUTION NOW TO GET OUT OF THAT BUSINESS AND HAVE TICKETMASTER SELL TICKETS NOW YOU? |
| 01:04:56 | >> | FIRST OF ALL, I WAS NOT AT THE COMPANY WHEN IT PURCHASED THE TICKETS NOW. |
| 01:05:00 | Schumer, Charles E. | YOUR JUDGMENT. |
| 01:05:03 | >> | PERSONALLY, I DON'T BELIEVE THERE SHOULD BE A SECONDARY MARKET AT ALL. I BELIEVE SCALPING AND RESALE SHOULD BE ILLEGAL BUT I'M ONE MAN. |
| 01:05:12 | Schumer, Charles E. | GIVE US SOME INKLING AS TO WHETHER TICKETMASTER IS THINKING OF, WOULD CONSIDER, WILL SELL TICKETS NOW. |
| 01:05:19 | >> | YOU KNOW, I'VE SPOKEN WITH SENIOR EXECUTIVES AT TICKETMASTER AND MEMBERS OF MY BOARD AS TO WHY TICKETMASTER THOUGHT THEY NEEDED TO BUY TICKETS NOW. IT WAS -- THEY FELT THAT THIS WAS A BUSINESS THAT IN THE OLD DAYS YOU WOULD GO STAND OUT ON THE CORNER AND IT LED TO COMPLETE CHAOS. THEY GOT INTO THE BUSINESS BECAUSE A LOT OF TEAMS AND A LOT OF OTHER CLIENTS ASKED THEM TO GET IN THE BUSINESS AND CREATE A TRANSPARENT MODEL. |
| 01:05:48 | Schumer, Charles E. | MY TIME IS LIMITED. IS YOUR VIEW, YOURS, THAT TICKETMASTER SHOULD SELL TICKETS NOW. |
| 01:05:55 | >> | MY VIEW IS I NEVER WOULD HAVE BOUGHT IT. I DON'T HAVE A VIEW CURRENTLY BECAUSE I NEED TO DO MORE INVESTIGATION BECAUSE MY ANSWER HAS TO REPRESENT THE VARIOUS TEAMS AND OTHER PEOPLE THAT WE. |
| 01:06:05 | Schumer, Charles E. | AT LEAST YOU'LL SAY THAT TICKETMASTER, YOU WEREN'T THE OWNER THEN, SHOULD HAVE -- SHOULDN'T HAVE BOUGHT IT. |
| 01:06:12 | >> | I WOULDN'T HAVE BOUGHT IT, NO. |
| 01:06:13 | Schumer, Charles E. | ARE YOU OPEN TO SELLING IT. |
| 01:06:14 | >> | LISTEN, WE'RE A PUBLIC COMPANY. IF YOU'D LIKE TO MAKE AN OFFER, SENATOR, WE'D LOVE TO HEAR IT. |
| 01:06:20 | Schumer, Charles E. | NO, I COULD NOT AFFORD IT. I CAN BARELY AFFORD TO BUY ONE TICKET ON TICKETS NOW. |
| 01:06:25 | >> | AND SENATOR, WHEN ALL OF THOSE COMPANIES APPROACHED LIVE NATION OVER THE LAST COUPLE YEARS FROM STUB HUB ON WARD TO BE BOUGHT, WE ABSOLUTELY STAYED OUT OF THAT BUSINESS. |
| 01:06:36 | Schumer, Charles E. | GOOD FOR YOU. MAYBE MR. -- MAYBE MR. AZOFF WILL COME TO YOUR WISDOM AT THAT. MY TIME IS UP. DO I HAVE MORE QUESTIONS IF THEY'LL BE A SECOND ROUND. |
| 01:06:45 | Kohl, Herbert H. | WE'LL DO THAT. |
| 01:06:46 | Schumer, Charles E. | THANK YOU. |
| 01:06:47 | Kohl, Herbert H. | SENATOR COBU CHAR. |
| 01:06:50 | Klobuchar, Amy | THANK YOU VERY MUCH, MR. CHAIRMAN. TO FOLLOW-UP ON WHAT SENATOR SCHUMER WAS ASKING, IF YOU'RE NOT GOING TO SELL TICKETS NOW, HOW DO YOU PLAN TO ENSURE THAT SOME OF THE SPRINGSTEEN INCIDENT WHEN I TALK ABOUT WHAT HAPPENED IN MINNESOTA THAT THESE VERY BEST SEATS IN FACT GO TO THE FANS THAT WANT THEM, THAT THEY'RE SOLD AT FACE VALUE AND NOT AT A MARKED UP PRICE? HOW WOULD YOU DO THIS GIVEN WHAT WE'VE SEEN OVER AND OVER AGAIN? |
| 01:07:15 | >> | WELL, FIRST OF ALL, WE'VE INSTITUTED A POLICY AT TICKETS NOW WHERE YOU WILL NO LONGER HAVE THE OPTION OF GOING FROM THE PRIMARY SITE AT TICKETMASTER TO TICKETS NOW. SECONDLY AND I BELIEVE WE'RE THE ONLY MAJOR RESELLTORY DO THIS, WE ARE NO LONGER GOING TO ALLOW THE PRELISTING PRIOR TO ON SAY FOR ANY OF THEM. WE'VE ALSO COME UP WITH A -- WE'VE COME UP WITH A PLAN TOP LIMIT SOME OF THE SEARCH OFF OF THE SEARCH ENGINES BACK TO TICKETS NOW. THE WHOLE SECONDARY -- ONE OF THE REASONS FOR THIS MERGER IS THE WHOLE SECONDARY AREA IS A MESS. OKAY? IN A PERFECT WORLD, I PERSONALLY WOULD HOPE THAT THERE WOULD BE A MORE TRANSPARENT ACCURATE PRIMARY THAT WOULD DO AWAY WITH THE NEED FOR ANY SECONDARY WHATSOEVER. YOU SHOULD ALSO UNDERSTAND THAT TICKETMASTER DOES NOT CONTROL WHAT TICKETS GO ON SAY AND WHAT TICKETS DON'T GO ON SAY. THERE ARE TICKETS HELD BY VARIOUS PARTIES THROUGHOUT THE BUSINESS AND THESE TICKETS ARE THE ONES THAT GENERALLY END UP ON THE SECONDARY SITES. |
| 01:08:16 | Klobuchar, Amy | DID YOU THINK THE MERGER WILL BRING THE PRICES DOWN FOR THE TICKETS. |
| 01:08:19 | >> | YES, I DO. |
| 01:08:21 | Klobuchar, Amy | YOU HAVE PAST ACQUISITIONS YOU'VE MADE BROUGHT PRICES DOWN. |
| 01:08:24 | >> | I HAVEN'T MADE ANY. |
| 01:08:25 | Klobuchar, Amy | WELL, THAT, TICKETMASTER HAS MADE BECAUSE THE NUMBERS I LOOK AT SHOW THAT TICKETS HAVE BEEN GOING UP. |
| 01:08:30 | >> | TICKETS HAVE BEEN GOING UP. |
| 01:08:32 | Klobuchar, Amy | YOU SO YOU DON'T HAVE ANY PROOF THAT. |
| 01:08:34 | >> | RISING ABOUT 4% A YEAR I BELIEVE. I WILL ALSO SAY, I'D LIKE TO GET ON THE RECORD WHEN PEOPLE HEAR WHAT TICKETMASTER'S SERVICE CHARGE IS, YOU KNOW, TICKETMASTER WAS SET UP AS A SYSTEM WHERE THEY TOOK THE HEAT FOR EVERYBODY. TICKETMASTER GETS A MINORITY PERCENTAGE THAT HAVE SERVICE CHARGE. IN THAT CHARGE ARE THE CREDIT CARD FEES, THE ROOENT REBATES TO THE BUILDINGS, REBATES SOMETIMES TO ARTISTS, SOMETIMES REBATES TO PROMOTERS. SO TICKETMASTER, WE'RE LIKE THE IRS AND DELIVER BAD NEWS. IF YOU GET A TICKET TO THE CONCERT, FEW PEOPLE GET A GOOD TICKET, THEY'RE HAPPY. PEOPLE DON'T GET GREAT SOOETZ THEY'RE UNHAPPY. TO A GREAT EVENT, THERE ARE UNTOLD THOUSANDS THAT GET SHUTOUT. WE TAKE THE BRUNT OF THAT AND ALSO TAKE THE BRUNT WHICH IS THE OTHER THING WE'RE TRYING TO ACCOMPLISH IS TO GO TO ALL-IN TICKETING AND TRYING TO TALK AS MANY RIGHTS HOLDERS AS WE CAN INTO GOING ONE PRICE ALL IN TICKETING SO THE PUBLIC KNOWS WHAT THE TOTAL COST OF THE TICKET IS WHEN THEY GET THERE. |
| 01:09:30 | Klobuchar, Amy | MR. HAD YOURWITZ, DO YOU WANT TO TALK ABOUT IF YOU THINK THIS IS GOING TO BRING PRICES DOWN AND SOME OF THESE CLAIMS THAT WERE MADE ABOUT HOW IT'S GOING TO RESULT IN ELIMINATING INEFFICIENCIES, ELIMINATING LARGE VOLUMES OF UNSOLD TICKETS, ADDRESS THE PROBLEMS WITH THE SECONDARY MARKET? |
| 01:09:47 | >> | WELL, I'M A LITTLE CONFUSED BECAUSE TODAY THEY'RE SAYING BUSINESS IS BAD AND YET WITH ALL THEIR QUARTERLY REPORTS THEY SAY BUSINESS IS GREAT. I DON'T REALLY KNOW WHETHER BUSINESS IS GOOD OR BAD ON THEIR SIDE OF THINGS. WHICHEVER IT IS, I'M NOT SURE HOW COMBINING IMPROVES EITHER SITUATION OR HELPS EITHER SITUATION. AS FAR AS A SECONDARY TICKETING BUSINESS IS CONCERNED, I PERSONALLY HAVE NEVER SOLD A TICKET TO A SCALPER NOT THAT I'M CLAIMING SAINTHOOD BUT ON THAT PARTICULAR TOPIC I'VE NEVER SOLD A TICKET TO A SKAP PER. PEOPLE STARTED SEEING IS OTHER PEOPLE MAKING MONEY ON THEIR ACTS AND OUR BUSINESS IS FRAUT WITH PEOPLE COUNTING OTHER PEOPLE'S MONEY AND SAYING IF THEY'RE MAKING MONEY, I SHOULD GET A PIECE OF IT. I THINK WHAT HAPPENED IS PEOPLE STARTED LOOKING AT THE SECONDARY TICKET MARKETING AND SAYING IF THEY'RE MAKING MONEY ON A PRODUCT THAT WE'RE CONTROLLING, WE SHOULD BE GETTING A PIECE THAT HAVE AND THEY GOT INTO IT. I THINK IT'S WRONG. I WOULD NEVER DO IT. IT WILL GO ON WHETHER WE DO IT OR NOT BUT THAT DOESN'T MEAN I HAVE TO PARTICIPATE IN IT. |
| 01:10:52 | Klobuchar, Amy | MR. BALTO, THE QUESTION ABOUT THE PRICES GOING DOWN, AND IT HAVE YOU SEEN THEM GO DOWN BEFORE WITH ACQUISITION. |
| 01:10:59 | Balto, David A. | WHAT COMPELS COMPANIES TO REDUCE PRICES IS COMPETITION AND BOTH FIRMS ARE DOMINANT FIRMS IN THE MARKET. NOTHING AFTER THIS MERGER IS GOING TO FORCE THEM TO LOWER PRICES. IT'S ONLY RIVALRY THAT DOES THAT. SECOND, YOU LOOK AT THE PAST EXPERIENCE OF THEIR ACQUISITIONS, THE TICKETS NOW ACQUISITION WHICH BY THE WAY, THE JUSTICE DEPARTMENT CLEARED WITHOUT ISSUING A SECOND REQUEST HASN'T LED TO ANY BENEFITS, IN FACT, MR. AZOFF HAS DIFFICULTY JUSTIFYING WHY IT EVER OCCURRED IN THE FIRST PLACE. THERE ARE ONLY TWO REASONS WHY ACQUISITIONS OCCUR, EITHER TO GO AND BRING BENEFITS TO THE COMPANY EITHERING TO BRING SOME KIND OF PRO COMPETITIVE BENEFITS OR FOR AN ANTI-COMPETITIVE REASON. IF HE CAN'T ARTICULATE A PRO COMPETITIVE REASON FOR THE DEAL, WE SHOULD SERIOUSLY CONSIDER WHETHER IT'S ANTI-COMPETITIVE. |
| 01:11:50 | Klobuchar, Amy | WE NEED TO CONSIDER IS WHETHER IN THE WAKE OF THE MERGER OTHER COMPETITORS CAN EMERGE TO PROVIDE A TICKETING SYSTEM THAT CAN EFFECTIVELY COMPETE WITH THIS COMBINED ENTITY. AND I UNDERSTAND BECAUSE IT TAKES AWAY THE MAJOR COMPETITOR. WITH LIVE NATION OUT OF THE PICTURE, HOW HARD WILL IT BE FOR ANY OTHER BUSINESS OR ENTITY TO COMPETE IN THE MARKET? |
| 01:12:11 | Balto, David A. | I THINK IT WOULD BE EXTRA NARALLY DIFFICULT. IT'S INTRIGUING. THE TECHNOLOGY INVOLVED NOT ROCKET SCIENCE. BUT IT'S THE TYING ARRANGEMENTS, THE EXCLUSIVITY ARRANGEMENTS WITH VENUES, TYING UP THE CONCERT PROMOTERS. IT'S ALL OF THOSE ARRANGEMENTS THAT CREATE THE BOTTLENECK THAT PREVENT ENTRY INTO THE THIS MARKET. THAT'S WHY BLOCKING THIS DEAL IS A GOOD FIRST STEP BUT IT'S NOT SUFFICIENT TO RESTORE THE COMPETITIVE HEALTH IN THE MARKET. |
| 01:12:39 | Klobuchar, Amy | DO YOU WANT TO RESPOND, MR. RAPINO? YOU HAD GOTTEN INTO THE TICKETING FOR A WHILE AND WHY DID YOU GET OUT? |
| 01:12:45 | >> | IF YOU DON'T MIND, I WANT TO TALK ABOUT TICKET PRICE FOR A SECOND AND I'LL JUMP IN. DAVID REFERS TO THE TICKET PRICES WILL GO DOWN BECAUSE OF COMPETITION, AND DAVID, I WISH THAT WAS THE CASE. THE TRUE MONOPOLY IN OUR BUSINESS IS THE ARTIST. THERE IS ONLY ONE AEROSMITH. SO THEIR TICKET PRICE GOES UP BECAUSE THEY GET TO CALL SETH JIM AND I. THE ONE THAT BIDS THE MOST FOR THE TOUR THEN DRIVES THE TICKET PRICE. IN A WARPED WAY, IF THEY COULD ONLY CALL ONE PERSON, THEN THAT PERSON COULD ACTUALLY SET THE TICKET PRICE. THAT'S WHY WE DON'T SET THE TICKET PRICE. COMPETITION HAS GONE UP FOR TEN YEARS AND THE TICKET PRICE HAS GONE UP FOR TEN YEARS BECAUSE THERE ARE ENOUGH COMPETITIVE FORCES FOR AEROSMITH TO CALL EVERY DAY TO CREATE A GREAT RACE TO THE HIGHEST PRICE. THAT'S THE BOTTOM LINE WHY TICKET PRICES GO UP. SO COMPETITION OR NOT, THE MONOPOLY IS THE ARTIST. WE BELIEVE THE ONLY WAY YOU CAN TRY TO GET OUTPUT IN THE FUTURE IS TO MAKE THE ARTIST MORE MONEY OTHER WAYS SO IF THEY WANT $700,000 A NIGHT FOR A GUARANTEE, YOU GOT TO FIND IT OTHER WAYS ON THE PRIMARY TICKET. THAT'S THE PROBLEM WITH THE BUSINESS. THE PRIMARY TICKET ISN'T FUND THE 700. |
| 01:13:54 | Klobuchar, Amy | DID THERE USED TO BE MORE COMPETITION IN IN MARKET. |
| 01:13:57 | >> | THERE'S ALWAYS BEEN COMPETITION AND THAT'S WHY AN ARTIST USED TO GET 50/50 ON A DEAL, THEN 70/30 AND NOW AN ARTIST GETS 90/10 OF A DEAL. |
| 01:14:12 | Klobuchar, Amy | WE'LL GET BACK IN THE SECOND ROUND. MR. MICKELSON, COULD YOU RESPOND TO THIS IDEA THAT IT'S THE ARTIST DRIVING THE PRICES UP? |
| 01:14:18 | >> | YES, AND I'D ALSO LIKE TO GET A CHANCE TO COMMENT ABOUT SOME OTHER THINGS THAT WERE SAID WHICH NEED SOME CLARIFICATION. I GOT TO TELL YOU, WHEN HE SAID AEROSMITH CALLED SETH OR CALLED ME TO COMPETE WITH LIVE NATION'S BID, AEROSMITH DIDN'T CALL ME. THEY DIDN'T CALL SETH. YOU 2 DIDN'T CALL US. SHAKIRA DIDN'T CALL US. COLD PLAY DIDN'T CALL US. AND I CAN GO ON AND ON AND ON ABOUT THE TOURS THEY BOUGHT THAT THE INDEPENDENT PROMOTERS DIDN'T GET A CALL ON BECAUSE THEY'VE PAID SO MUCH MONEY TO BUY THAT TOUR. AND LET'S NOT FORGET AS I SAID EARLIER, THERE ARE ACTS AND THEY WON'T DENY THIS, THAT THEY PAY MORE THAN 100% OF THE GROSS TO. WELL, NO WONDER WHY THEY'RE LOSING MONEY. HOW CAN YOU POSSIBLY MAKE MONEY WHEN YOU'RE PAYING MORE THAN 100% OF THE GROSS TICKET SALES TO? SO IN ANSWER TO YOUR QUESTION, WE DON'T GET TO BID ON SO MANY OF THESE SHOWS BECAUSE THE MONEY IS SO BIG, THE AGENTS DON'T EVEN CALL US. |
| 01:15:17 | Klobuchar, Amy | THANK YOU. I'LL GET BACK ON THE SECOND ROUND, MR. RAPINO WITH THE OTHER QUESTION I HAD. THANK YOU. |
| 01:15:28 | Kohl, Herbert H. | THANK YOU. PLU BALLOT TOE. |
| 01:15:31 | Kohl, Herbert H. | CONSUMERS HAVE LONG EXPRESSED DISSATISFACTION WITH TICKETMASTER FOCUSING ON THINGS LIKE THEIR HIGH SERVICE FEES, WHICH SOMETIMES APPROACH 40 TO 50% OF THE FACE VALUE OF THE TICKET. IN MY OPINION, THE BEST WAY TO ADDRESS THIS IS TO HAVE VIGOROUS COMPETITION IN THE TICKETING MARKET INCLUDING ENTRY OF NEW COMPETITORS. RIGHT NOW, TICKETMASTER IS ESTIMATED TO CONTROL BETWEEN 60 TO 80% OF THE CONCERT TICKETING BUSINESS AND PROVIDES TICKETING SERVICES FOR ABOUT 2300 VENUES IN OUR COUNTRY. WHAT IS THE LIKELIHOOD OF NEW ENTRY INTO THE TICKETING BUSINESS? DOESN'T THIS STILL MAKE ENTRY EVEN HARDER AS ALL VENUES OWNED OR MANAGED BY LIVE NATION WILL AUTOMATICALLY GIVE THEIR TICKETING BUSINESS TO TICKETMASTER? SO HOW LIKELY IS IT THAT A NEW COMPANY COULD ENTER THE TICKETING BUSINESS WHEN IT DOES NOT HAVE NEL HOPE OF BUSINESS FROM LIVE NATION VENUES? |
| 01:16:30 | Balto, David A. | I THINK IT WOULD BE EXTRAORDINARILILY UNLIKELY THAT WILL WE'D EVER SEE ENTRY. WE MUST PAUSE AND RECOGNIZE FOR TEN YEARS, TICKETMASTER HAS HELDaf)j"z & i a i & ) & UNDERSTANDING YOU OFTEN USE TICKETMASTER TO SELL TICKETS FOR CONCERTS THAT YOU PROMOTE. TICKETMASTER OFTEN HAS EXCLUSIVE CONTRACTS TO SELL TICKETS AT VENUE THAT YOU USE. AND I FURTHER UNDERSTAND THAT THIS ARRANGEMENT HAS WORKED FAIRLY WELL FOR YOU. WHAT WILL CHANGE ONCE TICKETMASTER BECOMES PART OF THE LIVE NATION FAMILY OF COMPANIES? HAVE YOU CONCERNS THAT DEALING WITH TICKETMASTER AS PART OF LIVE NATION BECAUSE LIVE NATION WILL GAIN ACCESS TO CONFIDENTIAL INFORMATION REGARDING THE CONCERTS THAT YOU PROMOTE. IS THAT A MATTER OF CONCERN TO YOU? |
| 01:18:00 | >> | IT'S A BIG MATTER. I MEAN, YOU KNOW, YOUR SALES HISTORY IS WHAT YOU BASE YOUR NEXT OFFERS ON FOR YOUR BANDS. AND HAVING WORKED WITH THOSE BANDS AND HAVING THOSE RELATIONSHIPS, YOU DESERVE TO HAVE THAT INFORMATION. YOU'VE INVESTED IN THAT BAND AND YOU'VE BUILT UP A BUSINESS THERE WITH THAT BAND. AND IF THEY HAVE AN INSIGHT TO THAT, YOU DON'T HAVE THAT OVER THEM ANY MORE AND YOU'RE NOT GETTING THEIR INFORMATION. A LONG TIME AGO, WHEN THERE WAS AN INDEPENDENT PROMOTER'S ORGANIZATION SOMEDAYS, WE USED TO SHARE TICKET COUNTS AND WE USED TO TRADE EACH OTHER'S INFORMATION AND LIVE NATION AT THE TIME WAS CLEAR CHANNEL I'M NOT SURE. FAMOUSLY WOULD NOT SHARE THAT INFORMATION. SO THEY THEMSELVES KNEW THAT THAT WAS SENSITIVE INFORMATION THAT COULD HELP A COMPETITOR. |
| 01:18:47 | Kohl, Herbert H. | MR. MICKELSON, DO YOU SHARE THAT OPINION? |
| 01:18:52 | >> | AS FAR AS SELLING TICKETS ON TICKETMASTER? IF THE MERGER GOES THROUGH? I ABSOLUTELY SHARE THAT OPINION, AND YOU KNOW, THEY'D HAVE ACCESS TO OUR TICKET SALES INFORMATION. THEY'D HAVE ACCESS TO OUR CUSTOMER DATABASES. THEY'D HAVE ACCESS TO THE FINANCIAL TERMS OF OUR TICKETING AGREEMENTS. THEY WOULD BE RECEIVING OUR COMPETITOR, WOULD BE RECEIVING INCOME FROM EVERY TICKET THAT WE SELL. THAT'S NOT WHAT I CALL SOMETHING I RELISH. THEY HAVE REVENUE STREAMS THAT THEY SHARE IN BEING TICKETMASTER THAT THEY COULD OFFER THE ARTIST AND WE CAN'T OFFER THE ARTIST THOSE REVENUE STREAMS FROM TICKETING FROM THE CONVENIENCE FEES. SO NOW THEY HAVE ANOTHER LEVER TO USE AGAINST TO US GET A DATE OR GET A TOUR BECAUSE THEY CAN OFFER THAT ARTIST TICKET REVENUE THAT WE CAN'T OFFER. SO IT'S A PROBLEM BECAUSE WE'LL LOSE MORE SHOWS IF WE ARE -- IF THIS MERGER GOES THROUGH JUST ON THAT FACT ALONE. |
| 01:20:00 | Kohl, Herbert H. | WELL, MR. RA PIN. |
| 01:20:02 | Kohl, Herbert H. | KNOW, ONCE TICKETMASTER AND LIVE NATION MERGE A COMBINED COMPANY WILL GAIN ACCESS TO AN ENORMOUS AMOUNT OF COMPETITIVE INFORMATION WITH RESPECT TO CONCERTS PROMOTED BY INDEPENDENT PROMOTERS LIKE MR. HURWITZ AND MR. MICKELSON, INFORMATION LIKE THE DEM GRAPHICS OF THE AUDIENCE ATTENDING CONCERTS, TICKET SALES, PRICING, E-MAIL ADDRESSES AND THINGS LIKE THAT. THIS INFORMATION WILL BE GAINED WHENEVER TICKETMASTER ELSE IS TICKETS FOR THEIR CONCERTS. LIVE NATION CAN USE THIS INFORMATION IN PROMOTING ITS OWN CONCERTS IN COMPETITION TO THESE INDEPENDENT PROMOTERS. YET, THE INDEPENDENT PROMOTERS WILL HAVE NO SUCH INFORMATION REGARDING THE CONCERTS THAT LIVE NATION PROMOTES. WON'T THIS PLACE THESE INDEPENDENT CONCERT PROMOTERS AT YET AN EVEN GREATER COMPETITIVE DISADVANTAGE TO LIVE NATION? |
| 01:20:54 | >> | I WOULD ABSOLUTELY AGREE THAT THAT'S A CONCERN ON THEIR PART. I WOULD UNDERSTAND THEIR CONCERN. WE WOULD ABSOLUTELY HAVE THE CONCERT DIVISION THAT WOULD NOT HAVE THE ACCESS TO THE TICKETING DIVISION DATA. THE TICKETING DIVISION DATA THE CUSTOMER IS THE VENUE. SO THE VENUE IS IN BUSINESS WITH THESE PROMOTERS EVERY DAY. I COULD UNDERSTAND THEIR CONCERN I CAN UNDERSTAND THEIR CONCERN AND WE WOULD MAKE SURE THAT BOTH DIVISIONS WERE RUN SEPARATELY. THERE WOULD BE NO REASON TO SHARE THAT DATA. |
| 01:21:26 | Kohl, Herbert H. | ARE YOU SAYING THAT YOU WOULD SUPPORT THE CONCEPT OF A FIRE WALL TO PROTECT THE INFORMATION? TICKET MASTER GAINS ABOUT CONCERTS FROM BEING SHARE EDD. |
| 01:21:47 | >> | IN THEORY YES, THE CONCERT DIVISION SHOULD HAVE NO ACCESS TO ANYTHING ANY PROMOTER DOES IN ANY BUILDING, ABSOLUTELY. |
| 01:22:03 | Kohl, Herbert H. | TICKET MASTER AND LIVE NATION ARGUE THAT IT WILL LEAD TO COST SAVINGS THAT WOULD BE PASSED DOWN TO CONSUMERS. WHAT IS THE LIKELIHOOD THAT ANYTHING WILL BE PASSED ON TO CONSUMER IN THE FORM OF LOWER PRICES OR SERVICE FEES. DO YOU THINK IT IS A BOGUS CLAIM THEY ARE MAKING? |
| 01:22:24 | Balto, David A. | I THINK IT IS EXTREMELY UNLIKELY THAT THE CONVENIENCE AND SERVICE CHARGES WILL GO DOWN BECAUSE OF THIS. NOTHING IS GOING COMPEL THEM TO PRODUCE THOSE CHARGES EVEN IF THEY HAVE SAVINGS. THIS FIGURE IS A FIG LEAF COMPARED TO THE SIZE OF THEIR BUSINESSES THIS IS NOT A SIGNIFICANT AMOWN OF EFFICIENCIES. |
| 01:22:59 | Kohl, Herbert H. | ALL RIGHT. |
| 01:23:00 | Klobuchar, Amy | THANK YOU VERY MUCH. I WANTED TO GO BACK TO WHAT WE WERE TALKING ABOUT, ABOUT THIS IDEA IF ANYBODY ELSE WOULD ENTER THE MARKET AND HOW YOU WOULD RESPOND TO THAT. MY QUESTIONS WERE ASKED OF THE OTHER WITNESSES ABOUT OTHER |
| 01:23:30 | >> | RIGHT. THE TICKETING BUSINESS IS -- IT IS MORE OF AN EXPERTISE. WE DEFINITELY HAVE DECIDED IN THE LAST FEW MONTHS THAT WE NEEDED TO GET INTO THE TICKETING BUSINESS ON PURE VERTICAL NEEDS OF THE MARKETPLACE. WE THOUGHT IT WAS IMPORTANT TO START SELLING AT THE FRONT DOOR ON OUR OWN BASIS. WE TRIED TO RENEW WITH TICKET MASTER BUT MANAGEMENT DIDN'T WORK. WE BELIEVE THAT GOING FORWARD, WHEN WE LEFT TICKET MASTER, AND WE FIRED TICKET MASTER. LET ME BE CLEAR, I UNDERSTAND THE ISSUES ON WHAT THEY CAN AND CAN'T DO. WE HAD A LINE UP OF COMPANIES THAT WANTED TO BE OUR TICKETING COMPANY. WE ENDED UP WITH A GERMAN BASED COMPANY. WE DON'T DO IT OURSELVES, WE OUTSOURCE TICKETING TO ANOTHER COMPANY. AND WE FOUND NO -- |
| 01:24:32 | Klobuchar, Amy | DID YOU SAY YOU WERE GOING BE A COMPETITOR OF TICKET MASTER? NOTHINGING OFF SOMETHING LIKE 15% OF THE MARKET? |
| 01:24:39 | >> | WE DO HAVE 15% OF THE MARKET. |
| 01:24:41 | Klobuchar, Amy | OKAY. THEN YOU DECIDED NOT TO COMPETE IN THIS MARKET. WHY DO YOU THINK OTHER PEOPLE WOULD WANT TO COME IN? |
| 01:24:49 | >> | I THINK OUR BUSINESS DECISION WAS DIFFERENT. RIGHT NOW THERE ARE A LOT OF COMPANIES, BRANDS, TICKETING THEMSELVES. BASEBALL, FOOTBALL, HOCKEY. OUR NEEDS GOT TO THE POINT WHERE A YEAR AGO WAS A VERY DIFFERENT MARKETPLACE, AS YOU KNOW. OUR STOCK PRICE, WE HAD ACCESS TO CAPITAL TO BUILD OUT AROUND THE WORLD. WE HAVE NOT REALLY DEVELOPED A NEW PRODUCT AND WE BELIEVE THE QUICKEST WAY TO TRY TO BULK UP AND DELIVER A DIFFERENT PRODUCT WAS TO ENTER INTO A BIGGER RELATIONSHIP WITH TICKET MAST ERER. |
| 01:25:40 | Klobuchar, Amy | HOW DO YOU THINK THE SMALL VENUES ARE GOING CONTINUE TO ATTRACT ARTISTS TO THEIR SITE IF THE VENUE ISN'T OWNED OR AFFILIATED WITH THE LARGE COMPANY IF THE MERGER IS APPROVED? |
| 01:25:53 | >> | JUST FOR THE RECORD, I HEARD DIFFERENT NUMBERS. WE ONLY OWN 18 VENUES. WE MANAGE OR LEASE 88 IN AMERICA. THERE ARE THOUSANDS OF VENUES PRODUCING MUSIC FROM THE SMALL CLUBS TO BIG ARENAS. THEY ARE FINDING LOTS OF COMPETITORS. ALL THE YOUNG BANDS ARE WORKING AND FINDING THEY COULD NEVER WORK WITH ME AND DO A VERY GOOD JOB AS IN 70% OF THE OTHER BANDS. AND TICKETING BUSINESS HAS CHANGED DRAMATICALLY IN FIVE YEARS. |
| 01:26:42 | Klobuchar, Amy | MR. MIKKELSON, YOU WANT TO RESPOND? |
| 01:26:46 | >> | I KEEP HEARING 38% OF THE MARKET SHARE. THAT'S NOT TRUE. I DON'T HAVE ALL THE FIGURES WITH ME. I WAS READING, AND IN 2000, POLL STAR SAID 150 OF THE TOP 200 TOURS IN 2001. CLEAR CHANNEL PROMOTED 161 OF THE TOP 200 TOURS. SO IF, IN FACT, HE IS TALKING ABOUT 38%, HE MAY BE INCLUDING THE SMALLEST CLUBS THAT HOLD 100 PEOPLE. THEY DOMINATE THE ARENA LEVEL FOR TICKET SALES. THEY CONTROL AND HAVE ALL OF THE OUTDOOR AMPHITHEATERS SO THAT NOT ONE OF US CAN COMPETE. WE CAN'T CONTROL THAT. WITH HOUSE OF BLUES, THEY ARE GOING SOON CONTROL THAT IF THEY CONTINUE THAT. THAT MEANS THAT NONE OF US THAT ARE COMPETING WILL BE ABLE TO RAMONE IN BUSINESS IF THEY ARE ABLE TO BUY MORE HOUSE OF BLUES OR BUILD MORE SMALL THEATERS. WHEN YOU LOOK AT TICKET MASTER, THEY, I BELIEVE, HAVE CONTRACTS WITH 90% OF THE TOP 50 BUILDINGS, 50 ARENAS. AND I BELIEVE IT IS OVER 80% FOR THE TOP 100 BUILDINGS. THEY HAVE CONTRACTS WITH EVERY MAJOR ARENA. THEY PRETTY MUCH CONTROL MOST OF THE OTHER THEATERS AROUND THIS COUNTRY. NOW YOUR QUESTION CAN -- |
| 01:28:27 | >> | ABOUT THE SMALL VENUES. |
| 01:28:29 | >> | CAN OTHER TICKET COMPANIES ENTER THE MARKET? I DON'T THINK SO. WHAT COULD HAPPEN IS THAT TICKET MASTER CAN SAY IF YOU WANT MY CONCERTS YOU HAVE TO USE MY TICKETING. IF YOU DON'T, YOU WON'T GET MY CONCERTS. THAT CAN HAPPEN AND HAS HAPPENED WITH OTHERS. I THINK IT'S A REAL POSSIBILITY THAT IT COULD HAPPEN. |
| 01:28:56 | >> | THAT'S YOUR CORE CONCERN HERE? |
| 01:28:59 | >> | THAT'S A HUGE CONCERN. |
| 01:29:00 | >> | IF I COULD HAVE ONE MORE QUESTION. DO YOU THINK THAT'S TRUE? |
| 01:29:05 | >> | ABSOLUTELY. LOOK AT FOOTNOTES. |
| 01:29:12 | >> | I CAN'T WAIT TO SEE THAT. |
| 01:29:15 | >> | THESE ARE SIGNIFICANT CONCERN CONCERNS THAT HAVE BEEN DOCUMENTED. |
| 01:29:26 | >> | DO YOU WANT TO RESPOND? I AM AT THE END OF MY TIME HERE. |
| 01:29:35 | >> | NO. |
| 01:29:44 | >> | THANK YOU VERY MUCH. |
| 01:29:45 | >> | THANK YOU FIRST FOR YOUR LEADERSHIP OF THIS COMMITTEE AND YOUR LEADERSHIP IS VERY IMPORTANT ON THIS ISSUE FOR OUR STATE THAT WE SHARE AS WELL AS FOR THE COUNTRY AND I APPRECIATE ALL THAT YOU HAVE DONE IN THIS GENERAL AREA. THANK YOU FOR HAVING A HEARING ESPECIALLY ON THE TOPIC OF THE MUSIC INDUSTRY. I HAVE BEEN CONCERNED FOR SOME TIME ABOUT CONCENTRATION AND VARIOUS PRACTICES. I BEGAN HEARING A LOT FROM LOCAL BUSINESSES ABOUT THE HARM BEING CAUSED ON CONCENTRATION IN RADIO OWNERSHIP AND ITS EFFECT IN CONCERT PROMOTION AND CONTROL OF VENUES. OF SPECIAL CONCERN WAS CLEAR CHANNEL. I FIRST ELEARNED OF THIS PROBLEM THIS LOCAL BUSINESS WAS WHAEP TO COMPETE BUT WAS AT A DISADVANTAGE WHEN CROSS OWNER SHIP WAS USED IN AN ANTI-COMPETITIVE MANNER. WE HAVE MADE PROGRESS WHEN CLEAR CHANNEL SPUN OFF INTO LIVE NATION. WHEN THE FCC AND ATTORNEY GENERAL BROUGHT ACTION. EVEN THOUGH THE CONCENTRATION ISSUES REMAIN, THE RISK OF LEVERAGING BY CROSS OWNERSHIP WAS LESSENED BUT NOW, TWO MUSIC INDUSTRY GIANTS, LIVE NATION AND TICKET MASTER PO POSE TO MERGE AND FORM AN ENTITY THAT WOULD BE THE LARGEST COMPANY, I THINK RAISING SIMILAR CONCERNS ABOUT CROSS OWNERSHIP LEVERAGING. THIS HAS THE POTENTIAL TO BE MORE HARMFUL BECAUSE TICKET MASTER'S MARKET SHARE IS LARGER THAN CLEAR CHANNEL'S SHARE WAS FOR RADIO. TO SAY THE LEAST, I COME TO THIS HEARING WITH A HEALTHY DOSE OF SKEPTICISM. Td & @@ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ '"Rgh')a,@ @ @ @ @ @ g IF BRUCE SPRINGSTE IMP N, THE ANSWER IN THE SUMMER IN THE OUTDOOR IS NO. IN INDOOR ARENAS, THEY DON'T CONTROL INDOOR ARENAS THE WAY THEY DO THE AMPHITHEATERS. SO I SUPPOSE BRUCE COULD PLAY ARENAS -- THEY DON'T CONTROL, I DON'T THINK, HAVE MANY ARENAS. TICKET MASTER HAS MOST OF THE ARENAS. YOU COULDN'T BRING IN SOMEONE ELSE BECAUSE TYPICALLY THE ARENAS SIGN SKA EXCLUSIVE CONTRACTS. |
| 01:33:20 | >> | THE SIXTY MASTER PROBLEM EXISTS IN BOTH CONTEXTS. |
| 01:33:25 | >> | WELL, NO. YES, IF YOU ARE TALKING ABOUT BOTH COMBINED COMPANIES, YOU CAN'T GET AROUND THEM AT THE AMPHITHEATERS OR THE INDOOR ARENAS. |
| 01:33:47 | >> | IT WAS ALREADY ANSWERED WHETHER SPRING STEEN COULD SCHEDULE A LIVE TOUR? |
| 01:33:53 | >> | YOU COULD IN ARENAS BUT AS FAR AS AMPHITHEATERS, NO. THEY OWN ALL OF THEM AND THAT IS BY DESIGN. LET ME EXPLAIN A PROBLEM. OUR SUPPLIERS, AGENTS, ETC. THIS IS WEIRD. THEY HAVE COMPLETE DISREGARD FOR OUR FINANCIAL HEALTH. THEY FEEL LIKE THEY ARE THERE FOR THE MOMENT. WE GOT TO GET ALL WE CAN. WE DON'T CARE IF THIS GUY IS IN BUSINESS TOMORROW. THE ONLY WAY TO COMBAT THAT IS WITH LEVERAGE. ONE IS BY DOING A BETTER JOB AND COMPELLING THEM TO PLAY YOUR VENUES BECAUSE IT IS THE BEST CHOICE. THE OTHER WAY IS TO REMOVE THAT CHOICE. THEY WILL KEEP GOING UNTIL SOMEONE STOPS THEM. |
| 01:34:52 | >> | YOUR OPINION OF THE CURRENT STATE OF COMPETITION, EVEN WITHOUT THE MERGER? |
| 01:35:00 | >> | I SAY THIS IS A COMPETITIVELY UNHEALTHY MARKET. AND I THINK YOU HAVE IDENTIFIED ONE OF THE KEY PROBLEMS THAT THE VERTICAL ARRANGEMENTS ALLOW THEM TO ENGAGE IN LEVERAGING WHICH INHIBITS THE ABILITY OF RIVALS TO COMPETE. |
| 01:35:31 | >> | THIS PROPOSED MERGER WOULD IT BE WORSE THAN WHAT WAS GOING ON WITH CLEAR CHANNEL? 2002? |
| 01:35:39 | >> | THIS IS VERTICAL INTEGRATION ON STEROIDS. THE TICKET COMPANY THAT IS SUPPOSED TO BE, YOU KNOW, NEUTRAL, SUPPOSED TO BE NOT OUR COMPETITOR IS NOW OUR COMPETITOR. THE LEVERAGE WE WOULD HAVE IN THE MUSIC INDUSTRY. NOT JUST CONCERTS OR TICKETING IS HUGE. AND THEY WOULD BE ABLE TO CONTROL THE MUSIC INDUSTRY, NOT JUST TICKETING AND CONCERTS. EVERYTHING. RECORDED MUSIC, THEY COULD. THEY COULD GO INTO SO MANY THINGS IF YOU READ MY WRITTEN TESTIMONY. THIS IS MUCH WORSE THAN ANYTHING I WOULD IMAGINE AND MUCH WORSE THAN THE CLEAR CHANNEL. |
| 01:36:26 | >> | DO YOU AGREE? |
| 01:36:40 | >> | YEAH. THEY HAVE THE POWER TO USE IT BOTH WAYS AND I DON'T THINK ANYONE SHOULD HAVE THAT POWER. |
| 01:36:57 | >> | THANK YOU, MR. CHAIRMAN. |
| 01:37:00 | >> | LAST YEAR TICKET MASTER IMPLEMENTIMP IMPLEMENTED A PAPERLESS SYSTEM. THEY WOULD HAVE TO SHOW SOMETHING LIKE A CREDIT CARD OR DRIVERS LICENSE TO GET ADMITTED INTO AN ARENA FOR A CONCERT. LAST YEAR, AN EXECUTIVE WAS QUOTED AS SAYING THAT PAPERLESS TICKET IS THE NEXT KEY STEP FOR TICKET MASTER ALONG ITS INNOVATION PATH. ELIMINATE THE ABILITY FOR CONSUMERS TO RESELL THEIR TICKETS. WITHOUT PAPER TICKETS, THERE WOULD BE NO ABILITY FOR THOSE SEEKING TO PURCHASE TICKETS AT THE LAST MINUTE. DO YOU INTEND TO CONTINUE YOUR EFFORTS TO IMPLEMENT A PAPERLESS TICKETING SYSTEM AFTER THIS MERGER, WHAT WOULD THIS MEAN? |
| 01:37:51 | >> | YES, WE DO. I WOULD ALSO LIKE TO ADD THAT AC/DC TOOK THE FRONT 3,000 SEATS TO THEIR CONCERTS AND IT STILL DIDN'T SOLVE THE SECONDARY PROBLEM. IT'S THE FUTURE. |
| 01:38:15 | >> | ANYTHING ELSE THAT WE HAVE NOT COVERED TODAY FOR OR AGAINST ANY KPENTS YOU WOULD LIKE TO MAKE? |
| 01:38:22 | >> | HET ME MENTION ONE THING AND IT GOES BACK TO THE ANSWER WHERE HE SUGGESTS THAT COMPETITION WAS THAT CURRENTLY, LIVE NATION AND TICKET MASTER BOTH COMPETE FOR THE SAME PEOPLE. IT IS A BEDROCK PRINCIPLE IS NEVER BAD, ALWAYS GOOD. THAT ARGUMENT WAS POSED IN THE HIGH MARK MERGER WHEN THE HELD -- INSURANCE COMMISSIONER LOOKED AT RIGHT NOW WE BOTH COMPETE TO SIGN UP DOCTORS AND THAT'S BAD. THE INSURANCE COMMISSIONER RIGHTFULLY FOUND THAT ARGUMENT WAS JUST INCONSISTENT WITH THE LAW AND WITHIN THE ECONOMIC. CONCEIVABLY, A CONCERT PRODUCER COULD HARM COMPETITION BY |