Live Domination?

PG. 16 NIELSEN’S 2019 REPORTM PG. 18 SAVINGarket AUSTRALIA PG. 20 CASEY MCGRATH’S WILD NIGHTS

Live Domination? After an 18-month investigation, the Justice Department settlement with Live Nation over its consent decree ended up leaving the concert giant stronger than ever BY DAVE BROOKS

N DEC. 20, 2019, THE venues that didn’t use its ticketing disrupt the company’s year-over-year calling the settlement an “unequivo- U.S. Department of service or made threats to withhold growth. But the settlement calmed cal victory” for Live Nation presi- O Justice released the terms content. But the law didn’t prevent those waters. dent/CEO Michael Rapino. of its settlement with Live Nation from bundling concerts Congress could still enact legis- Today, Live Nation’s stock price is Live Nation. It found five separate with ticketing deals or giving prefer- lation to curb Live Nation’s domi- 700% higher than it was before the instances in which the concert ence to venues that use Ticketmaster, nance, but that is unlikely in today’s Ticketmaster acquisition in 2010. Ac- promoter allegedly violated the taking advantage of what Congress- political climate. Delrahim is one of cording to a 2018 New York Times re- terms of the consent decree govern- man Matt Gaetz, R-Fla., called a the few individuals in Washington port, Live Nation/Ticketmaster holds ing its 2010 merger with Ticketmas- significant “loophole” in the decree. who can unilaterally take action 80% of the total ticketing market ter, paving the way for a possible Amid pressure to address antitrust against Live Nation, and share in North America. federal lawsuit against the company. issues around giant tech companies news that his ofce settled “We were disap- But instead of suing Live Nation, like Amazon and Facebook, the DOJ its diferences with Live 8K pointed,” says Chris assistant attorney general for the declared victory, calling the Live Na- Nation means one of the VanDeHoef, president antitrust division Makan Delrahim tion settlement the most “significant conglomerate’s largest po- of Fan Freedom, a trade announced he reached a settle- enforcement action” of a decree in 20 tential liabilities has been NUMBER OF organization funded by ment with Live Nation. The consent years. Concerns about a DOJ inves- resolved for now. CONTRACTS StubHub, adding: “It’s TICKETMASTER decree would be extended five more tigation or lawsuit had whiplashed “It means business SAYS IT RENEWED obvious [Live Nation/ years and Live Nation would face the company’s stock, with investors as usual,” says Jeferies UNDER THE Ticketmaster] is a mo- stifer penalties if it retaliated against worried a government probe would equity analyst Khoa Ngo, CONSENT DECREE. nopoly that controls the

VIVENDI SOLD 10% OF UNIVERSAL MUSIC GROUP TO TENCENT HOLDINGS. INTERSCOPE GEFFEN A&M UPPED GARY KELLY TO CHIEF REVENUE OFFICER/GLOBAL HEAD OF STREAMING AND STRATEGY.

ILLUSTRATION BY REMIE GEOFFROI JANUARY 11, 2020 • WWW.BILLBOARD.COM 1 3 venues and the artist ticketing — so the DOJ’s eight clarifications to the we were hoping that the Justice De- original agreement and five-year partment would actually sink some extension, Live Nation is more power- teeth into this, since Live Nation has ful than ever. Last year, Live Nation been violating the consent decree posted a record $272 million in profit from day one. But as quickly as the and nearly $10.8 billion in revenue. DOJ announced the investigation, The company enters the new decade Live Nation announced a settlement with a $15 billion market cap and $1.8 on it. I don’t blame Live Nation or billion in cash on hand. Ticketmaster for moving in that The consent decree also sought direction — that’s the smart thing to to “re-create the exact dynamic that do — and maybe moving forward, the Live Nation had itself produced by in- Can The Carlyle DOJ will actually make them stick to tegrating into ticketing in 2009 when the terms of the consent decree. But the company had attempted and Group Shake It Of? I don’t have a ton of faith.” failed to launch a competitor to Tick- TAYLOR SWIFT MAY NOT SCARE PRIVATE EQUITY — Negotiated between former assis- etmaster,” said Varney during a 2010 BUT HER OUTRAGE COULD SHAPE FUTURE DEALS tant attorney general for the depart- speech at South by Southwest laying ment’s antitrust division Christine out her department’s thinking behind BY GLENN PEOPLES Varney, Rapino and Live Nation’s the merger. With Live Nation opting lawyers, the original consent decree to merge with Ticketmaster instead of N HER SONG “BLANK investors are funding the growth sought to prevent Live Nation from spending more on its failed ticketing Space,” Taylor Swift sings the of midsize publishing companies. punishing or retaliating against system, DOJ lawyers decided to prop line, “I’m a nightmare dressed Music publisher Primary Wave’s venues (by withholding concerts and up competing major promoter AEG to like a daydream” — a fact multiyear spending spree was tours) if those venues used a compet- “go head to head with Ticketmaster in Ithe new owners of her recordings helped by $75 million each from ing ticketer (like Ticketfly). Live Na- primary ticketing” by requiring Tick- are learning the hard way as she the retirement system of the tion was, however, permitted to give etmaster to license its technology to uses her pulpit to warn the music State of Florida and the City and preference to venues that worked AEG until the company could create a industry of “potentially harmful” County of San Francisco. And with Ticketmaster. This language competitive product. private-equity companies. Ariana Grande’s hit “7 Rings” pays created the so-called “loophole,” giv- The result was AXS, now one of The object of her scorn: Ithaca publishing royalties to the Concord ing Live Nation the latitude to with- the larger ticketing companies in live Holdings chief executive Scooter Music-owned “My Favorite Things” hold concerts from non-Ticketmaster entertainment. Instead of building Braun, who bought her former by Rodgers & Hammerstein — venues and potentially pressure of its right to license Ticketmaster’s label, Big Machine, for $300 million and to the Michigan Retirement venues to use Ticketmaster. technology for five years under the with fnancing from private-equity Systems’ pension fund that owns In August 2019, Sens. Amy Klobu- original 2010 consent decree, AEG companies including The Carlyle 90% of Concord. char, D-Minn., and Richard Blumen- tried to create its own system through Group and other parties. Sources say that Swift could thal, D-N.J., sent a letter to the DOJ, a series of mergers that created a Her criticism of private equity have at least bid on her catalog calling the consent decree “inefec- three-way ownership structure with highlights the sector’s percolating using alternative fnancing. If she tive” amid “disturbing reports that TPG Capital and Dan Gilbert’s Rock- interest in publishing and recorded- had borrowed against her catalog Live Nation has flouted its condi- bridge Growth Equity. music rights, now spurred by a fast- of recordings, she could have tions” and left the company largely Antitrust attorney Richard Ham- growing music business and low retained ownership of her masters unchallenged. Those comments ilton, who used to work for the DOJ, interest rates that are driving record and licensed them to a record probably won’t afect the company believes Delrahim deserves credit for amounts of money to private mar- label for distribution, marketing now. “Politicians tweeting about strengthening the decree and adding kets. In 2018, private-equity frms and promotion. 23 Capital, one their unhappiness with Live Nation severe penalties for future violations. invested $1.4 trillion overall, slightly of the frms Swift has called out, and Ticketmaster are a ‘headline Says Hamilton, “[The Justice Depart- higher than prerecession levels and provides this type of fnancing for risk’ for the company,” says Ngo. “Not ment] is making it clear that it doesn’t up 75% over the previous fve years, companies such as Vice Media. So a long-term risk.” matter that only a very small percent- according to a 2019 McKinsey & does Vine Alternative Investments, Sources believe that following age of businesses felt threatened.” Company report. whose flm and music clients have But is private equity as del- nontraditional options “that can eterious as Swift claims? On the supplement senior bank loans,” contrary: Barry Massarsky, head says partner Rob Amir. of Massarsky Consulting and an Big Machine doesn’t need expert in valuing songwriting and Swift’s permission to rerelease MARKET WATCH recording catalogs, says the “ferce albums or greatest-hits compila- acquisitions market” is actually a tions, though as a songwriter with boon for creators that leaves them full or partial rights, she can veto “in a very comfortable position.” potential synch licenses for TV, flm 21.86B 12.83M 1.147T Using private equity to fund and ads. That could diminish the music deals is still rare, but it’s also value of her recordings to some 10.8% 19.2% 29.3% not entirely new. Such frms backed extent, especially as Swift has said the acquisitions of Warner Music she plans to rerecord her entire TOTAL ON-DEMAND ALBUM CONSUMPTION TOTAL ON-DEMAND STREAMS WEEK UNITS WEEK OVER WEEK STREAMS YEAR Group in 2003 (by Thomas H. catalog. So the lesson for future Lee, Bain Capital and Providence investors is that an artist’s catalog OVER WEEK Album sales plus track-equivalent OVER YEAR TO DATE Number of audio and albums plus audio streaming- Number of audio and video Equity Partners) and EMI Music — generally viewed as a stable video on-demand streams for equivalent albums for the streams for the past 52 weeks in 2007 (by Terra Firma), although asset — may be less valuable when

the week ending Jan. 2. week ending Jan. 2. over the same period prior. both were later sold. Lately, private it’s not in the artist’s hands. IMAGES RICH FURY/GETTY

WARNER MUSIC’S DAN CHALMERS WAS NAMED YOUTUBE MUSIC’S FIRST DIRECTOR FOR EUROPE, MIDDLE EAST AND AFRICA. CONCORD MUSIC PUBLISHING BOUGHT A STAKE IN PULSE MUSIC GROUP.

14 BILLBOARD • JANUARY 11, 2020