This weekend, there was a long piece in the New York Times about music industry macher Irving Azoff, chairman of the newly minted company Live Nation Entertainment (an amalgam of industry monoliths Live Nation and Ticketmaster). Though Azoff’s profit maximizing tactics as a manager were pretty eye-opening (the so-called “Irving Deal” which guaranteed his artists 90% of the ticket revenue was a real revelation to me), one of the most interesting parts of the article was the supposed reason why the merger was given regulatory approval in the first place.
If the merger presents so many potential hazards, why did the Justice Department approve it?
Several people familiar with the negotiations inside the department said that officials didn’t think they had much choice. According to Jim Hurwitz, a former Federal Trade Commission lawyer who wrote a paper for the American Antitrust Institute arguing against the merger, Live Nation told the government that it was going to exit the ticketing market no matter what happened with this deal and that it would enter an informal alliance with Ticketmaster if it wasn’t allowed to merge. On the other hand, if it was allowed to merge, the government could exert some control through a consent decree.
In other words, Mr. Hurwitz explained, the choice presented to the Justice Department was this: either let us get married and have a say in our union or try to stop us — in which case, we’re just going to start seriously dating. “My sense also is that Justice was worried about its prospects if it went to court, and it didn’t want to lose its first major case,” Mr. Hurwitz says. [NYTimes.com]