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COMPETITION IN THE TICKETING AND 

PROMOTION INDUSTRY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COURTS AND 

COMPETITION POLICY 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

FEBRUARY 26, 2009 

Serial No. 111–62 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

DANIEL MAFFEI, New York 

[Vacant] 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COURTS AND COMPETITION POLICY

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia, Chairman 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

ROBERT WEXLER, Florida 

CHARLES A. GONZALEZ, Texas 

SHEILA JACKSON LEE, Texas 

MELVIN L. WATT, North Carolina 

BRAD SHERMAN, California 

[Vacant] 

HOWARD COBLE, North Carolina 

JASON CHAFFETZ, Utah 

BOB GOODLATTE, Virginia 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

DARRELL ISSA, California 

GREGG HARPER, Mississippi 

CHRISTAL SHEPPARD, Chief Counsel 

BLAINE MERRITT, Minority Counsel 

(III) 

C O N T E N T S 

FEBRUARY 26, 2009 

Page 

OPENING STATEMENTS 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Chairman, Subcommittee on Courts and 

Competition Policy ............................................................................................... 1 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts and 

Competition Policy ............................................................................................... 3 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Ranking Member, Committee on the Judiciary ......................... 4 

WITNESSES 

The Honorable Bill Pascrell, Jr., a Representative in Congress from the 

State of New Jersey 

Oral Testimony ..................................................................................................... 5 

Prepared Statement ............................................................................................. 8 

Mr. Michael Rapino, President & Chief Executive Officer, Live Nation Worldwide, Incorporated, Beverly Hills, CA 

Oral Testimony ..................................................................................................... 12 

Prepared Statement ............................................................................................. 14 

Mr. Irving Azoff, Chief Executive Officer, Ticketmaster Entertainment, Incorporated, West Hollywood, CA 

Oral Testimony ..................................................................................................... 21 

Prepared Statement ............................................................................................. 23 

Mr. Robert W. Doyle, Jr., Partner, Doyle, Barlow & Mazard, PLLC, Washington, DC 

Oral Testimony ..................................................................................................... 29 

Prepared Statement ............................................................................................. 31 

Mr. Peter A. Luukko, President & Chief Operating Officer, ComcastSpectacor, Philadelphia, PA 

Oral Testimony ..................................................................................................... 57 

Prepared Statement ............................................................................................. 60 

Mr. Luke Froeb, William C. and Margaret W. Oehmig Associate Professor 

of Management, Owen Graduate School of Management, Vanderbilt University, Nashville, TN 

Oral Testimony ..................................................................................................... 63 

Prepared Statement ............................................................................................. 64 

Mr. Ed Mierzwinski, Consumer Program Director, U.S. PIRG, the Federation 

of Public Interest Research Groups, Washington, DC 

Oral Testimony ..................................................................................................... 74 

Prepared Statement ............................................................................................. 76 

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 101 

(1) 

COMPETITION IN THE TICKETING AND 

PROMOTION INDUSTRY 

THURSDAY, FEBRUARY 26, 2009 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS AND

COMPETITION POLICY

COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:07 a.m., in 

room 2141, Rayburn House Office Building, the Honorable Henry 

C. ‘‘Hank’’ Johnson, Jr. (Chairman of the Subcommittee) presiding. 

Present: Representatives Johnson, Sherman, Coble, Sensenbrenner, Goodlatte, and Issa. 

Staff Present: (Majority) Christal Sheppard, Chief Counsel; 

Elisabeth Stein, Counsel; Anant Raut, Counsel; Rosalind Jackson, 

Professional Staff Member; (Minority) Sean McLaughlin, Chief of 

Staff and General Counsel; and Stewart Jeffries, Counsel. 

Mr. JOHNSON. This hearing of the Committee on the Judiciary, 

Subcommittee on Courts and Competition Policy, will now come to 

order. 

Without objection, the Chair will be authorized to declare a recess of the hearing. I will start by saying that there has been a request by Congressman Pascrell that after he testifies, he would like 

to come and sit on the podium with us. I have spoken to my colleagues on the other side of the aisle, and they have no objection 

to that provided, that you don’t ask any questions. So you are welcome to sit up here. 

Mr. PASCRELL. Thank you. 

Mr. JOHNSON. I now recognize myself for about 5 minutes. I 

would like to make an opening statement. 

The reality in these tough economic times is that businesses are 

hurting. The entertainment business is affected by this economic 

downturn in the same way as other companies. TicketMaster, 

which owns the ticketing rights to 80 percent of the major venues 

in the United States, and Live Nation, which controls over 150 

venues in addition to being the biggest concert promoter in the 

United States, have argued that a merger is necessary for the companies to survive in the changing entertainment environment. 

While it is important to examine the effects of the merger between Live Nation and TicketMaster on the live entertainment industry, there may very well be reasons to support such a venture. 

Prior to this proposed merger, the companies simultaneously occupied different positions in the supply chain and were competitors. 

2 

Until December of 2008, Live Nation was a client of TicketMaster, 

generating 17 percent of TicketMaster’s overall revenue. Live Nation elected not to renew its contract with TicketMaster, choosing 

instead to enter the primary ticketing market and compete directly 

against TicketMaster. 

Live Nation also competed against TicketMaster for a controlling 

stake in Front Line, which is an artist management company, 

which TicketMaster ultimately won. 

In the primary ticket market, too much control over live entertainment might result in significantly higher ticket prices for consumers. The combined company would have vertical integration of 

every element of the live music business, that being artist management, promotion, venue and primary ticketing. 

Both companies have stated that this merger will not raise ticket 

prices because the artists sets the ticket price. This statement has, 

in my opinion, limited believability, and I am sure that we will 

hear more about that when we hear testimony. 

It is one thing to claim that artists such as Bruce Springsteen 

or Barbra Streisand have the star power to exert control over ticket 

prices, but artists without that clout are not in a position to negotiate the price of their tickets. 

TicketMaster and Live Nation argue that artists support the 

merger because artists will benefit, and they offered letters from a 

number of artists who support this merger. I could not help but notice that at least four of those five artists are currently managed 

by Live Nation or TicketMaster, yet we do not have an artist on 

the witness panel, despite our monumental efforts to procure someone. 

Our understanding is that those artists we reached out to were 

reluctant to speak against the merger, presumably for fear of repercussions. 

It is also troubling that a combined Live Nation and TicketMaster might have significant control over the secondary ticket 

market. Live Nation might have been a competitor of TicketMaster’s ticket reseller TicketsNow. 

Recently, TicketMaster tickets for a Bruce Springsteen concert 

were available on TicketsNow with a considerable markup from the 

face value. When fans complained about the bait and switch, 

Springsteen stated, quote, ‘‘The one thing that would make the current ticket situation even worse for the fan than it is now would 

be for TicketMaster and Live Nation coming up with a single system, thereby returning us to a near-monopoly situation in music 

ticketing.’’ 

Three days ago TicketMaster reached a settlement with the New 

Jersey attorney general, Anne Milgram, where TicketMaster 

agreed not to allow tickets to be sold on TicketsNow.com until the 

initial sale begins on its primary site. Only yesterday it was reported that TicketsNow began selling tickets to Leonard Cohen 

concerts before the tickets went on sale. I was astonished to learn 

that tickets with a face value of $99 to $250 were being sold on 

TicketsNow.com for between $568 and $856 plus a service charge 

ranging from $85 to $128 per ticket. 

There is a risk that ticket prices will increase and consumers will 

be harmed by this merger. The Department of Justice has opened 

3 

an investigation into this matter, and today we have a balanced 

panel because we want to understand how this merger will affect 

consumers. 

We are not here to gang up on a U.S. business that is doing its 

best to weather hard economic times. I thank TicketMaster and 

Live Nation for being here today, and I look forward to your candid 

testimony. 

I am now going to recognize my colleague, Mr. Coble, the distinguished Ranking Member of the Subcommittee for his opening remarks. 

Mr. COBLE. Thank you, Mr. Chairman, and thank you for calling 

this hearing of the Courts and Competitive Policy Subcommittee. 

Until very recently, as you know, Mr. Chairman, antitrust has 

been a full Committee issue; and I believe this is the first Subcommittee hearing on antitrust matters in at least 8 years, and I 

am pleased that we have such an interesting first topic. 

Bill, it is good to have you with us. And I will say to some of the 

witnesses who came by my office yesterday, because of conflicting 

hearings, I was not able to be with you, but I hope my staff extended a cordial greeting to you. I have heard no complaints, so I 

assume they did. 

Today’s hearing gives us the opportunity to examine the proposed merger of Live Nation and TicketMaster, a combination that 

would create one of the world’s largest entertainment companies. 

The combined company would own a segment of every aspect of the 

live music distribution chain from artist management to ticketing 

and practically everything in between. 

The Senate Judiciary Committee, Mr. Chairman, conducted a 

hearing on this very issue earlier this week, and it appears from 

their comments that several of the Senators had real concerns 

about this proposed merger. One of their main concerns arises from 

the relationship that TicketMaster has with its wholly owned subsidiary, TicketsNow.com, which is a secondary ticket retailer. 

Recently, hundreds of fans seeking Bruce Springsteen tickets on 

TicketMaster.com, I am told, were redirected to TicketsNow.com for 

tickets at a significantly higher price than face value. Furthermore, 

I am advised that there were still tickets available for face value 

on the main TicketMaster Web site. 

In addition, TicketMaster’s CEO, Mr. Azoff, who is testifying 

today, was recently quoted in the Wall Street Journal as saying 

that artists’ agents frequently leverage their value of their start clients to extract better deals from venues and concert promoters. 

With a stable of artists that includes—and, Mr. Chairman, I will 

stipulate that I am not the most hip guy on Capitol Hill, so I may 

mispronounce some of these names—The Eagles, Jimmy Buffett, 

Neil Diamond, Van Halen, Fleetwood Mac, Christina Aguilera, 

Aerosmith, Miley Cyrus, Madonna, Jay-Z, U-2 and Shakira. 

A combined Live Nation-TicketMaster would have a lot of leverage, and that is only one aspect of this business. I noticed, Mr. 

Chairman, conspicuously absent from that list of artists are some 

of my favorites—Earl Scruggs, Lyle Lovett, the late Grandpa Jones, 

the late Buck Owens—but as I say, I am not the most hip guy 

around. 

4 

All of that leads me to be concerned about how this deal with affect the average customer. With its wealth of resources in terms of 

artists managed, venues controlled and tickets sold, the combined 

TicketMaster-Live Nation will have a lot of sway, it seems to me, 

over the little guy. After all, in these troubled economic times we 

cannot ask customers to pay more for a TicketMaster ‘‘convenience 

charge,’’ a charge that many customers would probably indicate is 

not convenient. 

This Subcommittee, with the support of the current and former 

Chairman, have spent enormous resources to improve and secure 

the future of the American entertainment industry, which is indeed 

significant. It provides billions, billions, in positive revenue to our 

economy. At the same time, this entertainment must remain affordable and accessible for the industry to continue to flourish. 

As I implied earlier, I am a devout bluegrass and old time country fan, and while this may be only a fraction of the events affected 

by this merger, thousands of my constituents back home, Mr. 

Chairman, are skeptical; and I am sure they are watching or will 

follow this hearing closely as to how this matter will affect them. 

That said, the burden today, it seems to me, is on TicketMaster 

and Live Nation to demonstrate how their proposed merger will 

benefit fans and the industry alike. 

I thank our witnesses who have agreed to participate in today’s 

hearing, and I look forward to hearing the testimony. 

I yield back. 

Mr. JOHNSON. I thank the gentleman for his statement. 

I now recognize Representative Smith, who would like to make 

an opening statement, an honorable Member from Texas. 

Mr. SMITH. Mr. Chairman, I appreciate your calling this hearing 

on competition in the ticketing and promotion industry. 

Vigorous, unimpeded competition sustains our economy and 

keeps it strong. It leads to innovative products that better our lives 

and keep prices low. 

The Judiciary Committee has a long history of oversight to ensure that American markets retain healthy competition. This hearing is evidence of the Committee’s continued interest in considering 

mergers of large companies that can affect American consumers. 

Today’s hearing gives us the opportunity to examine the proposed merger of Live Nation and TicketMaster, a combination that 

would create one of the world’s largest entertainment companies. 

The combined company would own significant assets in the artist 

management, venue management, concert promotion, ticketing and 

marketing aspects of live entertainment. In short, the new company will have a hand in everything from signing up artists, to deciding what venues those artists will play, to the price of the ticket 

that consumers must pay. 

The question that the Department of Justice must answer in reviewing this merger is whether the proposed transaction will lessen 

competition and thereby harm consumers. 

On the other hand, this merger is not typical of the mergers that 

this Committee usually reviews. Normally, we look at mergers between head-to-head competitors such as Delta and Northwest and 

XM-Sirius. 

5 

While there is an element of that in this merger, the more compelling and harder-to-answer question is whether a vertically integrated company that has a hand in every stage of live entertainment from artist to concert goer will reduce choices and raise prices 

for live entertainment. This is particularly relevant given that one 

of the parties, TicketMaster, has recently been the subject of scrutiny because of a mistake that directed hundreds of customers for 

Bruce Springsteen tickets to a TicketMaster-owned ticket reseller 

that was charging significantly higher prices. The Boss was upset, 

his fans were upset; and I can’t say that I blame them. 

Under these circumstances, it is harder to believe TicketMaster 

when it says, Trust us that ticket prices can come down under this 

merger. 

Finally, while some artists, such as Bruce Springsteen, have expressed public displeasure with this deal, none was willing to testify today. Conversely, numerous artists have written the Committee to say that the deal will lead to better options for artists 

and consumers alike. 

I would like to thank all of our witnesses for appearing here 

today, and I look forward to hearing the views of the witnesses on 

this subject. 

I yield back. 

Mr. JOHNSON. Thank you, Congressman Smith. 

Without objection, other Members’ opening statements will be included in the record. 

I am now pleased to introduce the witnesses for today’s hearing. 

We have two panels, and I will now introduce the first panel which 

consists of the distinguished gentlemen from New Jersey, Representative Bill Pascrell, Jr. He is in his seventh term as the Congressman for the Eighth District of New Jersey. Throughout his 

distinguished career in public service, first as a member of the New 

Jersey General Assembly and later as Mayor of Paterson, New Jersey, Representative Pascrell has earned numerous accolades, including a humanitarian award from the New Jersey State Firemen’s Mutual Benevolent Association, as well as special recognition 

from the Brain Injury Association of America. 

Welcome, Congressman Pascrell. 

TESTIMONY OF THE HONORABLE BILL PASCRELL, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PASCRELL. Mr. Chairman, I want to thank you and I want 

to thank our Ranking Member, Mr. Coble, my neighbor, and Members of the Committee for this critical hearing and allowing me to 

testify before the Subcommittee about the proposed merger between TicketMaster and Live Nation. 

My attention was brought to this issue by the botched sale on 

February 2 of tickets to two Bruce Springsteen shows in New Jersey. To be clear, fans trying to buy tickets on TicketMaster.com 

were met with error messages and a link to purchase more expensive tickets on a secondary resale site, TicketsNow, which TicketMaster happens to own. 

Mr. Chairman, let me say that I was moved to act on this issue 

by the appeal of over 1,000 average Americans who felt they got 

6 

a rotten deal and just wanted to know the truth, which is why I 

wrote to the Federal Trade Commission and the Justice Department calling for an investigation. 

But when I read yesterday in Roll Call that a Live Nation source 

said that this whole issue was just a distraction and not a legal 

issue, well, I have to admit I went from cerebral to visceral. To 

even imply that the Senate committee and the House committee 

are irrelevant to the task of examining this merger, first of all, is 

wrong and, second of all, we should all think about what our responsibilities are. 

The heart of this issue is the average American out there, the 

person who works longer and longer hours for less and less, the 

person who scrimps and saves for months to maybe buy a couple 

of tickets to their favorite sporting event or a concert only to be 

gouged at every turn. 

That same Live Nation source went on to say that ‘‘This whole 

’flap’ was a bit of a surprise, but is not really related to the deal. 

There is nothing that a merger with Live Nation will do that 

changes that scenario, just what happens when you have bad public relations at the wrong time.’’ 

I don’t know if there are bad public relations at the right time. 

Mr. Chairman, I am sorry about the debacle on February 2, and 

it shouldn’t have been a surprise to the parties involved, and it has 

everything to do with the merger we are talking about today. This 

isn’t just a little bad PR, this is quite simply a bad deal for the 

American people. 

Listen to Bruce Springsteen himself, who said, ‘‘The one thing 

that would make the current ticket situation even worse for the fan 

than it is now would be TicketMaster and Live Nation coming up 

with a single system, thereby returning us to a near-monopoly situation in music ticketing. If you, like us, oppose the idea, make it 

known to your Representatives.’’ 

That is what Bruce Springsteen had to say. 

Let me tell you, Mr. Chairman, they have indeed made their feelings known. Now TicketMaster wants us to believe that by merging 

with promoting juggernaut Live Nation, they will be able to offer 

lower prices and better service to consumers. That is what you are 

going to hear today. 

You don’t have to have a Ph.D. in economics to see this for what 

it is. This is a naked attempt to dominate the concert marketplace, 

to stifle competition and prevent any competitors from entering the 

market in the future. 

The combined corporation would control nearly every aspect of 

the live music business—you referred to this in your opening comments, Mr. Chairman—the artist management, the record sales, 

the promotion, the licensing, the venue control, the marketing, the 

ticket sales and the resales all of the way down to the hot dogs and 

beer. 

Try to take your family to a baseball game or a football game. 

Pretty soon you won’t be able to wash your hands at a concert 

without this new company making a profit. Independent promoters, 

artists and the fans will have no choice but to do business with this 

behemoth and pay whatever they charge. It will be the only game 

in town, and that is the epitome of a monopoly. 

7 

For years, TicketMaster has been able to get away with its arbitrary and overpriced service and convenience fees by cornering the 

market for ticket sales through anticompetitive exclusivity arrangements with venues. Today, you have to pay a fee just to print your 

tickets out at your home. That is greed, plain and simple. 

And what did TicketMaster do when the first significant competitor to them in the primary ticketing industry finally emerged, they 

didn’t choose to out-compete them, they sought to gobble them up 

in order to preserve their market dominance. This is the very essence of anticompetitive behavior, and this Committee and the Department of Justice must reject it. 

The President is on the side of the people, Mr. Chairman. In 

1962, Robert Kennedy, his Justice Department refused to allow 

MCA, Music Corporation of America, and Decca Records to merge 

because it would have put a talent agency and a movie studio 

under the same corporate roof. 

The merger we are discussing today would similarly put the 

managers of talent, the operators of venues and ticket sales together and allow them to exclude outside artists, allow them to exclude venues and allow them to exclude promoters from their business. 

The issue of a primary ticket reseller owning a secondary ticket 

dealer raises many significant questions in and of itself. TicketMaster has admitted that it earns more gross profits off a sale on 

its secondary site than its primary one. Everyone, from the scalpers 

to the hackers—and by the way, in the United States, scalping is 

legal in most States; we need to take a look at this—brokers and 

TicketMaster itself, makes a little extra cash under this perverse 

system of incentives; and the fans are left sitting outside in the 

cold. 

Senator Schumer and I agree, TicketMaster should immediately 

sell TicketsNow and end this obvious conflict of interest. I will soon 

be proposing Federal legislation to ban the use of automated 

ticketing programs and rein in the secondary ticket market. Real 

music and sports fans deserve the right to see their favorite bands 

and their teams without a greedy middleman cutting the line and 

exploiting their passion for profit. I hope that is clear. 

We live in a period of tough economic times. Oftentimes live entertainment is a way to escape for a few moments or a few hours. 

For years fans have scraped together some cash to buy a ticket to 

their favorite band or sports team, but anticompetitive behaviors 

have driven these costs to astronomical heights, pricing many fans 

out of the market. 

The question we should be asking in any merger is this: When 

this deal is approved and all of the scrutiny and press attention 

dies down, as it certainly will, do we really believe that this new 

corporate Goliath will do what is in the best interest of consumers 

and the marketplace? 

I think the actions of TicketMaster and I think the actions of 

Live Nation make it clear that the answer is a definitive ‘‘no.’’ 

I thank you for allowing me to come here and testify today. I 

hope the rest of the hearing is revealing. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Pascrell follows:] 

8 

PREPARED STATEMENT OF THE HONORABLE BILL PASCRELL, JR., A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF NEW JERSEY

INTRODUCTION

I want to thank Subcommittee Chairman Johnson and Ranking Member Coble for 

inviting me here today to testify about the proposed merger between TicketMaster, 

the country’s largest primary ticketing company, and Live Nation, our country’s 

largest concert promoter and operator of over 150 venues. I have grave concerns 

that this merger will have far reaching negative consequences for artists, fans, promoters, and the music industry as a whole. I believe that it violates both horizontal 

and vertical anti-trust principles, and will undoubtedly lead to higher ticket prices 

for the average consumer. I applaud the Subcommittee for taking a careful look at 

this merger. I fear that if this merger is approved we will lose any semblance of 

competition in the live music industry. 

TESTIMONY

As a Member of Congress, my number one priority is to represent my constituents 

and to defend their interests. I was troubled when I was contacted by many constituents and read press reports regarding the initial sale of tickets to two Bruce 

Springsteen shows in New Jersey, in which fans trying to buy tickets on TicketMaster.com were met with error messages and links to purchase the tickets on 

TicketsNow.com, a TicketMaster subsidiary, for two, three, or four times the original price. Something was not right, and I’m glad that TicketMaster has since acknowledged that. I am pleased with many of the concessions they were forced to 

make, although they still maintain cause of the problems so many fans had was 

simply the glitch with their technology. I’ve written to the FTC to request a full investigation of what occurred on February 2nd to make sure we get to the bottom 

of this. 

However, the problems with TicketMaster’s business practices go far beyond a 

simple one time glitch. The fact is that without this glitch, we would never have 

uncovered the insidious relationship between TicketMaster and TicketsNow to begin 

with. It has brought to light the many consumer complaints and problems with 

TicketMaster that for years we have shut our eyes to, but the fans have known 

about all along. For years they have been dealing with unjustified and arbitrary 

‘‘service’’ and ‘‘convenience’’ fees, including a fee to print your tickets in your own 

home, and rising base ticket prices that have far outpaced the rate of inflation. And 

they have finally had enough. I was moved to act by the thousands of messages my 

office has received regarding not only the botched Bruce Springsteen sale, but issues 

with TicketMaster going back years. Yes, TicketMaster has apologized for their recent actions, but how sincere is this? Is it just a coincidence that these apologies 

and concessions occur at the moment they are seeking this merger? I urge this committee to consider how this proposed corporate conglomerate will behave when they 

are not under our watchful gaze. Do we really believe they will have the best interest of the consumer in mind? The nature of the complaints my office has received 

and their actions suggest that once this merger has been approved and we aren’t 

looking, it will be back to business as usual at TicketMaster/Live Nation. 

As we saw with the initial ticket on sale to the Bruce Springsteen concerts at the 

beginning of this month, TicketMaster’s current monopolization of the primary ticket market and questionable business practices often lead to the consumer being 

taken for a ride. Now TicketMaster wants us to believe that by merging with Live 

Nation it will be able to offer lower priced tickets to consumers. Now, I don’t have 

a PhD in economics, but I’m not stupid either, and neither are the American people. 

They see this for what it is: a naked attempt to dominate the concert marketplace. 

This merger will combine TicketMaster, which owns the ticketing rights to 80 percent of the major venues in this country, with Live Nation, which in addition to 

being the biggest concert promoter in the world, also controls over 150 venues. This 

combined company would be a juggernaut. It would have control over every aspect 

of the live music business: artist management, record sales, promotion, licensing, 

venue control, parking, ticket sales and resales, all the way down to the hot dogs 

and beer. Pretty soon, you won’t be able to wash your hands at a concert without 

this new company making a profit. This level of vertical control will be unprecedented in the music industry and recalls the trusts of the gilded age that controlled 

every step along the production process for oil or steel. Independent promoters, who 

don’t get squeezed out of business, artists and fans will have no choice but to do 

business with this behemoth and pay whatever they charge. It will be the only game 

in town—and that, I must say, is the epitome of a monopoly. 

9 

1See McDougal, Dennis. The Last Mogul: Lew Wasserman, MCA, and the Hidden History of 

Hollywood. Da Capo Press, 2001. 299–302. 

It didn’t have to be like this. Live Nation, which until recently had sold tickets 

through TicketMaster, was poised to enter the primary ticket sales market and finally provide some much needed competition in the ticketing industry. Competition, 

after all, is what capitalism is all about. This new and significant challenge to 

TicketMaster’s dominance was sure to cause ticket prices to fall. But what happened? After only one month of real competition in the ticketing industry, this merger between the country’s two largest primary ticket agents was announced. Now, the 

combined company will maintain its stranglehold on the primary ticket market and 

the ability to raise prices at will not because they offer a better service, but because 

they were able to buy out their only competition. This is anti-competitive behavior 

distilled to its purest form, and must be rejected by this committee and the Department of Justice. 

Combining Live Nation and TicketMaster would obviously significantly dilute 

competition in the live music industry and violates both vertical and horizontal 

models of anti-trust law. It would create no benefit for the consumer, and as history, 

economic theory, and common sense dictate, would not lower the cost of tickets. 

TicketMaster already has a monopoly on primary ticket sales in this country. Live 

Nation has a monopoly on this country’s amphitheaters and many other venues in 

addition to promoting a vast majority of the top concerts in this country each year. 

Two wrongs don’t make a right and combining two monopolies cannot possibly be 

a good deal for consumers. 

While rejecting this merger is imperative, I would urge this committee to further 

consider federal review of consolidation within the music industry as a whole. I believe that both TicketMaster and Live Nation may already be violating federal antitrust laws. The Department of Justice has let these companies get too big, and I 

urge this committee and the new Administration to take a fresh look at their business practices. 

Precedent is on the side of the people. In the 1960s, MCA (the Music Corporation 

of America) entered a merger with New York-based Decca Records. MCA at the time 

included in its business portfolio a successful talent agency, while Decca at the time 

owned a controlling stake in Universal Pictures. In order to acquire Universal, the 

Department of Justice led by Attorney General Robert F. Kennedy, forced MCA to 

dissolve its talent agency. The Department of Justice felt that one company owning 

both the movie studio and a talent agency would violate anti-trust laws.1 The 

TicketMaster-Live Nation merger before us today would violate the same anti-trust 

principles by putting control of top talent as well as the production of their shows 

under one company’s roof. 

If this merger is allowed to proceed, problems like those that fans experienced trying to buy Bruce Springsteen tickets will become more and more commonplace. The 

issue of a primary ticket reseller owning a secondary ticket market raises many significant questions in of itself. TicketMaster’s business practice in this arena appears 

to contradict its tough public rhetoric on ticket scalpers. In reality, TicketMaster has 

little financial incentive to reign in brokers and hackers who may be using computer 

software to either cut the line or purchase mass quantities of tickets. After all, 

TicketMaster has admitted it earns a larger gross profit on a ticket sold on their 

secondary market site than on their primary market one. Everyone, from scalpers 

and hackers to brokers and TicketMaster itself, makes a little extra cash under this 

perverse system of incentives, and the fans are left sitting outside in the cold. I 

agree with what Senator Schumer said at Tuesday’s hearing in the Senate Judiciary 

Committee. TicketMaster should immediately sell TicketsNow and end this obvious 

conflict of interest. 

Additionally, I will soon be proposing federal legislation to ban the use of these 

automated ticket purchasing programs and take additional steps to reign in the secondary ticket market, and I hope to work with this committee on this important initiative. The real fans deserve the right to see their favorite bands without a greedy 

middleman cutting the line and exploiting their passion for profit. 

We are all well aware of the tough economic times this country and its citizens 

are faced with. This economy is scary. For many Americans, going to sleep every 

night means wondering if they will have a job to wake up to in the morning. Will 

I be able to afford a trip to the hospital bill if something happens? Will my house 

be foreclosed on tomorrow? For many, live music and entertainment is a way to escape all of this, if at least for a few hours. 

However, over the past several decades, anti-competitive behaviors by companies 

such as TicketMaster and Live Nation have priced so many of these average fans 

out of the market. The last thing that the American people deserve in these tough 

10 

economic times is to be continually price gouged by a corporate conglomerate more 

concerned with profits and the price of its stock then the experience of the fans. 

Live Nation and TicketMaster has assembled a strong team of expensive lobbyists, law firms and publicists to push for their goal of merger. There is no comparable group on the other side of the issue to pay for lobbyists, to pay for attorneys, 

no one to fight for the average Joe. My friends, it is the job of those of us in the 

Congress to represent the people and fight for what is in their best interest. It is 

time for the Congress to ensure that the concert industry returns to a business 

model that puts the fans, artists and music first. Rejecting this merger will be a 

significant first step in that direction. 

Thank you. 

Mr. JOHNSON. Thank you. I thank the gentleman for his statement. 

I will say that back in 1973, when I was in college, I was feeling 

pretty low one day and so I decided to go to a concert that was 

being held at the old Atlanta Fulton County Stadium. It was on the 

lawn out there, and the headliner was George Clinton and the 

Funkadelics. I don’t know if Ranking Member Coble recalls that 

group, but I think tickets were somewhere between $5 and $10. 

So I went to the concert. It was a wonderful experience. It definitely took my mind off of my troubles, and I had a renewed sense 

of vigor to press forward. You mentioned about how concerts can 

positively impact people, particularly during a tough economic time 

as we are in now. 

Mr. PASCRELL. Mr. Chairman, if I may. 

Mr. JOHNSON. Please. 

Mr. PASCRELL. There is nothing in what I have said that implies 

that we want the government to control A to Z. That doesn’t help, 

either. 

But I think we have a responsibility. I know that Bruce 

Springsteen’s song, The Promised Land, has been an inspiration to 

a lot of people. And I don’t pretend to be an expert on Bruce 

Springsteen, although I know most of his music and he is from 

New Jersey. But in that song he said, ‘‘Driving all night chasing 

some mirage, some day with a girl I’m going to take charge.’’ 

Folks need to know we do have some control over what is happening, that we are not simply at the beck and call of other people. 

We want people to make profits. That is what America is all 

about. But the average guy out there is getting stuck every day, 

and particularly when it comes to some entertainment, I think we 

need to take a real good look at this proposed merger, and I am 

sure you are up to it. 

Mr. JOHNSON. There is no question that this Subcommittee has— 

from the outset of the announcement of the merger, been concerned 

about this issue. We view it very seriously, and that is why we are 

meeting today for this hearing. 

I thank you for your statement. Please feel free to come up and 

have a seat. 

I want to now introduce our second panel. Our second panel features Mr. Michael Rapino, President and CEO of Live Nation 

Worldwide. Mr. Rapino began his career in the music business as 

an undergraduate at Lakehead University in Canada, promoting 

Labatt Brewing Company at live music shows. He was the CEO 

and President of Global Music for Clear Channel Music Group and 

11 

has been President and CEO of Live Nation since 2005, when it 

was spun off as a separate company by Clear Channel. 

Welcome, Mr. Rapino. 

Next is Mr. Irving Azoff, CEO of TicketMaster Entertainment. 

From his early days booking bands as an undergraduate at the 

University of Illinois, Mr. Azoff has been a fixture in the music 

business. He has experience as a music agent, manager, promoter, 

publisher, producer and record label owner. 

In 1983, Mr. Azoff was named Chairman and CEO of the MCA 

Music Entertainment Group. In 2005, his artist management firm, 

Front Line Entertainment, was acquired by TicketMaster; and in 

addition to serving as CEO of TicketMaster, Mr. Azoff manages 

such recording artists as The Eagles, Christina Aguilera, Van 

Halen and Steely Dan. 

Welcome, Mr. Azoff. 

Also on the panel is Mr. Peter Luukko, President and Chief Operating Officer of Comcast-Spectacor, a Philadelphia-based sports 

entertainment firm that owns the NBA Philadelphia 76ers and the 

NHL’s Philadelphia Flyers as well as the arenas in which they 

play. 

Beginning with an internship at the New Haven Coliseum, Mr. 

Luukko’s sports management career spans two decades. He was 

the 2000 recipient of the City of Hope’s Tri-State Labor Award. In 

his own words, Mr. Luukko describes himself as a hockey player, 

a hockey coach, and a hockey parent. 

Welcome. Mr. Luukko. 

Next is Mr. Robert Doyle, an antitrust partner in the firm Doyle, 

Barlow & Mazard, PLLC. After receiving degrees in law and economics from Temple University, Mr. Doyle spent 20 years litigating 

cases on behalf of the Federal Trade Commission. 

Mr. Doyle served previously as a Deputy Assistant Director in 

the FTC’s Bureau of Competition and has been featured on the 

cover of the American Lawyer magazine. 

Welcome, Mr. Doyle. 

Next is Professor Luke Froeb of the Owen Graduate School of 

Management at Vanderbilt University. Mr. Froeb spent 7 years as 

an economist at the Antitrust Division of the Department of Justice 

before becoming Director of the Bureau of Economics at the Federal 

Trade Commission. 

Professor Froeb has published numerous papers concerning antitrust policy and economics and was voted outstanding professor of 

Vanderbilt’s executive MBA program in 3 separate years. 

Welcome, Professor Froeb. 

Our last witness is Ed Mierzwinski, who is a Senior Fellow in 

the consumer program of the National Association of State Public 

Interest Research Groups, known as U.S. PIRG. Mr. Mierzwinski 

has testified on numerous occasions before State legislatures and 

Congress on a wide variety of consumer issues. He has appeared 

as a commentator on the Today Show, Good Morning America, 

Nightline, CNN, Crossfire and NPR’s Talk of the Nation. 

Mr. Mierzwinski is a recipient of Privacy International’s Brandeis Award for privacy protections and the Consumer Federation of 

America’s Esther Peterson Consumer Service Award. 

Welcome, Mr. Mierzwinski. 

12 

Mr. JOHNSON. We thank all of you for joining us here today. 

Without objection, your written statements will be made a part of 

the record in their entirety. 

I ask each of you to summarize your testimony in 5 minutes or 

less. There is a timing light at your table. When 1 minute remains, 

the light will switch from green to yellow, and then to red when 

your 5 minutes are up. 

Mr. Rapino, please proceed. 

TESTIMONY OF MICHAEL RAPINO, PRESIDENT & CHIEF EXECUTIVE OFFICER, LIVE NATION WORLDWIDE, INCORPORATED, BEVERLY HILLS, CA 

Mr. RAPINO. Thank you, Mr. Chairman and Members of the 

Committee, and thank you for the opportunity to speak today and 

address some of the perceptions about Live Nation and this merger. 

I want to address this quote that was apparently in some paper 

yesterday. I can assure you that it didn’t come from me. I wouldn’t 

even know who to call to make that quote. And I can assure you 

that everyone on our team has the utmost respect for these hearings, and we appreciate and understand your concerns. 

As a side note, I am fully aware of the power of the Senate and 

the Congress. I am a fellow Canadian who will be sworn in as a 

U.S. citizen in the next 30 days after going through my 6 months 

of the process to become a U.S. citizen. So I am very proud to become part of this country. 

Let me explain some of the facts regarding Live Nation because 

sometimes the perception of ‘‘big’’ isn’t always the truth. 

We have 17,000 employees that work in local communities across 

America. Last year, our market share was approximately 35 percent and has declined for 5 years straight. Our market cap today 

is $250 million and we are carrying $700 million in debt. Our stock 

is widely held and owned by many of your constituents. We have 

no large shareholder who controls our company. 

We put on 7,000 concerts a year for young artists, and we lose 

$10-20 million on those shows. We operate in a highly competitive 

marketplace. We are in a 4 percent margin business, the lowest in 

the industry. And to give you a comparison, record labels operate 

in the 15 to 20 percent margin business. 

Let me tell you about our competition. Our biggest competitor is 

AEG, a privately held company owned by multibillionaire Phil 

Anschutz, who is the 31st richest man in America. AEG promoted 

five of the top 10 concerts last year; we promoted four. AEG is a 

vertically integrated company in two separate categories. They own 

a movie production company and chain of movie theaters; and in 

live entertainment, they own arenas, stadiums, clubs, sports teams, 

a concert company, music merchandise, and are one step away 

from a ticketing company. 

To put it in perspective, one of those assets, the Staples Center, 

is worth more than our two companies combined. 

In every market we face able and relentless competition from 

AEG and independent promoters. For example, in Washington, DC, 

the local promoter, Seth Hurwitz, has a larger market share than 

Live Nation. 

13 

Some of the facts about our venues: We own 18 venues and lease 

70 in America. This is a small fraction of the thousands of venues 

across America that are staging music. In every city and town, 

there are buildings and stiff competition from the new casinos to 

fairs, festivals and arenas. 

When we fired TicketMaster, we found it very easy to find other 

competing ticketing companies for our venues. We had a lineup of 

companies willing and able to ticket our venues. We narrowed it 

down to four, and we ended up choosing a company from Germany—we are not actually a ticketing company, the CTS company 

is the ticketing company—and we found it to be a very competitive 

marketplace. 

Let me tell you about the concert business. The artist pays us a 

fee to handle their show. We guarantee them an amount of dollars, 

and they pay us a fee from the concert promotion profits, somewhere in the 5 to 15 percent range. The artist and their business 

team set the basic prices and financial needs of the tour. From a 

small band to a large band, an artist has a running operating cost 

that he needs to cover on the road. He then works backwards and 

sets ticket prices to help cover his expenses. An average ticket price for a concert is only $50. Front row may cost you up to $150. That is still well below the price of a ringside 

boxing match seat, courtside at a basketball game, rink level seats 

at a hockey game or seats on Broadway. 

Fans go to an average of only two concerts a year historically. It 

is not a necessity. It is a form of entertainment, and it is still much 

cheaper than an average dinner in Washington. 

When polled and fans were asked, ‘‘why did you not go to the 

show?’’ Their top reasons were: They did not know about the 

show—50 percent said they didn’t know; they didn’t like the band; 

and they couldn’t get good seats. 

In our business we have a saying: If the front row was 8 miles 

long, we would have a lot of happy fans. If you are in the front row 

of a show, you love the system. If you are in the back row of the 

arena, you are not that happy. And if you are one of the thousands 

that didn’t get into the show, it is our fault. 

The Live Nation business model: We make money two ways, 

from artist revenue and ancillary revenue. Our model is based on 

putting fans in seats. The more fans that walk in the door, the 

more money we make. We make very little money from the ticket; 

on average, $4 out of a $100 concert ticket goes to us. We make 

$12 to $15 on peanuts, popcorn, parking, ticket rebates and all of 

the ancillary revenue created to fund the business. 

Mr. JOHNSON. Mr. Rapino, your time has expired. Please sum up. 

Mr. RAPINO. I apologize. 

This merger, we believe, is going to be a good step forward for 

an industry that needs change. We don’t have all of the answers. 

We are not miraculously going to change a 30-year history, but we 

believe change is needed, and technology advances are needed. 

We agree that scalping has to be addressed, from outlawed, and 

stopped. We would like to reduce service fees and we would like to 

create a better model for the artist that helps the fan. 

Mr. JOHNSON. Thank you, Mr. Rapino. 

[The prepared statement of Mr. Rapino follows:] 

14 

PREPARED STATEMENT OF MICHAEL RAPINO


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*Subsequent to delivering this testimony, Mr. Azoff learned that as to a de minimis number 

of tickets sold in very narrowly defined cases (constituting less than four one-hundredths of one 

percent of the tickets that TicketMaster sells), TicketMaster sets ticket prices. 

Mr. JOHNSON. Mr. Azoff, it is time for your testimony now. 

TESTIMONY OF IRVING AZOFF, CHIEF EXECUTIVE OFFICER, 

TicketMaster ENTERTAINMENT, INCORPORATED, WEST HOLLYWOOD, CA* 

Mr. AZOFF. First, I would like to thank Chairman Johnson and 

the Subcommittee Members for this opportunity to speak about 

this proposed merger. 

I came to TicketMaster 4 months ago when it acquired a majority interest in Front Line Management; I became CEO of TicketMaster Entertainment. While I have spent my 43-year career serving artists, TicketMaster has dedicated itself for 30 years to reaching fans of live entertainment. We have roughly 6,700 employees, 

who have worked extremely hard to bring us the success we have 

seen as a company. 

I have come to realize in my short time with the company that 

TicketMaster is a lightning rod for many issues beyond its control. 

As the only point of contact with fans, TicketMaster hears nearly 

every gripe about—just about everything that goes wrong. People 

don’t like ticket prices, they blame TicketMaster even though we 

have nothing to do with setting ticket prices. 

If a show sells out, they get mad at TicketMaster even though 

all we do is sell all the tickets that our clients give us to sell. 

If they get a bad seat, they blame TicketMaster even though we 

don’t control which seats go on sale. 

If somebody gets hurt in a mosh pit, they try to sue us. We take 

so much heat for what we do, you would think that we were the 

IRS. 

That is not to say that we always get it right. We don’t. No one 

does. As hard as we try to serve clients and ticket buyers, technology is not perfect. 

I fully understand the frustration and anger created by the problems we experienced in the recent Bruce Springsteen on-sale. I will 

explain in detail. 

On February 2, tickets for three Bruce Springsteen concerts went 

on sale at 9 a.m. Because of Mr. Springsteen’s popularity, there 

were many more fans trying to buy tickets through TicketMaster.com than there were tickets available. As a result, many requests could not be filled. 

In August 2008, TicketMaster modified its payment processing 

software in the U.S. to support certain credit card antifraud programs. On the morning of February 2, on the TicketMaster server 

covering sales for New Jersey, the extreme load caused by the 

Boss’s concert on sale revealed a limitation in the software implementation. While the code that was added to implement this program passed all internal tests, it ultimately was unable to handle 

the extreme conditions of the heavy volume. Starting at approximately 9:08, this caused certain consumer transactions to freeze for 

an extended period to be aborted while processing payments. It 

also caused certain consumers to see routine maintenance error 

pages on the Web site while attempting to reserve tickets. 

22 

No consumers were directed to TicketsNow or given the option 

to link to TicketsNow from the error page. TicketMaster identified 

the software problem at approximately 9:45. In both cases, fans involved had to return to start over at the TicketMaster.com site to 

start another search. 

The problem was corrected at approximately 1:25 p.m. when a 

software patch was installed on the affected ticket inventory systems. That unlocked the frozen transactions and eliminated the 

routine maintenance error pages. In addition, TicketMaster sent 

out a ticket alert e-mail to certain registered users that inadvertently and mistakenly listed the on-sale time as 10 a.m. rather than 

9 a.m. 

Consistent with our policy at the time, other ticket purchasing 

options for the event were unable to fulfill a specific ticket request 

on TicketMaster.com. Fans who were unable to secure tickets in response to their search were given three choices: Search again using 

different parameters, come back later, or voluntarily click on a link 

to see inventory available on TicketsNow. Some consumers who 

chose to link to TicketsNow and then completed a purchase, however, complained they were confused and believed they were instead purchasing tickets from the initial on-sale from TicketMaster.com. 

While we believe the messaging on the site was clear when consumers chose to switch to TicketsNow, we immediately offered to 

issue refunds for the difference between the purchase price and the 

face value of the ticket. Also, to address the concerns we received 

from consumers, we have removed all links to TicketsNow from our 

TicketMaster Web site in all States. 

We are in a service business, and like any other service business, 

if we don’t serve our clients, we lose the business. 

We are proud of our success and the number of our satisfied customers who rely daily on our ticketing system. Some claim we have 

a large share of the ticketing service market. We don’t measure or 

keep track of such things. What we do is we strive to do the best 

job we can and keep up with the many competitors who are offering alternatives to our clients. 

All of our venue agreements come up for renewal constantly. We 

have lost major arenas to competitors in Philadelphia, Houston, 

Cleveland and Denver. If that is not competition, I don’t know 

what is. 

Others will most certainly leave if this merger is consummated. 

In fact, AEG has notified us by letter that they believe they have 

the right to terminate our agreement in connection with this merger. I will supply a letter to the Committee. Thank you very much. 

[The prepared statement of Mr. Azoff follows:] 

23 

PREPARED STATEMENT OF IRVING AZOFF


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Mr. JOHNSON. Mr. Doyle. 

TESTIMONY OF ROBERT W. DOYLE, JR., PARTNER, DOYLE, 

BARLOW & MAZARD, PLLC, WASHINGTON, DC 

Mr. DOYLE. Thank you, Mr. Chairman and the Subcommittee, for 

this opportunity to present my views on this proposed merger. I do 

not represent anybody here. I am appearing at the invitation of the 

Committee to express my views on the transaction. 

I have four basic views on the proposed merger: 

I believe that the merger will eliminate competition in the primary ticket services market; 

I believe it will reduce competition in the secondary ticket services market; 

It will reduce competition in the management of top tier artists; 

and 

Fourthly, it will reduce competition in the concert promotion industry. 

In the interest of time, I am going to focus my summary on the 

competitive effects of this merger in the primary ticket services 

market. 

This merger will eliminate the only viable competitor available 

to go head to head with TicketMaster in the primary ticketing services market. Now let me put this in a little bit of context. We have 

to go back to September of 2008. 

On September 11, 2008, Live Nation announced that it was entering the ticketing business. That same day they also announced 

that they had taken away from TicketMaster its largest customer, 

SMG Entertainment. TicketMaster immediately responded to that 

press release put out by Live Nation. 

Their press release indicated that in the short term Live Nation’s 

entry didn’t impact them very significantly because SMG was tied 

up in a long-term contract through 2010, and during the interim 

period, TicketMaster would take every step possible to convince 

SMG to stay with them until the expiration of their contract. 

The following month, after TicketMaster saw Live Nation entering its market, what did TicketMaster do? It announced its acquisition of Front Line. Now, that could be a retaliatory response, it 

could be a defensive response, but within a short period of time 

after Live Nation begins competing with or announces that it is 

going to compete with TicketMaster, TicketMaster announces that 

it is going to get into the talent management business, a business 

obviously that Live Nation was in. 

So you have these two large competing firms going head to head 

with each other, and within a short period of time Live Nation in 

January of 2009 began ticketing some of its own venues. So not 

only did it announce it was getting into the market and taking 

away a significant competitor from TicketMaster, but shortly thereafter, in January, it began ticketing some of its events. 

We all stood by. We all saw these two significant competitors finally going head to head, and we waited to see what kind of a competitive response the market would realize. 

Well, the market didn’t get any response at all because the companies decided in February to merge. They called a truce. There 

was no point banging each other in the marketplace in ticketing on 

30 

one side of the coin, and on the other in the management, the talent management part of the business. So the merger eliminates the 

only viable, integrated, potential competitor that could challenge 

the monopoly position of TicketMaster in the marketplace. 

Now, there is another concern that has arisen as a result of this 

transaction, and that is the degree to which a combined Live Nation-TicketMaster can impose its will on the venue customer in 

particular. We have done several interviews of venues over the 

course of the last week or so, and the indications that we have gotten from the venue segment of the industry is that they are concerned that a combined Live Nation-TicketMaster will exercise leverage and impose its will on the venue in the form of perhaps 

higher convenience fees, in the form of perhaps less services, and 

in the form of picking and dictating to the venue what ticket company to use. 

Now the question is, does that leverage exist, number one; and 

number two, will it be exercised post acquisition by the merged 

firm? 

Let me quickly sum up and say that we don’t have to speculate 

whether leverage can be used or not used. In Saturday’s Wall 

Street Journal, over the weekend, there was a front page article on 

TicketMaster; and Mr. Azoff was quoted extensively in the article. 

I would direct your attention to my Exhibit 4 where I have copied 

the article. 

In the article the question was put to Mr. Azoff about leverage, 

and the best way to summarize here is to read his comment: ‘‘Mr. 

Azoff isn’t shy about using his gold-plated roster as leverage when 

negotiating with concert promoters. ’It is done with a wink,’ he 

said. There is never a conversation that says if you don’t extend 

this rent deal to Journey and The Eagles, I’m not going to let 

Jimmy Buffett play your building.’′′ 

That is an acknowledgment by Mr. Azoff that he has the market 

power to impose his conditions on the venue which would extend, 

in my opinion, to selecting the ticket company, post acquisition, to 

the exclusion of other competitors in that marketplace. 

Thank you. 

[The prepared statement of Mr. Doyle follows:] 

31 

PREPARED STATEMENT OF ROBERT W. DOYLE, JR. 


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EXHIBIT 1 


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EXHIBIT 2 


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EXHIBIT 3 


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EXHIBIT 4 


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Mr. JOHNSON. Mr. Luukko. 

TESTIMONY OF PETER A. LUUKKO, PRESIDENT & CHIEF OPERATING OFFICER, COMCAST-SPECTACOR, PHILADELPHIA, 

PA 

Mr. LUUKKO. Thank you, Mr. Chairman. 

I have spent my entire career in the sports management and facilities management industries, and I have done business with both 

TicketMaster and Live Nation for many years. 

Since 2005, I have been the President and Chief Operating Officer of Comcast-Spectacor, a Philadelphia-based sports and enterVerDate Aug 31 2005 11:20 Mar 16, 2010 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\022609\47628.000 HJUD1 PsN: DOUGA

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tainment firm which includes the Philadelphia Flyers hockey team, 

the Philadelphia 76ers basketball team, the Philadelphia Phantoms 

hockey team, and two south Philadelphia arenas in which the 

teams play, the Wachovia Center and the Wachovia Spectrum. 

In my current position, I am also responsible for oversight of 

Comcast-Spectacor’s other business interests which include Global 

Spectrum, a company that manages stadiums and arenas throughout the country and Canada; Ovations Food Services, a food and 

concessions company; New Era Tickets, a full-service ticketing company which is a competitor of TicketMaster—and with all due respect to Mr. Doyle, we do not feel any implied leverage whatsoever 

and, in fact, we see this as an opportunity—Flyers Skate Zones, a 

series of community skating and hockey rinks in the Greater Philadelphia region; and Disson Skating, the developer and promoter of 

a series of ice skating and music shows performed live and distributed to a national television audience. 

Also within the Comcast-Spectacor family of companies is Front 

Row Marketing Services which provides consulting services to help 

develop effective sports and entertainment marketing, sponsorship 

and advertising strategies. 

My duties include serving as the Chairman of Global Spectrum, 

and I am responsible for creating new business opportunities for 

Comcast-Spectacor in the fields of facility management, sports ownership and operations, food and concessions. 

Prior to joining Comcast-Spectacor and ultimately becoming the 

company’s President and COO, I worked in various aspects of facility management, event organization and hospitality services, including such positions as Vice President of Spectacor Management 

Group’s western region and Facility Manager for SMG at the Los 

Angeles Coliseum and Sports Arena. 

Let’s talk about vertical integration. In my position at SMG, 

Comcast-Spectacor and Global Spectrum, I have come to understand the benefits of having a vertically integrated live entertainment business. By being part of a company that owns, manages, 

and/or operates venues and owns several sports teams and other 

content, and provides its own ticketing solution in food and beverage services to arenas, stadium and amphitheaters throughout 

the country, we have the ability to cross-promote among these different levels in the vertical distribution chain and to touch the fan 

directly at multiple points in his or her sports entertainment experience. 

Additionally, because we have more assets in some cities, like 

Philadelphia, we have the ability to create unique packages to offer 

to sponsors and, most importantly, the fan. This is where the industry trend is clearly moving, in large part because content providers want to have more direct control of the connection to their 

fans. 

We believe that one of the reasons Comcast Spectacor has been 

so successful in its ability to vertically integrate all of the resources 

of its related companies, as well as those supplied by its parent 

company, Comcast Corporation, is to create synergistic opportunities to grow our business. We provide a unique and excellent opportunity for our teams and facilities to utilize the relationship in the 

Comcast family of companies, including Comcast Cable, Comcast 

59 

SportsNet, the Versus Network, E! Entertainment Television, to increase market visibility. 

But don’t just take my word for it. Look at the other competitors, 

like MLBAM/Tickets.com and Kroenke Sports in Denver. They are 

doing the same thing. This is what is happening. 

The merger. I believe that the merger of TicketMaster and Live 

Nation is an exciting combination that has potential to reinvigorate 

the industry at a time when change of direction is drastically needed. The economy is distressed right now and, as a result, many 

sports teams and other live entertainment acts are struggling to 

sell event tickets. 

This industry needs some new and fresh ideas, especially now, so 

that we can provide consumers with the much-needed leisure activities that keep their spirits up and our economy moving in the 

right direction. 

I think the merger will bring welcome change. If together TicketMaster and Live Nation can sell more tickets, and therefore provide more content to venues and consumers, this will be a huge improvement over the status quo. I also believe that this type of strategic combination will encourage other competitors, like myself, to 

be more creative in their offerings and to compete more effective 

overall. 

I certainly don’t have any reasons to believe that the combination 

will in any way whatsoever stifle competition. 

Mr. JOHNSON. Mr. Luukko, your time has expired. If you would 

go ahead and sum up. 

Mr. LUUKKO. In summary, I think this combination will breathe 

much-needed life to an industry that is hurting. And, at the end 

of the day, change is good. Thank you. 

[The prepared statement of Mr. Luukko follows:] 

60 

PREPARED STATEMENT OF PETER LUUKKO


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Mr. JOHNSON. Thank you, sir. Mr. Froeb, please begin. 

TESTIMONY OF LUKE FROEB, WILLIAM C. AND MARGARET W. 

OEHMIG ASSOCIATE PROFESSOR OF MANAGEMENT, OWEN 

GRADUATE SCHOOL OF MANAGEMENT, VANDERBILT UNIVERSITY, NASHVILLE, TN 

Mr. FROEB. Mr. Chairman, Ranking Member Coble, Members of 

the Subcommittee, thank you for this opportunity to testify. My 

name is Luke Froeb. I teach management at Vanderbilt University, 

and I was formally a staff economist at the Justice Department and 

chief economist at the Federal Trade Commission. 

In this short oral testimony, I want to highlight what I can some 

of the most interesting and significant issues raised by this merger. 

TicketMaster and Live Nation are part of the vertical supply 

chain that delivers live performances to fans. The price of this service is the difference or ‘‘wedge’’ between what consumers pay and 

what performers receive. The size of this wedge is one criterion the 

Justice Department will use to determine whether the merger is 

anticompetitive or not. This is important because a bigger wedge 

means either the consumers are paying more or that performers 

are receiving less, or both. In the first case, one might expect fewer 

tickets purchased; in the second, fewer concerts performed. 

This leads naturally to a second criterion that the agencies will 

use: The expansion of output. More seats or more concerts. A merger that increases the size of the wedge and reduces industry output 

would likely to be found anticompetitive and vice versa. This merger is complex because, as Representative Smith has noted, it raises 

both horizontal and vertical issues. The Department of Justice will 

analyze the extent to which actual and potential horizontal competition is lost by this merger and count this as a cost of the merger. 

But, for the most part, TicketMaster and Live Nation occupy different positions in the supply chain and perform different functions. When firms producing complementary services do business 

with one another, incentive conflicts naturally arise. These conflicts 

can be over what price to charge or how much to spend on promotion, as noted by Mr. Rapino. 

A merger among the providers of these services would likely reduce the costs of controlling these incentive conflicts and could result in levels of price and promotion that would both reduce the 

size of the wedge, as well as increase output. 

But perhaps the biggest potential benefit of this merger is innovation. The fragmentation of the supply chain means that individual firms may lack the information necessary to innovate or the 

incentive to do so because each receives only a small slice of the 

proverbial pie. 

Innovation is important to the music industry because business 

models are changing rapidly. If this merger gives the merged firm 

enough information to design more effective ways of managing the 

supply chain, and the incentive to do so, it could reduce the size 

of the wedge and increase output. This kind of experimentation in 

innovation is crucial to the health of the economy. Its ability to 

adapt to change is what makes it strong. 

64 

Thank you for giving me the opportunity to share my views on 

this timely and important topic. 

Mr. JOHNSON. Thank you, Professor Froeb. 

[The prepared statement of Mr. Froeb follows:] 

PREPARED STATEMENT OF LUKE FROEB


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Mr. JOHNSON. Mr. Mierzwinski. 

TESTIMONY OF ED MIERZWINSKI, CONSUMER PROGRAM DIRECTOR, U.S. PIRG, THE FEDERATION OF PUBLIC INTEREST 

RESEARCH GROUPS, WASHINGTON, DC 

Mr. MIERZWINSKI. Thank you, Mr. Chairman and Ranking Member Coble. I am Ed Mierzwinski, program director and senior fellow 

at the U.S. Public Interest Research Group, which is the Federation of State PIRGs. 

Before I begin my testimony, as a point of personal privilege, Mr. 

Chairman, I want to say that the consumer civil rights community 

strongly supports your Arbitration Fairness Act as one of the most 

important pieces of legislation before the Congress. We hope we 

can get it through and signed by the President this year. It is an 

important bill to balance the scales between powerful companies 

with their one-sided contracts and individual consumers, small 

businesses, and small farmers. So we appreciate your work on that. 

Mr. JOHNSON. Yes. Mr. Mierzwinski, you get an extra 5 minutes. 

Mr. MIERZWINSKI. Thank you very much, Mr. Chairman. U.S. 

PIRG has long been concerned with the important matter of fairness in the ticket industry. We were partners with Pearl Jam in 

their unsuccessful effort 15 years ago or so to convince the government to take action against TicketMaster’s unfair practices at the 

time. 

And you pointed out in your opening remarks that you were disappointed that there were no artists on the panel today. I would 

suggest that based on my understanding of the history of what 

happened back then, Pearl Jam faced enormous competitive pressures, had difficulty obtaining venues, and for several years was 

treated with disdain by powerful interests in this industry 15 years 

ago. 

So I would suggest that it is disappointing, but not surprising, 

that other artists are not here the testify. But I know a lot of them 

are concerned. 

It is our view that this merger is bad for consumers, bad for artists, and bad for independent promoters. We believe it violates the 

Clayton Act, and we believe that the Justice Department should reject the merger. It is a bedrock principle of our antitrust laws that 

merging to avoid competition is simply wrong, illegal, and should 

be defeated. 

I want to make just a couple of quick points. A lot has already 

been said about all of these issues. And I will try to summarize 

very quickly. First, TicketMaster is the dominant player in primary 

ticket sales. We thought a year ago that Live Nation would be a 

competitor. Now Live Nation wants to merge with TicketMaster. 

That is unacceptable on face and that alone should be a reason to 

deny the merger. 

Second, the merger also raises the specter of a vertical monopoly, 

since Live Nation, by all accounts, controls through exclusive longterm contracts the market for marquee venue, events, and major 

tours. The combined firm would have tremendous market power 

over artists and venues, as well as over consumers. 

We would all have no choice but to accept their terms of trade. 

Higher prices and fewer choices. Certainly bands might find an 

75 

American Legion hall or a county fairground not controlled by the 

combination if they wanted to have a venue. But if the firms combine, artists would not be able to negotiate. There would be fewer 

choices in that marketplace. 

We have already heard how big the company would be. I won’t 

go through that again. I do want to elaborate further on the impact 

on independent promoters. Seth Hurwitz was mentioned further. 

He owns the local 9:30 Club, and has testified before the Senate 

this week. In his Senate testimony he said, If this merger is allowed to happen, my biggest competitor will have access to all my 

sales record, my customer information, sales dates for tentative 

shows, my ticket count. They can control which shows are promoted, and much more. This will put all independent promoters at 

an irreparable competitive disadvantage. 

To make it clear, if we have this vertical integration, independent promoters will face a significant problem. They won’t be 

able to get the artist unless they take the ticketing, unless they 

also take the venue control, and the artist management. They simply cannot compete on that basis. 

I want to make a couple of quick points about a couple of the 

other issues. TicketMaster and its reseller affiliate, TicketsNow, I 

mean, really, how can the company that owns primary ticketing 

also own legal ticket scalping ticketing. I don’t think that the proposed solution to the problem that occurred with Bruce Springsteen 

is any kind of a solution. I think that issue raises significant unfair 

and deceptive practices, as well as structural problems. 

Second, my testimony goes into detail about our efforts, particularly in New York, to fight ticket scalping. We have argued very 

strongly in New York—and I think the Committee should look at 

this—the relationship between taxpayer-built venues and these 

long-term contracts from these companies raises serious questions. 

If taxpayers can’t get a ticket a fair price, why do taxpayers pay 

to build these venues? 

Finally, I would be remiss as a consumer advocate if I didn’t 

point out that consumers are outraged, absolutely outraged, over 

the unfair convenience fees and handling fees that TicketMaster 

loads on to all of its sales. Nobody else that sells anything on the 

Internet charges convenience fees and handling fees. You pay a 

handling fee as if somebody’s going to walk up to your house and 

deliver your ticket, when all they do is push a button and deliver 

it to your e-mail account. There are numerous sites on the web, 

TicketMasterSucks.com, and other sites. 

In other circumstances, a consumer could simply say, I will get 

a new cell phone company; I will get satellite instead of cable. But 

in the case, particularly after this merger, the consumer can’t fight 

back against TicketMaster. They have got to get the tickets 

through them. 

I appreciate the opportunity to testify before you today. I would 

point out I like all the music that has been discussed, from Bruce 

Springsteen to George Clinton to Doc Watson and Buck Owens. 

And I hope that all artists and all independent promoters will be 

given a fair chance to compete, and that this monopoly does not go 

forward. Thank you. 

Mr. JOHNSON. Thank you, Mr. Mierzwinski. 

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[The prepared statement of Mr. Mierzwinski follows:] 

PREPARED STATEMENT OF EDMUND MIERZWINSKI


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Mr. JOHNSON. I will now recognize myself for 5 minutes for purposes of asking questions. 

Mr. Azoff, in the last month alone, two incidents have occurred 

where consumers were directed to a secondary ticketing site and 

forced to pay significantly more for tickets than advertised. It has 

been reported that Live Nation and TicketMaster tend to concentrate more efforts on the secondary ticket market as a merged 

company. 

How does the proposed firewall between TicketMaster and tickets now prevent TicketMaster from continuing to use the secondary 

ticket market to charge inflated ticket prices to consumers? 

Mr. AZOFF. First off, we have instituted a policy that these two 

companies will be run totally separately in that you will not be 

able to link directly from TicketMaster to TicketsNow. In particular, people are never automatically sent. This is a standard industry practice. Major League Baseball, Tickets.com both link to 

StubHub; Veritix links to Flash Seats. We are the first one to 

unlink. 

Secondly, we are the first site now, and it is going to take a bit 

of time because we have to do it manually until we get this automated—we will be the only secondary site that will not allow prelistings on the site because what the brokers currently do is list 

tickets before the on-sale, under the assumption that they know 

they will get the seats. It confuses consumers into thinking tickets 

have actually been pulled and left. 

I might add that I am new at TicketMaster. Had I been there, 

I would not have purchased TicketsNow. When we talk about 

under the merger that we want to concentrate on secondary 

ticketing, we want to concentrate on a different model. We agree 

that this model is broken, and it needs a solution. As the Congressman said, it is legal to scalp in nearly every State, but that, and 

we fully agree, that it is an area that needs a lot of work. We think 

that this merger will give us the ability to work hand-in-hand and 

get it done. 

Mr. JOHNSON. Thank you. 

Mr. Rapino, you state in your testimony that your stock has declined and you are concerned about being bought by a foreign company. Yet, your balance sheet appears to be quite healthy, with the 

chance to increase profits with your entry into the primary 

ticketing market. Can you explain in detail the grounds on which 

you believe this merger is necessary for Live Nation to survive as 

a U.S. company? 

Mr. RAPINO. Yes. Thank you. We took over 3 years ago from 

what Clear Channel Entertainment was, and it was spun out to 

Live Nation. Our management team was installed then, and we 

had a failing business model, and a horrible name, equal to TicketMaster. We renamed the company Live Nation, we fired old management, and set off on a journey 3 years ago to build this company. 

Three years later, we are proud. We are not laying off employees. 

I think we will have one of the best performances in the entertainment business. And we worked hard for 3 years to run the company right. No excessive CEO pay or bonuses. We rebuilt it. 

83 

A year ago, we had a $20 stock, capital was available, and the 

fight to continue globally seemed very certain. A year later, our 

stock is down to $4, capital is not available. Our real estate holdings have been gutted. So it is a tough economy. 

We believe that we can continue our model with or without 

TicketMaster. This is not about us going broke and needing a solution. This is about excelling in the race to try to solve these problems that Peter outlined. 

I absolutely agree that scalping is a huge problem. It is about a 

billion-dollar business that we receive zero dollars from. We invest 

$2 billion a year with artists. We made $160 million in Ebitda last 

year, but we had a negative cash flow. We didn’t actually make a 

dollar. We spend millions on real estate and artist investments. 

And we realize zero of the scalping market. 

We have realized that technology is moving fast, and artists 

want solutions now. And we want to excel in our chance to innovate this market. And from outlawing scalping, to figuring out how 

the artist participates in it, we absolutely think it needs to be addressed. 

Mr. JOHNSON. All right. Thank you, Mr. Rapino. 

Back to you, Mr. Azoff. The recent conflict with Springsteen is 

not the first time that TicketMaster has had a conflict over the 

price of TicketMaster tickets. In 1994, Pearl Jam canceled its summer tour after the band was unable to negotiate a deal with TicketMaster to keep ticket prices below $20, or find a way to tour without selling tickets through TicketMaster. 

You claim that artists set the price of tickets. However, Pearl 

Jam certainly did not believe so in 1994, and many artists have recently opposed your proposed merger with Live Nation on the 

grounds that they will have even less control over the price of tickets if the merger were to go through. 

How do you respond to that charge, sir? 

Mr. AZOFF. I believe the Pearl Jam, the dispute with old TicketMaster was about the service charges. The public believed that 

TicketMaster sets the service charges. The old regime at TicketMaster basically set up TicketMaster to take the brunt of the criticism. The consumer thinks if there is an $11 service charge, that 

that is what TicketMaster makes. What that service charge really 

contains is all the credit card processing fees, which average about 

2.9 percent, and there are enormous rebates back to the venue. 

The convenience issue really—for Pearl Jam to get the service 

charges down to the level they wanted, required venues to agree. 

TicketMaster can’t unilaterally set any service charge. 

So, basically, what we believe is there needs to be, in the new 

model of what we accomplish—when you walk into a building, you 

have the rent, the service charge. You can’t just isolate the service 

charge. And we think the industry needs a complete overhaul on 

how it does figure out these service charges. 

The first thing I did when I started at TicketMaster was I convinced my client, the Eagles, to go to all-in ticket prices. So, in virtually every date that they now do, except where a building will 

not allow it, the stated ticket price includes all the service charges. 

84 

I think that the public needs truth in advertising from all ticket 

charges, and we think that will go a long way toward solving this 

problem. 

Mr. JOHNSON. Thank you, Mr. Azoff. I will now recognize the 

Ranking Member, Mr. Coble, for 5 minutes for questioning. 

Mr. COBLE. Thank you, Mr. Chairman. Good to have you gentlemen with us. 

Mr. Rapino, I am an avid Canadaphile, so good to have you as 

an American citizen here. What was your home province? 

Mr. RAPINO. Ontario. 

Mr. COBLE. Mr. Rapino, does Live Nation currently compete with 

TicketMaster and, in the absence of the merger, how would Live 

Nation continue to compete with TicketMaster? 

Mr. RAPINO. We have been selling tickets for the last 2 years on 

our own. We have a system that we use. As of January, we had 

a new ticketing supplier called CTS, who owns the ticketing company, and licenses to us. We had planned on by the end of this year 

looking to third parties to compete with TicketMaster. As of this 

year, our stated goal publicly has just been to service our own 

needs. 

And the SMG comment is relevant here. We have the option and 

right to bid on the SMG buildings if we are capable to service them 

by the end of the year. And TicketMaster has a full right to convince them that they are still a better solution because they are 

usually city buildings. 

So, as of today, we are not out competing. We are worried about 

servicing our initial needs this summer. 

Mr. COBLE. I thank you for that. 

Professor Froeb, you live in a city that would embrace my affinity 

for country and bluegrass. What are the horizontal and vertical effects of this proposed merger, Professor? 

Mr. FROEB. It is funny you mention Nashville. A lot of my friends 

are part of this vertical supply chain, and they are facing a lot of 

uncertainty. And if this merger is successful and does what it is designed to do, a lot of them are going to face a lot more competitive 

pressure than they did before, and that is reducing the size of the 

wedge between what artists receive and what consumers pay and 

what artists receive. So that could be counted as a potential benefit 

of the merger. 

And the horizontal potential and actual loss in horizontal competition probably will be narrowly focused on the ticketing services. 

Mr. COBLE. I thank you. 

Mr. Azoff, if this merger succeeds, you will control, I am told, virtually all aspects of major concerts in the United States. Will this 

improve efficiencies in the music industry, A, and will it likely lead 

to reduced ticket prices? 

Mr. AZOFF. I have spoken to many artists. Basically, this Committee, as I understand it, was also formerly Intellectual Properties. I know that you all are very well versed in that. 

The complete destruction of recorded music earnings to artists is 

one thing that has driven ticket prices up. We fully believe that 

this merger will allow us to get marketing moneys back into the 

business. Currently, $9 billion goes to sports marketing and $900 

million goes to music. We fully believe by selling more seats and 

85 

bringing in new revenue sources and also, in the secondary area, 

that we will create a pot that is bigger for the artists. Every artist 

I talk to would like to charge less money for their tickets, but they 

have to meet a nut to go out on the road, and since there is really 

no contribution, or little contribution from their recorded music 

now, that is the theory under which we think ticket prices will go 

down, not up. And certainly on the major acts, that is for sure. 

New artists we think we can bring so many of these new marketing opportunities across the board to new artists that currently 

can’t get radio airplay. MTV stopped playing videos. We are going 

to try to connect these artists directly to their fans. We have got 

this list of ticket buyers that currently is not being utilized, and 

this is really about music business 3.0. It is about creating the new 

model. And under this model, we intend to be a Switzerland-type 

distribution system. We don’t intend to ask artists to sign over 

rights the way the old recorded music model worked. We intend to 

get a fair distribution fee and let artists control their intellectual 

property and exploit it to the fan. We think it will reduce and lower 

costs across the supply chain. 

Mr. COBLE. And you mentioned intellectual prompt. You all probably know that is an issue that will be considered by the full House 

Judiciary Committee. Mr. Johnson and I won’t have that at the 

Subcommittee level any more. But I thank you for that. 

I think my time is about to expire. I yield back. 

Mr. JOHNSON. Thank you, Representative. We will start with 

questions from Mr. Brad Sherman from California. Five minutes, 

sir. 

Mr. SHERMAN. Thank you, Mr. Chairman. I know that a vote has 

been called, and I know I have been told that the Chairman will 

not be able to be here between 12 and 1. And I will be happy to 

Chair the hearing during that period, as I think the Chairman has 

requested. 

You hear the bell, but you will not be saved by the bell. We will 

come back after votes. 

I think this hearing is important, not only because it affects consumers so much, but it affects the artists and the music that we 

all love. 

We have seen the artists get ripped off in so many ways. They 

don’t get a performance right. They listen to their music on the 

radio. They know that the songwriter is getting paid for that. So 

many other people are being paid for that. The radio station is 

being paid for that. The artist is getting nothing. They hear their 

recorded music taken from them by various technologies. 

And so they are really relying upon live music to be compensated 

for their work. So many of them are not going to be the big superstars, but they may make it for a year or two. And this industry 

has got to pay the piper, which is so important if you want to listen 

to the music. 

Now, we are not experts here in antitrust law. We rely upon the 

Justice Department to do so. I hope the Hart-Scott-Rodino process 

plays itself out. But given how important this is to the music we 

all love, I am glad we are having this hearing. 

86 

Now, being that I am so interested in where the artists stand on 

this, do any of you have letters of support or opposition to this 

merger from artists that you would want to put in the record? 

Mr. RAPINO. Yes, Congressman. We have letters of support. 

Mr. SHERMAN. Without objection, I would like them put in the 

record. Do any other witnesses have letters of support or opposition 

from others in the food chain, the venues, or anyone else? 

Mr. JOHNSON. Without objection. 

Mr. SHERMAN. Without objection, they will be made part of the 

record. Please enter them. 

Now, we have heard from some of the witnesses that AEG is a 

big player. I mean that is an extremely well-financed operation. 

And I guess the implication is that they would want to stop using 

TicketMaster. They would have to use someone else. 

The second biggest primary ticket operation in the world, as I 

understand it, is CTS, out of Germany, and I believe they have a 

contract that makes Live Nation their exclusive operator partner. 

Mr. Rapino, if this merger goes through, is CTS free from their 

contract with you to then go to anyone else, including AEG, and 

say, We want to be your ticket agent in the United States? 

Mr. RAPINO. Yes. Part of the contract is clearly stated that if we 

were ever to merge with TicketMaster, they would have full rights 

to leave and pursue another U.S. client. 

Mr. SHERMAN. Because the testimony here from opponents to the 

merger focused on the primary ticketing business, and allowing the 

number two primary ticketing company to do business in the 

United States freely would, I think, open competition in that business. 

Obviously, there is concern about what happened with secondary 

marketing in the Springsteen concert. Mr. Azoff, you have testified 

that you would not have advised TicketMaster to buy the secondary marketer. Is it your intention to advise your board to sell 

tickets now and to stay out of secondary—the secondary business? 

I realize you can’t sell it unless you get a good offer. But is it your 

advice to your board to be in the secondary market, or not to be; 

or to be in it, and if you would want to stay in that business, what 

is your proposed wall between primary and secondary? 

Mr. AZOFF. For us to stay in that business, it would have to be 

a different business. Many of our team clients, for the purpose of 

allowing season on ticket holders to exchange seats, we do operate 

Ticket Exchange. If there were some way to make Tickets Now a 

straight, legitimate exchange where the rights holders were able to 

transfer tickets with, I would hope, limited fees, et cetera, but—— 

Mr. SHERMAN. I am talking about where you buy the Bruce 

Springsteen ticket for $95 and sell it for $950. 

Mr. AZOFF. As it currently exists now, yes. Obviously, with all 

the normal public company approval requirements. I would advise 

my board if we got the right offer. Senator Schumer hasn’t made 

the right offer to us yet. I would advise my board to consider that. 

And I certainly would vote to do that. 

We agree with Congressman Pascrell on the whole idea of bots, 

and we also agree with him that the secondary area really needs 

cleaning up. We think this merger gives us a seat at the table, 

along with every government body, to do that. 

87 

Mr. JOHNSON. All right. At this time—and your time has expired, 

Mr. Sherman. 

Mr. GOODLATTE. Mr. Chairman, I am not going to be able to 

come back. I wonder if I might have a couple of minute’s worth of 

questions. 

Mr. JOHNSON. We have got about 4 minutes, 31⁄2 minutes before 

votes expire on this. I would be inclined to not put the Members 

at risk of missing the vote. 

Mr. GOODLATTE. Then I would just ask—I will submit my questions for the record—but I would ask the Chairman to make sure 

that the panelists answer the questions in writing for us. 

Mr. JOHNSON. No doubt. 

Mr. SHERMAN. If the gentleman from Virginia wants to leave me 

with a written question or two, I would be happy to ask them. 

Mr. GOODLATTE. That would be great. Thank you. 

Mr. JOHNSON. We will be in recess for about 25 minutes while 

we go vote. Two votes; one 15-minute and one 5-minute vote. 

[Recess.] 

Mr. SHERMAN. [presiding]. We will come to order. We are ready 

to start a second round. We will start with the senior Republican 

on the Committee, Mr. Coble. 

Mr. COBLE. You go ahead, Mr. Chairman. Let me examine what 

I have got waiting here. 

Mr. SHERMAN. So I will pick one here. It is for Mr. Rapino and 

Azoff. 

Mr. Rapino has testified that if the merger is not completed, both 

companies would be required to lay off employees. You have also 

claimed that a merger would lead to $40 million in savings. Do 

those savings involve laying off employees either from your operation or from the TicketMaster operation? 

We are in a strange economy where savings are good. But when 

savings lead to layoffs, that concerns some of us. Tell us about how 

employment is going the be affected by this merger. 

Mr. RAPINO. On the Live Nation front I actually haven’t said that 

if we didn’t do the merger, we would lay off employees. I have said 

that we have been a very progressive company for the last 3 years 

and in hiring employees and creating jobs. I do believe though, 

with these economic times, my 5-year vision certainly needs to be 

adjusted, and we currently do have a hiring freeze on. And we are 

just going to have to get through this year and see how the business turns out. 

We do believe that the efficiencies of the merger created—will actually create jobs. This merger will create jobs because we will 

have to staff up on the technology side to better equip ourselves to 

handle the scalping and the needs of today. So, no layoffs. Jobs created. 

Mr. SHERMAN. Mr. Azoff, if this merger doesn’t go through, what 

is the effect on jobs in your operation. And, if it does go through, 

what is the effect on jobs? 

Mr. AZOFF. Right before I started with the company, TicketMaster laid off 10 percent of its workforce. And the recent studies 

that we have done are we can’t get the job done with less people, 

regardless of whether the merger goes through or not. 

88 

So we don’t anticipate being able to reduce the workforce at this 

time, nor are we looking to. However, we are a public company and 

we have a board. We currently lose money on about, we think, 

2,600 of our accounts, many of which are nonprofits and museums 

and municipal-owned buildings. 

So, down the road, if we were forced to cut back, it would probably be both in the area of accounts and employees. But, for sure— 

I agree with Michael—if the merger is approved, we would be adding people. 

Mr. SHERMAN. And you would be adding people because there 

would just be more music? 

Mr. RAPINO. No. We believe that right now we are both really 

understaffed on the technology, research, development, and consumer side of the business. So we believe that the answer for the 

future is creating a more accessible storefront. And technology has 

just taken off, as you know. 

On the recording side, they have lost a lot of their business to 

the pirates of the Internet. That is happening right now with these 

professional scalpers and professional technology that are just way 

more advanced than we are. 

So, we would assume we would have to build a much more sophisticated consumer storefront. We like to think it as the TicketMaster.com of today needs become the Amazon of tomorrow for the 

consumer and fan. A much more convenient and accessible place to 

buy music. With that, we would like to staff up in the technology 

side. 

Mr. COBLE. Thank you, Mr. Chairman. Let me put this question, 

Mr. Chairman, jointly to Mr. Luukko, Doyle and Professor Froeb. 

What would you all say are the relevant product and geographic 

markets at issue in this proposed merger? 

Mr. FROEB. There are various aspects of the merger. It is a 

tough, fact intensive investigation. And these are the kinds of questions that the Justice Department is investigating and answering. 

And the blunt answer is, I don’t know. But there is certainly the 

methodology for delineating markets is known. 

You ask, How do these guys compete? If they limited that competition, could they raise price by a significant amount. If the answer is, yes that is a relevant market for antitrust purposes. If the 

answer is no, they would substitute to various other suppliers. 

Then you have to expand the market and re-ask the question. 

In this industry that is so, so complicated—one of the things that 

I heard earlier today was that the merged firm was going to spin 

off the German ticketing part of supplier if that turns out to be a 

relevant market, that it is these two ticketing suppliers, then the 

spinoff would certainly mitigate the anticompetitive effects of that 

merger. 

So the answer is, I don’t know. It is a fact-intensive investigation 

that is very, very detailed. And I haven’t done it. 

Mr. COBLE. Anybody else want to weigh in on that? 

Mr. DOYLE. Can I weigh in on that? I think the most significant 

antitrust product market here is competition in the primary ticket 

services market. Now, if you look at that market—and the geographic market, I would argue, is the United States as a whole. 

But if you look at the ticketing market closely, you will see that 

89 

Tickets.com has always been a relatively insignificant player over 

time, and TicketMaster has had a very significant market share 

over a long period of time. That would suggest to me that the market is somewhat barricaded. And you don’t see significant entry, 

and you don’t see any exits from the market. 

But I would argue that the best market for the Department of 

Justice to look at, if they seriously thought about challenging this 

acquisition, would be the primary ticketing market, where the overlap is horizontal, and you have got some fairly good evidence that 

Live Nation seriously considered entering the market, in fact, did 

enter the market, took SMG away from TicketMaster, and you saw 

an immediate reaction from TicketMaster. 

So, TicketMaster clearly felt threatened by the announcement of 

Live Nation entering the market and, in fact, felt threatened in 

January of this year when it saw Live Nation ticketing some of its 

own venues. 

The primary ticket service market, I think, should be the primary focus of the Department of Justice inquiry. Contrary to what 

else has been said, the vertical case, I agree, is complicated. But 

to look at the essence of competition in the ticketing market is not 

complicated. It is a relatively straightforward, horizontal analysis. 

The Department goes through this analysis over and over again. 

So, if you focus on that market, I think you will be able to define 

it as a relevant market. And the facts suggest that it is in fact a 

relevant market. 

Mr. COBLE. I thank you, gentlemen. Mr. Chairman, that is all I 

have. Thank you. 

Mr. SHERMAN. Thank you. I will pick up on Mr. Doyle’s comment, 

because we all want the benefits of competition for consumers. 

Now, I wouldn’t care if somebody had 100 percent of the market 

if the potential market entrance were such that the monopolist felt 

they needed to keep prices down and services good. So the question 

is not how much of the market do you have, but how much of it 

could you keep if you started acting like a monopolist. I see you 

nodding in general agreement. 

So I am interested in this primary ticket market, which you have 

identified. And I am aware of a couple of possible competitors. The 

first of these is sitting immediately next to you. 

So, let me ask Mr. Luukko, what made you decide to bring 

ticketing service in-house and not to use TicketMaster? Could other 

venues choose to do the same, unless they thought they were getting a really good deal from TicketMaster. How difficult was it for 

you to take ticketing inhouse? 

Mr. LUUKKO. It is very interesting. When we looked at our decision to do inhouse ticketing, it wasn’t necessarily a knock on 

TicketMaster, Tickets.com, AudienceView, and probably more than 

100 companies that pursued our ticketing accounting. Philly is a 

big market. It sells a lot of tickets. 

Mr. SHERMAN. You say 100 different companies. 

Mr. LUUKKO. When we were going out and getting into the 

ticketing company, we were contacted by so many. We had to ferret 

out even who we would use as our back-house engine. There is a 

lot out there. And I am not an expert in technology, but a lot of 

90 

that has to do with the advent of the Internet and the barriers to 

entry to get into ticketing. 

We found that out as a company in Philadelphia. And, really, we 

looked at it as part of our vertical integration program. We own the 

teams, we own the venues. We are getting into the food and beverage business. We own the merchandising rights for those teams. 

And the ticketing was a natural flow in our business plan. 

Again, with the advent of the Internet, we could get into that 

business. And we wanted to control the data, we wanted to directly 

control the message to our fans. And at times, which was under our 

control before, but we wanted to have quick, direct control of the 

service charges for a lot of the low end offers we make for various 

specials to our fans. 

So, for us, the barrier to entry—this is not easy to be in the 

ticketing business—but the barriers to entry had lowered, and it 

was really part of our vertical integration plan as a company and 

how we compete in the marketplace. 

Mr. SHERMAN. So did you develop your own software or were you 

able to get it licensed by someone else? 

Mr. LUUKKO. We were a licensee, if that’s the correct legal term, 

of Packi Owen, a company in southern California. 

Mr. SHERMAN. Okay. So, then that licensing agreement, whatever they did for you, I am sure they would do for any other major 

venue. It is not that they love you so much, they wouldn’t sell—— 

Mr. LUUKKO. Ironically, they have been purchased by TicketMaster since. We are still competing. 

Mr. SHERMAN. So at least that one—now Tickets.com, I realize 

they are a small competitor, or a smaller competitor, but did they 

make a credible offer to you? 

Mr. LUUKKO. We had some discussions. We had really made the 

decision through a lot of research to go inhouse. So we were approached by many to be our back end. 

Mr. SHERMAN. If you couldn’t get the software from the same 

source, is there other software available to you? 

Mr. LUUKKO. There is plenty available, including looking at the 

option of the creating the software ourselves. So we had a lot of options as we looked into this business. 

Mr. SHERMAN. One of the things that I am interested in, and Mr. 

Rapino, is helping the artists, because they are not getting paid for 

their music. They make a recording, the radio plays it, they don’t 

get anything. I see everybody listening to it and I wonder how 

many of them have paid for the music they are listening to. 

And it occurs to me that in addition to selling music, the artists 

can sell the T-shirts, the hats, the this, the that. At the present 

time, when you have—when you are selling tickets to the concert, 

and I go to buy the ticket on line, am I cross-marketed? Am I given 

a chance to buy the T-shirts and the other paraphernalia, or is the 

ticketing system that you currently use only selling me tickets? 

Mr. RAPINO. It is a good point. It is a key strategy of ours. First 

and foremost, on the artists. There has been suggestion that artists 

have not opposed this because they are scared, I think I have 

heard. If you work with artists in the year 2009, you find me an 

artist that is not one that likes to speak up and stand his own 

ground. 

91 

Mr. SHERMAN. So you are saying the Boss is the boss. 

Mr. RAPINO. He clearly stood up. He had a concern. I believe that 

every other artist I met usually likes to jump on these kind of situations if they can so-called go after the big company. 

Mr. SHERMAN. I would point out that even if the artist is too shy 

to come before the lights here, all of us are community leaders. Different types of music is popular in our different districts. There 

isn’t a Member of Congress that doesn’t have contacts with artists. 

And there isn’t a single one of us that wouldn’t take a call from 

Bruce Springsteen or a shier but equally popular artist. If they are 

afraid to come in public, they will certainly tell us in private. 

Mr. RAPINO. Absolutely. For the record, we actually did not want 

to bring any artists on our behalf. We actually said to all the artists, ‘‘This is not what we want you to do. Go worry about making 

music, and leave this to us.’’ 

Seventy-six percent of the artists’ income now comes from the 

road. Ten years ago, it was from the records. So for 30 years, the 

artist made all of his money from the record, and he went on tour 

to sell records. Today, an artist goes on the road to pay the bills. 

Seventy-six percent. So any economic theory will tell you if 76 is 

coming from the road. 

Mr. SHERMAN. Let me just interject. If somebody creates a hit 

song, 99.99 percent of the listenings of that song are from recorded. 

We all like to spend our whole lives at concerts but, as you point 

out, even the concert-goer only goes to two. And I haven’t been to 

a concert since I had hair. That long. 

So the 99.99 percent of the listenings of that song are paying 

only 24 percent of the freight. 

Mr. RAPINO. Absolutely. 

Mr. SHERMAN. So, go on. 

Mr. RAPINO. So we work for the artists. It is fundamentally that 

simple. They are the start of the value chain. They can decide to 

hear us or not. That is why we only have 38 percent market share. 

There are a lot of options. 

Number two, you should remember the artist is very sophisticated. He has a very good business team. He has a full accounting 

firm, he would have a law firm, and a manager. That team is sophisticated. And an agent. And their job is to maximize their artist’s revenue, find great new ways to develop and get their art to 

the world. 

What we find is we talk to artists daily. We are in their dressing 

room at midnight. The number one concern if you talk to an artist 

that we sense is, for 30 years I had a great business partner called 

the record label. He got my art to the fan, and he financed my investment. Who is going to take care of me in the future? Who is 

going to invest in the young band? How do I solve this technology 

maze? It scares me. I want a company that can first realize that 

they work for us. We always say at Live Nation, ‘‘Our boss is the 

artist.’’ 

Number two, we want to build a platform that I think you referred to earlier—I thought that was brilliant. The crux of the entertainment problem is it has been fragmented. The pie has been 

built in slices. Any industry you look at in history says, at some 

92 

point some of the slices come together to provide a better innovative product. 

We think it is crazy that we have a Web site today that sells a concert ticket. So we have the fan to spend $50. But we don’t have 

anything else for them. 

Mr. SHERMAN. The specific answer to my question is right now, 

I buy a ticket, and nobody is selling me an album, nobody is selling 

me a T-shirt. 

Mr. RAPINO. A quick point. We look at the average fan and you 

how he has to go to market today. He comes to a Web site to buy 

a ticket and is probably not satisfied. If you put Bruce Springsteen 

in Google now, you will get seven pages of scalpers selling tickets. 

So you can’t even get a ticket in a simple way. He has got to go 

probably to eBay to find a souvenir T-shirt; he has got to go to 

iTunes or a pirate site to get the music. The reason we said Amazon earlier is we want to be able to give the artist a platform to 

reach his fan. And when the wallet is out and he wants to buy a 

T-shirt, a song, another avenue to sell music with the ticket, they 

embrace that model continually when we talk to them about it. 

Mr. SHERMAN. I think my time has more than expired. I see the 

gentleman from California, and recognize him. 

Mr. ISSA. I thank the gentleman from California. I am sure when 

you went to that first Beatles concert, you did have a full head of 

hair. I think you should go to another one. I think you would be 

welcome. 

All kidding aside, this Committee deals with very serious issues, 

and all antitrust hearings in this Committee always look the same: 

Two groups are wanting to get together, and it’s going to potentially affect competition. Yours is no different. 

Mr. Doyle, let me ask one question, because all antitrust is comparative, in addition to relative market share and all the others. 

Major league baseball bought Tickets.com. The acquisition created 

a vertically integrated mechanism that included, if you will, and I 

am going to try to convert here, the teams, which had the talent; 

the promoter, which was Major League Baseball; the venues, which 

were the ball barks, were either owned or controlled; and then, of 

course, now the tickets. 

Is there an effect that can show us why this sort of a merger 

would cause higher prices based on that model? 

Mr. DOYLE. Tickets.com presents an interesting situation. It is 

owned by Major League Baseball, which obviously has a deep pocket. If they wanted to expand and put Tickets.com into every stadium, it clearly could do it, as I understand it. 

However, it is my understanding that Tickets.com only has 14 of 

the Major League Baseball teams. The question is, Why aren’t they 

in every team? And I don’t know the answer to that. But I can sit 

here and speculate that perhaps it is the significant market power 

of TicketMaster that allows it to get some of those baseball teams 

as well. 

The Major League Baseball model, the Tickets.com model, I 

think is an example of the degree of market power that TicketMaster has. Under normal economic—under a normal economic rationale, you would expect Tickets.com to be in every Major League 

Baseball stadium. And the question is: Why aren’t they? 

93 

Mr. ISSA. Mr. Azoff, I am going to ask you sort of the other side 

of the same coin, because I am very interested. Baseball does have 

a Congressionally granted monopoly. So, as Mr. Doyle said, they 

can do whatever they want. They do own the talent. Even if you 

want to be a free agent, where are you going to go? You ultimately 

are going to end up within Major League Baseball. So it is only a 

question of where. 

Now, let me just look at the music industry for a moment. You 

don’t have long-term binding contracts with the talent, if you will— 

the major stars—do you? 

Mr. AZOFF. No, I don’t. 

Mr. ISSA. After this merge, you still won’t. 

Mr. AZOFF. Virtually all of them will be free. 

Mr. ISSA. On top of that, you are not controlling the whole world, 

so they can tour anywhere that makes the money, right? 

Mr. AZOFF. Correct. 

Mr. ISSA. So, if I understand correctly, from the standpoint of the 

artist, who ultimately is probably the most important part of this, 

with the possible exception of those of us who do go to concerts a 

little more often, and I will go as long as I have hair. So the artist 

isn’t going to be hurt because he has a great deal freedom of choice, 

and ultimately you have to attract him, right? 

Mr. AZOFF. Yes. I might add, the TicketMaster contracts virtually one in four, one in three, come up for renewal every year. 

And I could shed a little bit of light because I recently met with 

one of the Major League Baseball owners. 

TicketMaster has a service called Archtics. In these very difficult 

times, people are not renewing season seats. And we have a unique 

program that allows them to, like, bundle. If you want 20 games 

and we find a person that can do 12 and 10. And we are actually 

putting TicketMaster personnel in their box offices. 

So my answer would be, as to why some of them have elected to 

come back to us is, because they get better service, and we spend 

a lot of money on R&D to provide great technology. 

Mr. ISSA. I found something interesting when it was said earlier 

if you Google for Bruce Springsteen, or whoever, you are going to 

get all these other wrong sites. And it suddenly hit me, Well, you 

are Googling. So, in the search world we have this dominant power. 

And we have had hearings to talk about Google and their market 

share and so on. Ultimately, if I understand, post-merger you won’t 

control Google or Yahoo! from a standpoint you cannot guarantee 

you will always come up first. You will still have to compete for 

that slot, right? Pay for it, actually. 

Mr. AZOFF. Yes. 

Mr. ISSA. So you are not going to control the search engines 

which, in an Internet age, is really the front end of the process. So, 

anyone who wanted to compete, including if Major League Baseball 

decided they were going to flex their muscle outside of Major 

League Baseball and do concerts, at least in baseball parks, they 

could potentially show up first on Google’s search. 

Mr. AZOFF. Makes sense. 

Mr. ISSA. I am trying to understand. You have got to pay a free 

and fair price for the entertainers. There are lots of venues beyond 

the ones that you could potentially lock up in a contract. There are 

94 

a lot of places people can be. I was at the Consumer Electronics 

Show and I saw Diana Ross in concert inside a large ballroom in 

a private venue. But there were a couple thousand of us having a 

great time. 

By the way, Brad, that was my last concert I went to. That was 

in January. 

What I am trying to understand is, in this whole circle of things, 

what are the barriers to entry or the competitive advantage you 

have other than adding some size and scale, which would be a little 

bit like Citibank bundling together a number of banks, and we 

know how much good that did them, right? Anyone want to comment on Citibank? Anyone want to say that this combination is any 

more powerful than perhaps Citibank or Bank of America was in 

their industries? 

Mr. RAPINO. I would just say that typically the output of a monopoly is a very high margin. We have a 4 percent margin business. 

Mr. ISSA. Roughly the same as VISA and MasterCard make off 

of your ticket sales. 

Mr. RAPINO. Exactly. So we spend $2 billion to make 4 percent 

off of that. TicketMaster would be in the 15 percent margin business. So if there was any demonstration of power, believe me, the 

margins would spit out that as a result. 

Mr. ISSA. Thank you, Chairman. It helps me understand this situation better. 

I yield back. 

Mr. SHERMAN. Mr. Doyle, there are two possibilities as to why 

TicketMaster has business from major league baseball. One idea is 

that they just provide a better service at a better price than major 

league baseball is willing to provide to the teams, and the other is 

they have some sort of market power. 

How could TicketMaster threaten the Dodgers or the Angels in 

a way that they would say we don’t want to do business, and then 

if they have that kind of market power, why don’t they have the 

other 14 teams? 

Mr. DOYLE. The short answer is, I don’t know the answer to that 

question. But let me make this observation. 

If TicketMaster provides a better service, and that service is replicated by Tickets.com, why doesn’t Tickets.com provide that service? 

Mr. SHERMAN. The real answer is Google, an example brought up 

by my colleague from California: Why does Google have more than 

50 percent share of the search engine? One theory is that they 

have somebody in my office with a gun to my head saying if I use 

another search engine, I’m dead. Another possibility is that they 

hired more engineers to create better software to do a better search 

to do better computer work, whatever software does. 

In my case, it is the latter. I have never been threatened by 

Google that if I searched on Yahoo, I would be hurt. And Google 

does the best job as far as I know. There are probably some computer experts here who know better. 

Let me turn to Mr. Luukko. 

95 

So you own venues. You are able to take your ticketing in-house. 

If you don’t want to go in-house, are there companies that want to 

provide the ticketing service for you? 

Mr. LUUKKO. Absolutely. Yes, there are. Tickets.com is one. Audience View. There are others. There has never been an issue that 

you couldn’t go in your own direction. 

Mr. SHERMAN. And CTS is the biggest, I believe, in Europe. And 

I am told that if this merger goes through, CTS is then free to do 

business in the United States. 

You are in the business. Is there any reason to think CTS is not 

competent? 

Mr. LUUKKO. No, not at all. 

Mr. SHERMAN. Okay. You described how you decided to become 

vertically integrated, and so presumably that helps the teams who 

are the artists in that business. 

Describe how your fans and team revenues have been helped by 

your decision to be vertically integrated. 

Mr. LUUKKO. It is essential in sports today to survive. Owning 

a team, in itself, is very, very difficult. I will give you an example 

probably that most recently has happened in this tough economy 

is, we own the Philadelphia 76ers. We have some unsold seats. We 

have noticed that the market for the sport is very, very price sensitive. So we decide in a short period of time that we need to discount certain nights in certain areas of our building or create various packages. 

It starts first with our ticketing system. We have collected data 

over the years of people who attend basketball games and who may 

attend our hockey games or family shows. We have an e-mail database, we create an offer, and then we blast that e-mail database. 

We also use our synergies by owning Comcast SportsNet to promote that offer through the unsold inventory that we do have. So 

we are using the assets of our company to create and promote this 

offer. 

So now we have discounted the seats, but at the same time we 

are putting people into the building and we are getting the parking 

and the food revenue. 

Mr. SHERMAN. So the key thing to benefit the artists and athletes and the teams, you have to know which seat you can sell for 

$200 and sell it for $200, which seat the day before the game is 

going to be unoccupied—and not only unoccupied, they are not buying beer or popcorn—and who to send an e-mail to, to say you can 

have that seat for $3.95, but please buy a lot of beer? 

Mr. LUUKKO. Yes. You need to have the ability to—to use a 

sports term, to read and react. You see where the marketplace is 

and see what you have or haven’t sold, and then you have to react 

quickly because that game or concert happens on a date certain; 

and then you move forward. 

Mr. SHERMAN. So you are in effect the promoter of the game and 

the ticketer, and without being vertically integrated, you would not 

be able to exploit those empty seats because an independent ticket 

agent can’t just wake up 2 days before the concert or the game and 

say I am going to sell seats for $3.95. 

I guess you could get all of the advantages of vertical integration 

without vertical integration if you had instantaneous agreement of 

96 

all the different parties involved in the vertical chain. Good luck 

in achieving that. 

Mr. LUUKKO. It is pure efficiency. The team, in essence, is similar to the artist and its manager. The team ultimately makes that 

decision, and the other pieces follow. 

Mr. SHERMAN. So the ticketing operation has the data and the 

capacity to market the discounted tickets, but the promoter has the 

authority, and unless you put those two together, you end up with 

empty seats and unsold popcorn. 

I think athletes are doing pretty well, but you end up with a 

team that can’t make the payroll necessary to beat New York. 

Mr. Azoff, is this analogous to the music business? Do you have 

a lot of—we are all familiar with Bruce Springsteen selling out 

every arena within an hour. But do you have a lot of clients that 

have empty seats in the room? 

Mr. AZOFF. Virtually every client has empty seats in the room, 

and it is a struggle. Bringing efficiencies, Michael spoke about how 

we want to do it. 

Currently, at TicketMaster, we have a list of names, but we don’t 

yet have the ability to share that data with artists. We don’t have 

the ability to sell merchandise and sell music. That is the real efficiencies in this merger. We are betting that despite less market 

share in the ticketing area, we will be able to start this new business that will serve consumers, fans and teams. 

Mr. SHERMAN. So your business plan is that after this merger, 

your share of the market declines, but your ability to exploit that 

market by selling ancillary products increases? 

Mr. AZOFF. Yes. 

And as each artist makes more, I think it will lower ticket prices. 

Mr. SHERMAN. Mr. Rapino, you probably know something about 

empty seats. 

Mr. RAPINO. There are two fronts. There is the venue and the 

artist. Currently, 40 percent of tickets go unsold. Other than Bruce 

Springsteen and the very, very top, our bread and butter is the 

middle of the road and lower, in terms of the 7,000 club shows and 

the arena acts that sell 6,000 seats out of 12,000. So the number 

one thing that an artist wants from us as a promoter is to become 

a better marketer and sell more seats. 

I think the sports analogy is a fabulous example because no one 

says, ‘‘Where is the next Kobe Bryant going to come from?’’ But everyone says, ‘‘How is the next Bruce Springsteen going to be created?’’ 

Sports is a very institutionalized industry, from the college 

league up to these four monopolies, from the NBA to the NHL, who 

are vertically integrated from the fullest, from the team to the 

broadcast. 

The reason the music business is in trouble and has been in trouble is because it has not been institutionalized. It has been fragmented, and there has been no system to help the young artist, no 

system to help sell more tickets and innovate. 

Our model is only one model, and we hope other models are generated from this. But we think it is a good example to market better, sell more seats, fill more venues because the irony is, my competition is the sports leagues. A consumer does decide to go to the 

97 

*Subsequent to delivering this testimony, Mr. Azoff learned that as to a de minimis number 

of tickets sold in very narrowly defined cases (constituting less than four one-hundredths of one 

percent of the tickets that TicketMaster sells), TicketMaster sets ticket prices. 

NBA game or the congressional monopoly-granted NBL league, or 

a concert. That is my concert competitor for that disposable income, 

and it is tough to fight. 

Mr. SHERMAN. Mr. Coble has graciously allowed me to ask a few 

more questions. 

Mr. COBLE. I have to leave shortly for another meeting, but I 

want to express thanks to the panel for being with us today. I will 

be around for a few more minutes. 

Mr. SHERMAN. Mr. Rapino and Mr. Azoff, your detractors say 

ticket prices have gone up in recent years and that your companies 

are responsible for that. 

Have ticket prices gone up and, if so, why? 

Mr. RAPINO. In the concert business, ticket prices have gone up 

4 percent a year on an annual basis. 

Mr. SHERMAN. Is that for the whole market? We all focus on the 

top 50 acts. 

Mr. RAPINO. In my testimony, the very small percentage of top 

acts get great press about ticket prices. An average ticket price for 

a concert is $50. 

I would again argue, what could you absolutely do in the world of entertainment for $50, by comparison? 

Mr. SHERMAN. A lot of people in the San Fernando Valley can go out on the town for $50 or less per person. We live cheaper lives. 

Mr. RAPINO. What the consumer is telling us, and when we poll 

consumers, is not that the ticket price is too expensive. That is not 

their number one problem with the business. When they see a Madonna show, they think it is great value. 

What the artist ticket prices have been driven by, for many years 

now is, the artist continually innovating his show, as you would 

know from the first show 20 years ago with the bad light and a 

mike on stage at the Forum to today where Britney Spears would 

probably have 18 transport trucks and 300 people on payroll because the fans want a great show. 

They want the fireworks and the spectacular part of that coming 

to that show, and the cost of production is part of the show that 

the consumers want. So part of the cost is, the cost of the show has 

increased. 

The artist wants to figure out how to pay for the show. And no 

one has to go to a Britney Spears show, but the economics still 

seem to be affordable that these shows do well and the consumer 

has many choices from a $9 ticket to a $100 ticket and small clubs 

to large. 

Mr. AZOFF. On the TicketMaster site, we don’t set ticket prices 

at all.* 

Mr. SHERMAN. Have you seen them go up at least for the A-plus 

events? 

Mr. AZOFF. Yes. I believe I have the same figures as Michael 

does. 

On the management side, yes, ticket prices have gone up. It is 

a function of two things. It is a function of the loss of income from 

recorded music and the increased production costs. 

98 

In preparation for these hearings, I sounded out several artists, 

and they all said, If you can show me a way that I can make the 

same money and not lose my production, of course I would like to 

see lower ticket prices. 

And everybody focuses on the problems in the secondary ticketing business: Oh, if the guy is paying $1,600 for the front 

row, why can’t I charge another $10? That’s a problem. 

Mr. RAPINO. We do 1,000 concerts at our 50 amphitheaters. We will lose $70 million at the door. That means the price of the talent 

versus the ticket price. That is 10 million tickets being sold. In theory, if I had any control on those ticket prices, you would assume 

I would charge $7 more a ticket to cover my $70 million loss. The 

artist takes the door, and we end up making the money on peanut, 

popcorn, parking and ticket rebates. 

Mr. SHERMAN. What is a ticket rebate? 

Mr. RAPINO. Most of the TicketMaster service fees that TicketMaster charges, the $10, $12. 

Mr. SHERMAN. So when I think I am paying Azoff, I am really 

paying you? 

Mr. RAPINO. You are really paying me and you are paying the 

venue, and obviously you are paying the artist in theory because 

the venue promoter needs to make a pot of money to cover that $70 

million loss at the door. 

Mr. SHERMAN. So what I think is a TicketMaster service charge 

is really a disguised portion of the price, and the people in your 

business and/or the artists have enough power to force Azoff to pretend like he is charging a lot when he is really giving part of the 

money to you? 

Mr. RAPINO. Yes. 

Mr. SHERMAN. So you are a professional bad guy, Mr. Azoff? 

Mr. AZOFF. We’re used to it. 

Mr. SHERMAN. I finally want to go to the scalping issue. One of 

the bizarre things is, the scalping business should not—if things 

are priced correctly, there shouldn’t be a huge industry in buying 

them and reselling them. But in fact, as I understand it, those 

great front row tickets are still being sold for $100 and $200 and 

they are worth thousands. 

Mr. Azoff, when these big acts have you as their ticket agent, do 

they give you all of the seats or do they hold back some to be sold 

in some other way? 

Mr. AZOFF. Inventory control is not a perfect science. Everybody 

in the food chain seems to have access. 

Mr. SHERMAN. If there are 10,000 seats in the arena and you are 

doing the event, are you selling 10,000 seats or are you often selling 7,000? 

Mr. AZOFF. Never the former. I would say on an average we 

might see 80 to 85 percent of the seats. 

Mr. SHERMAN. When you don’t get the 15 percent, are those the 

bad or good seats that you are not getting? 

Mr. AZOFF. The vast majority, they are the best seats in the 

house. They go to building holds, sponsor holds, band holds, record 

company holds. They go out the door, you know, multiple places. 

Mr. SHERMAN. So if I want to pay $800 for a ticket, I probably 

am getting one of those and you probably never touched it? 

99 

Mr. AZOFF. I would say that is correct, yes. 

Mr. SHERMAN. Then there are these companies that try to buy 

from TicketMaster and then resell, or buy from whoever the ticket 

agent is and then resell. 

Why are the artists/promoters having you sell some tickets that 

are worth 1,000 bucks for a 100 so the lucky fan and/or scalper 

ends up with $900 of consumer surplus? Why are you sometimes 

putting on your Web page a $1,000 ticket for a $100 price? 

Mr. AZOFF. The standard line I get when I talk to an artist is, 

you know, they are all worried about the press. If my ticket is 

$300—and I always say that is the guy who is getting his tickets 

for free. They are always worried about bad press, especially with 

the way the Internet flows now. 

If the Eagles were to raise their ticket prices—— 

Mr. SHERMAN. Does the press focus on the average price or the 

cheapest price, or if there are 50 seats being sold for $1,000 apiece, 

does the press focus on those 50 seats? 

Mr. AZOFF. Yes. Again, people lead. When Bruce Springsteen 

says I am charging $95, another artist is going to say, Hey, my 

fans are going to think I am a jerk if I charge $150. 

Look, in a perfect world we would all sit down and we would convince artists to realize that they ought to charge what they are 

worth. 

Mr. SHERMAN. At least for the top 1,000 seats or the top 500 

seats in the house. You are not deprived of a chance to see the artist if you don’t go one of the best 500 seats. 

Mr. AZOFF. The focus on this merger will enlighten a lot of artists, I hope. The first step at fighting the scalping would be for dynamic pricing to finally come into effect. 

Mr. SHERMAN. Do any of the other witnesses have a comment on 

why we are in this weird situation where the artist feels it necessary to sell one of those best 500 seats for a $100 when everybody knows it is worth $1,000? 

Mr. FROEB. One of the great ironies of this merger is, in theory, 

if it works the way it is designed to, it should allow the artist to 

grab control of the entire supply chain—including scalping—a lot 

better than they currently have. To me, it is part of their image. 

What creates demand for their tickets is their image of being good 

guys and selling cheap tickets. 

Mr. SHERMAN. Nobody thinks United Airlines is terrible when 

they sell a $250 ticket from L.A. to New York just because there 

are some First Class seats that they are able to get $3,000 for. 

There are many complaints that we have back in steerage, but the 

fact that they were able to squeeze a lot of money out of those people on the other side of the curtain has never bothered those of us 

on the plane. 

I don’t know why it bothers people who buy tickets, but you 

know your business better than I do. 

I have run out of questions, so thank you very much. 

[Whereupon, at 1:02 p.m., the Subcommittee was adjourned.] 

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