February 10 th, 2009 Ticketmaster Live Nation

The Players  Ticketmaster Largest primary ticketing provider in the U.S. (80%) Largest primary ticketing provider in the U.S. (80%) Host, Paciolian, Frontline Management Host, Paciolian, Frontline Management  Live Nation Largest concert promoter in the U.S. Largest concert promoter in the U.S.

Merger Case  11.5 months long  250 interviews  2.5 million documents  12 CID’s to merging parties and third parties

Horizontal & Vertical Issues Horizontal Ticketmaster’s contract with Live Nation ends in Dec 31 st, 2008 Live Nation does not renew the contract for primary ticketing with Ticketmaster Dec 2008, Live nation purchases European CTS software and enters the market for primary ticket sales Ticketmaster profits fell 78% in first quarter Feb 10th, 2009 Live Nation agrees to merge with Ticketmaster Vertical Vertical Control over all aspects of the live entertainment industry

Market Definition  Product Level: the sale of primary ticketing services to major concert venues  Geographic Level: venues with the U.S.

Market Concentration  Ticketmaster dominated primary ticketing for the last 20 years  Other players in the market: Tickets.com, New Era Tickets, and Front Gate Tickets  All rivals have less than 4% share of the market

Pre-Live Nation Entry

Post-Live Nation Entry

HHI  Market for primary ticketing to major concert venues is highly concentrated  Pre-Merger HHI: 4,710  Post-Merger HHI: 6,900  Post-Merger increase of 2,190 points

Theories of Harm  Major concert venues most affected  Classic market power Lessens competition in market for primary ticket sales as Live Nation was beginning to be only viable competitor Lessens competition in market for primary ticket sales as Live Nation was beginning to be only viable competitor Lessens incentive for innovation Lessens incentive for innovation  Exclusionary market power High barriers to entry High barriers to entry Merged firms potential ability to bundle all aspects of concert going experience and exclude competitors Merged firms potential ability to bundle all aspects of concert going experience and exclude competitors

Efficiencies  Defendant argued for: Efficiencies created by vertical integration Efficiencies created by vertical integration Price will pass to the consumer Price will pass to the consumer  Plaintiff argued for: U.S. does not fully credit this claim U.S. does not fully credit this claim Same efficiencies can be achieved without the merger Same efficiencies can be achieved without the merger

Entry Ticketmaster has dominated the market for over two decades Existing ticketing companies do not have the qualities required to compete in the market. New entry is costly and time-consuming A substantial amount of money and over two years would be required to develop similar qualities to Live Nation Entertainment Not likely to occur in a timely or sufficient basis on a scale that would raise competition

Final Judgment  Structural remedies AEG’s entry to primary ticket sales market AEG’s entry to primary ticket sales market Ticketmaster Host Platform for 5 years with royalties to TicketmasterTicketmaster Host Platform for 5 years with royalties to Ticketmaster Option to license their own copy of host for a feeOption to license their own copy of host for a fee Divestiture of Paciolian to Comcast-Spectator Divestiture of Paciolian to Comcast-Spectator  Behavioral remedies No exclusionary conduct No exclusionary conduct 30 day notification for new aquisitions 30 day notification for new aquisitions

Opinions/Conclusions  Live Nation was beginning to compete when merger occurred  Same vertical integration efficiencies could be achieved without merging as they were both beginning to verticaly integrate anyway  Entry will be too difficult post-merger