Now that the Live Nation-Ticketmaster combination has been announced, the question is how will the new company make enough additional money to justify the deal? Certainly, some people have speculated (including Bruce Springsteen, among others) that the answer is higher ticket prices — but how much higher? The Department of Justice will, of course, be looking at what the increased pricing power of Live Nation (NYSE: LYV) Entertainment means for consumers; the company itself has been on mum this issue.
According to our analysis of the new company’s revenue streams, it will have to jack up ticket prices by double digits to make the merger worth the trouble. That would mean the average ticket price of $60 would jump to more like $70 (that difference is enough to buy a couple of beers at concert venues in some cities). Here’s the math, after the jump…
–We assumed that ticket revenue accounts for 40 percent of the combined company
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