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Get Ready To Pay: What The Live Nation-Ticketmaster Merger Will Mean For Ticket Prices

imageNow 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

3 Responses to “Get Ready To Pay: What The Live Nation-Ticketmaster Merger Will Mean For Ticket Prices”

  1. Ticketmaster and LiveNation have been screwing the average fan with very poor service, high fees for handling/whatever and they give scalpers (often with connections to their companies) access to tickets before fans. Too many people have tried to buy tickets for various bands lately onluy to be told to "wait" while on line immediately after the sale starts…then they are told the tickets are sold out.

    This is the ugly side of free market economics. Soon only wealthy people will be able to go to concerts, sports events and the like. I would like to hear from the musicians and the venue owners to see if they recieve any additional monies from either Ticketmaster or LiveNation when they manage tiocket sales or is the public being screwed.

  2. @ Rory: that analysis is simultaneously fascinating and horrifying. Nice work!

    A few questions:

    In the post you say "our analysis" and "we assumed." Who's we? Just curious who the other brains are behind this.

    Also, what level of margin improvement do you think they'll target?

    And finally, are these percentage increases in ticket prices before or after service fees? (Not that you'll be able to tell the difference once the fees get buried into the ticket price…)

    @ Everyone else: If you're looking for comprehensive coverage of the Live Nation Ticketmaster merger, head on over to Satan's Box Office…

    http://jamtopia.com/blog/satans-box-office/

    It's updated daily with information and analysis plus more links than you can shake a pitchfork at.

    Take care,
    TL