Live Nation Entertainment (LYV) shares moved lower Wednesday after two Senate lawmakers urged the Department of Justice to probe the group's 'exorbitant fees' for concert and event tickets.
Democratic Senators Amy Klobuchar and Richard Blumenthal said Live Nation, which merged with Ticketmaster in 2010, the group's "aggressive acquisition strategy" and event pricing had violated a previous DoJ agreement that allowed for the combination with Ticketmaster to go ahead.
"As live events continue to open up, American consumers are confronting skyrocketing ticket prices, opaque terms, and exorbitant fees. Yet live entertainment markets, especially ticket markets, are dominated by one corporation," the Senators wrote. "We are deeply concerned that the Department’s past enforcement and negotiated remedies in this industry have failed to adequately foster and protect competition in live entertainment and ticketing markets."
Live Nation shares were marked 0.1% lower in early Wednesday trading, against a 1.4% gain for the S&P 500, to change hands at $111.50 each, a move that would extend the stock's year-to-date decline to around 8%.
Live Nation generated $6.27 billion in revenues over the final three months of last year, a 238% increase from 2020 levels, as ticketing and concert sales surged following the removal of Covid restrictions on indoor and outdoor gatherings.
However, while the group's concert division posted an operating loss of $294 million, its ticketing unit made $132.9 million.
Live Nation CEO Joe Berchtold told an investor conference earlier this week that secondary markets for event tickets suggest at least a $1 billion arbitrage from the "intrinsic" value of the group's products.
"So we're able and we have continued to increase the price of the tickets to capture that value for the artist and have seen very little pushback in terms of that ... real inelastic demand," he said.
"Consumers are speaking that the value is there, and they're giving the money to the brokers on secondary," he added. "So in my mind, it's not -- or at least now with ticket pricing, it's not a debate around the value, the value exists. It's one of the few products that still has a large portion of it that appreciates the moment it's sold rather than depreciates."
