As lawmakers continue to raise doubts about a proposed merger between Ticketmaster and Live Nation, the two entertainment giants have enlisted top K Street Democrats to diffuse the outrage, hiring lobbyists from Akin Gump Strauss Hauer & Feld as well as Gibson, Dunn & Crutcher, multiple sources confirmed on Tuesday.
Former Rep. Mel Levine (D-Calif.), a lobbyist at Gibson, Dunn & Crutcher, confirmed yesterday that his firm is representing Ticketmaster in the all-stock deal that would create a new $2.5 billion company and, some say, an unfair entertainment ticketing and promotion monopoly.
President Barack Obamas new Justice Department also is scrutinizing the proposed union to allay anti-trust concerns, agency spokeswoman Gina Talamona said on Monday.
But with the DOJ wheels in motion and no adversarial legislation to derail, Levine said his primary task now is not traditional lobbying around the Capitol although that may come, he said.
His immediate job is to calm New Jersey and New York lawmakers whose offices recently were bombarded with angry phone calls from rabid Bruce Springsteen fans who were unable to buy tickets to the Bosss Meadowlands concerts later this spring.
Its overwhelmingly related to Springsteen, Levine said of the rationale for yesterdays hearing before a Senate Judiciary subcommittee, which included testimony by Live Nation Chief Executive Officer Michael Rapino and Irving Azoff, the CEO of Ticketmaster. Unfortunately, the Springsteen concert had all kind of technical glitches, for which Ticketmaster has expressed embarrassment and apologized to Springsteen and the fans.
On Thursday, a House Judiciary subcommittee will hold a similar hearing at the request of Garden State Rep. Bill Pascrell (D), who asked Judiciary Chairman John Conyers (D-Mich.) on Feb. 5 to look into whether Ticketmaster engaged in self-dealing earlier in the month.
According to Pascrells letter, his office was deluged by calls from angry fans of the Asbury Park, N.J., rocker after they unsuccessfully attempted to purchase tickets on the Ticketmaster Web site to his May 21 and 23 concerts at the Izod Center in East Rutherford, N.J.
Instead, ticket-seekers allegedly were re-directed to TicketsNow.com, essentially a legal scalping service affiliated with Ticketmaster that takes a cut of each sale.
With Ticketmaster reaping a significant profit from TicketsNow sales, there is an obvious conflict-of-interest issue at play that calls into question the companys business practices, Pascrell wrote to the committee nearly three weeks ago. There is an incredible potential for abuse when one company controls the primary and secondary market for concert tickets.
That potential will surely be magnified exponentially should one company be able to control every aspect of recording, record sales, licensing, venue ownership and ticket sales, Pascrell added.
Ticketmaster on Monday reached a settlement with New Jersey Attorney General Anne Milgram to settle the three-week-old Springsteen debacle by agreeing to a ticket lottery for thousands of fans who filed complaints with the New Jersey Division of Consumer Affairs.
Under the agreement, Ticketmaster will also change the way it handles secondary sales and pay $350,000 to the state.
Ticketmasters press office did not respond to repeated requests to discuss the proposed merger.
Event ticketer and promoter Live Nation also declined to discuss the proposed merger or its lobbying.
Still, Secretary of the Senate filing shows that the publicly traded company hired Public Strategies Inc. on Feb. 5 to lobby antitrust issues relating to business combination with Ticketmaster.
Lee Godown, Rep. Loretta Sanchezs (D-Calif.) longtime chief of staff, and Daniel Kohns, Rep. Mike Hondas (D-Calif.) former communications director, both registered on behalf of the firm and Live Nation.
A Live Nation source agreed privately that this weeks hearing was little more than a formality, since the proposal really just needs the Justice Department sign off on the deal and that the online ticket debacle is more of a distraction than a legal hurdle.
The Bruce Springsteen-Ticketmaster flap was a bit of a surprise, but is not really related to the deal, the source said. Theres nothing that a merger with Live Nation will do that changes that scenario. Its just what happens when you have bad P.R. at the wrong time.
Numerous sources also confirmed that Live Nation is in the process of enlisting Democratic uber-lobbyist Joel Jankowsky of Akin Gump Strauss Hauer & Feld. The onetime aide to former Speaker Carl Albert (D-Okla.) did not respond to repeated attempts to discuss his possible hiring by the company.
In addition to Pascrell, Sen. Charles Schumer (D-N.Y.) also recently asked federal investigators to explore the alleged ticket switcheroo, expressing doubt at Tuesdays hearing that Ticketmasters computer servers actually failed.
Theyve said that this clever arrangement was caused, in part, by a malfunction. Given what Ticketmaster stood to gain by directing consumers to its own resell site, the episode seems to be much more about money-making than about malfunction, Schumer said at Tuesdays hearing, according to a statement distributed by his office. Ticketmaster has apologized for the incident, but to my knowledge still hasnt provided any detail as to how this happened. ... We need answers, not apologies.
Schumer, as well as other lawmakers and legal experts, also hinted that the Springsteen ticket mess likely will pale in comparison to the scrutiny expected by Obamas new Justice Department.
The Center for America Progress David Balto, who testified at Tuesdays hearing, said in an interview this week that the proposed merger will be a test anti-trust case for new DOJ officials.
Balto called the case a textbook example of why lawmakers early last century set out to bust up unfair business practices by massive enterprises.
One of the reasons that the anti-trust laws were passed by Congress was that it was a favorite sport of monopolists to go around and acquire their potential or nascent rivals, Balto said.
Its unfortunate that weve allowed Ticketmaster to become a monopolist basically through very lax anti-trust enforcement, but theres no way we should permit them to make it worse by acquiring the first firm thats really well-positioned to challenge that monopoly in a decade, Balto added.
Another realm in which the companies new lobbying and public relations teams may find themselves treading water is contending with Ticketmasters nasty reputation on the Hill, which reaches back to 1994.
Nearly 15 years ago, members of the Seattle grunge rock band Pearl Jam testified in a highly publicized Congressional hearing that Ticketmaster engaged in price fixing.
A source close to the merger said that company officials essentially acknowledged Ticketmasters bad reputation when they decided to change the new companys name should DOJ officials ultimately sign off on the deal.
The new company would be called Live Nation Entertainment.
When these two were brought together, there was a sense that this could be a fresh start, the source said. Getting rid of the name is not a bad thing if you want a fresh start.
Correction: Feb. 26, 2009
The article incorrectly reported that Live Nation has hired Public Opinion Strategies. The company hired Public Strategies Inc.
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