Case Analysis The House Of Blues - 1502 Words

1. What was Live Nation? What was Ticketmaster? (Include information business dealings, history and CEOs.) Live Nation was the largest concert promoter in the United States whose CEO was Michael Rapino. It was a spinoff of Clear Channel Communications in 2005. The House of Blues locations came under Live Nation ownership in 2006. This greatly increased the number of its venues. Some statistics about Live Nation from before the merger include it owning 75 domestic venues and 42 international venues, it had 22,000 events every year, it was in charge of the Super Bowl halftime show, and over 50 million people attended its events ever year. Live Nation also had deals with specific artists for promotional and branding rights and some live†¦show more content†¦This upset Ticketmaster because Live Nation was one of their largest sources of events to ticket. 2. Why did these companies decide to merge? (Provide detailed information provided in the sources as well as a basic microeconomic explanation.) When the merger was announced Ticketmaster and Live Nations stated reasons such as improved efficiencies and cost savings for shareholders, management and consumers (Too Big To Fail?). One of the way these cost savings was going to come about was through the removal of middleman (Smith). Before they decided to merge they were on a collision course which would have to have ended with a merger or a battle (Smith). Lastly, the changes in the music industry with records producing less and less money and ticket quantity and price going up they thought the merger would be good for everyone in the music business from artists to fans. As far as a microeconomic answer to why Ticketmaster and Live Nation pursued the merger the quick answer is being a monopoly is better for the firm. Monopoly is defined by the Mankiw textbook as, â€Å"a firm that is the sole seller of a product without close substitutes.† All firms want to be the sole provider of their good or service because than they can charge whatever price they want and consumers are forced to pay it. When the merger took place the resulting company Live Nation Entertainment did not have a full monopoly