Citi Defends Live Nation After Reports Of Antitrust Investigation

Live Nation Entertainment, Inc. (NYSE: LYV) rules concert ticketing, but it may do so through fear, according to an April 1 New York Times report. 

Nevertheless, the stock's weakness since the beginning of April represents a buying opportunity, according to Citi.

What Happened

Citi's Jason Bazinet upgraded Live Nation Entertainment from Neutral to Buy with a price target lowered from $47 to $45. While an adverse Department of Justice ruling is within the realm of possibility at this time, the stock's decline is an overreaction, Bazinet said in a Tuesday note. 

A 25-percent likelihood exists that Live Nation will be forced to split itself into more than one business, according to Citi. 

Live Nation shares were up 2.6 percent before the close Tuesday. 

Why It's Important

Live Nation was the biggest concert promoter and grew even bigger through its 2010 merger with Ticketmaster, the Times reported. As many expected at the time, ticket prices merely rose higher after the merger and service fees were not reduced. Ticketmaster tickets 80 of the top 100 arenas in the country and no single competitor has "more than a handful."

Multiple complaints have surfaced that Live Nation uses its control over concert tours to exert pressure on venues to do business with its Ticketmaster subsidiary, the report said. For example, Live Nation's chief competitor AEG told officials that venues it manages were threatened with a loss of valuable shows unless Ticketmaster's services were used. This could amount to a possible violation of antitrust laws, the Times said. 

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What's Next 

DOJ officials are looking into "serious accusations" relative to Live Nation's behavior, the Times reported. The regulatory body is reportedly reviewing instances of potential abuse in Austin, Texas and at Boston's TD Garden. 

"The consent decree was supposed to prevent Live Nation from using its strength in live entertainment to foreclose competition in ticketing," Beau Buffier, the chief of the New York Attorney General's antitrust bureau, told the Times. "But it is now widely seen as the poster child for the problems that arise when enforcers adopt these temporary fixes to limit the anticompetitive effects of deeply problematic vertical mergers."

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