Lawmakers to review Ticketmaster, Live Nation merger; Liberty takes 40% cut of Sirius XM Radio

By Cristal Cody

Tupelo, Miss., Feb. 17 - The merger of Ticketmaster Entertainment, Inc. and Live Nation, Inc. will undergo additional regulatory scrutiny in a Feb. 24 hearing by the U.S. Senate Judiciary Committee's antitrust subcommittee, a spokesman for the committee's chairman told Prospect News on Tuesday.

Also on Tuesday, Sirius XM Radio Inc. escaped a potential takeover or possible bankruptcy with $530 million in loans from Liberty Media Corp., but an analyst said in an interview that the company may have lost too much control.

While President Obama on Tuesday signed a $787 billion recovery package into law in the hopes it will create millions of jobs and stop the slide deeper into recession, General Motors Corp. and Chrysler LLC were looking for more funds to prevent bankruptcy.

Wall Street sunk on the deteriorating economic news.

The Dow Jones Industrial Average lost 297.81 points, or 3.79%, to 7,552.60.

The broader indexes fell even further.

The S&P 500 index slipped 37.67 points, or 4.56%, to 789.17, while the Nasdaq Composite index dropped 63.70 points, or 4.15%, to close at 1,470.66.

Ticketmaster, Live Nation enter regulatory limbo

Last week, the Department of Justice promised a thorough review of the Ticketmaster and Live Nation combination.

Now, the U.S. Senate Judiciary Committee's antitrust subcommittee will hold a hearing on the merger.

Lynn Becker, spokesman for subcommittee chairman Sen. Herb Kohl, D-Wis., said in an interview that the list of witnesses who will testify will be finalized later this week.

The merger has sparked concerns with lawmakers and musicians over the concentration of music industry power.

Beverly Hills, Calif.-based Live Nation is the largest producer of live concerts in the world, and West Hollywood, Calif.-based Ticketmaster is the leading entertainment ticketing and marketing company.

According to the merger agreement filed with the Securities and Exchange Commission on Friday, the deal includes requirements for each company to divest of assets or make other efforts to receive regulatory approval.

If the merger does not receive antitrust clearance, then both companies may walk away without paying any breakup fees.

One market source said the transaction has a 60% chance of being approved by the Justice Department, but state attorneys general also may challenge the merger.

In the all-stock merger, Ticketmaster shareholders will receive 1.384 shares of Live Nation stock for each share of Ticketmaster they hold.

Alan Gould, an analyst with Natixis Bleichroeder Inc., upgraded Live Nation's stock to "buy" on Tuesday.

"This stock is cheap with or without Ticketmaster," he told Prospect News. "If the deal goes through, it would be a great deal and make a powerhouse in the live music business."

Live Nation's stock rose 7 cents, or 1.98%, to close on Tuesday at $3.60, while shares of Ticketmaster jumped 16 cents, or 3.56%, to close at $4.66.

Liberty takes 40% stake in Sirius XM Radio

Sirius XM Radio escaped the clutches of Englewood, Colo.-based satellite company EchoStar Corp. and possible bankruptcy on Tuesday with the investment from Liberty Media through its Liberty Capital group.

Now entertainment company Liberty, also based in Englewood, Colo., has a major stake in the satellite radio provider.

"They're going to be owned 40% by Liberty Capital," an analyst told Prospect News. "That's a lot of control."

While New York-based Sirius XM Radio fought to remain a standalone company, chances are good for a Liberty takeover "down the line," the analyst said.

Liberty Capital is made up of subsidiaries Starz Media LLC, the Atlanta National League Baseball Club Inc. and minority investments in Time Warner Inc. and Sprint Nextel Corp.

As part of the agreement, Liberty provided a $280 million loan to Sirius XM Radio, with $250 million released immediately to help the company repay $171.6 million in convertible notes that matured on Tuesday.

Liberty also will provide a $150 million loan to Sirius XM Radio subsidiary XM Satellite Radio Inc. and purchase up to $100 million of the loans outstanding under XM Satellite Radio's existing credit facilities.

In exchange, Liberty will receive the company stake and seats on the board of Sirius XM Radio.

Sirius XM Radio said the deal does not constitute a change in control for the company and is not subject to approval of the Federal Communications Commission.

"This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM," Mel Karmazin, chief executive officer of Sirius XM Radio, said in a statement.

Sirius XM Radio has more than 18.9 million subscribers and features hosts that include Martha Stewart and Howard Stern, who has a $500 million five-year contract.

Sirius XM Radio's shares gained 6 cents, or 52.53%, to close at 16 cents on Tuesday.

Liberty shares closed unchanged at $5.40 on Tuesday.

EchoStar shares rose 36 cents, or 2.37%, to $15.53 in trading.

GM's stock falls

Shares in Detroit-based automaker General Motors fell 32 cents, or 12.80%, to close at $2.18 as the company's future hung in the balance late Tuesday.

General Motors' and Chrysler's initial restructuring plans were due to the government on Tuesday in exchange for $17.4 billion in loans, with the final drafts due by March 31.

President Obama said over the weekend that he will create a panel of advisers to oversee the restructuring of the automakers.

Mentioned in this article:

EchoStar Corp. Nasdaq: SATS

General Motors Corp. NYSE: GE

Liberty Media Corp. Nasdaq: LCAPA

Live Nation, Inc. NYSE: LYV

Sirius XM Radio Inc. Nasdaq: SIRI

Ticketmaster Entertainment, Inc. Nasdaq: TKTM

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