Ticketmaster Sued, Merges With Live Nation

An Ontario class-action lawsuit has been launched against Ticketmaster Entertainment Inc., Ticketmaster Canada Ltd., TNOW Entertainment Group Inc. and Premium Inventory, Inc.

The plaintiffs allege Ticketmaster is diverting tickets to its TicketsNow resale site and forcing consumers to pay a higher price for them in violation of the anti-scalping provisions in Ontario's Ticket Speculation Act. The suit also alleges the fees and surcharges levied by Ticketmaster also violate the Ontario legislation.

The lawsuit filed with the Ontario Superior Court Of Justice on Monday seeks $500 million in damages for "wrongfully, unlawfully [and] maliciously" conspiring to sell tickets at an increased price. It also seeks $10 million for punitive damages.

Ticketmaster purchased TicketsNow for $265 million U.S. (about $327 million Canadian) last year. It receives a portion of the proceeds from every ticket resold through TicketsNow in addition to the service charges it collects when the tickets are initially sold.

The lawsuit was filed on behalf of Toronto's Henryk Krajewski, who purchased two Smashing Pumpkins tickets last year for a Massey Hall show for $533.65 (including service charges, but not shipping costs) from TicketsNow. Court documents say the tickets would have cost about $130 if they'd been available from the Ticketmaster website, which Krajewski says directed him to the TicketsNow site.

"Henryk pleads that the conduct of the defendants was high-handed, outrageous, reckless, wanton, entirely without care, deliberate, callous, disgraceful, wilful and motivated by economic considerations," says the statement of action submitted to the court.

Anyone who was allegedly overcharged for buying from Ticketmaster or TicketsNow in Ontario after February 2007 will also be represented in the lawsuit. Those who think they may be able to participate should go to the website set up by the two law firms that launched the suit to provide information.

"The plaintiff seeks, among other thing, damages in an amount equal to the difference between the price the class members' paid for the tickets and the face price of the tickets," says a statement on the site.

Ticketmaster hasn't yet filed a statement of defence, but company representatives have previously told The Canadian Press they don't divert tickets to TicketsNow or give it preferential treatment or access. They insist it's a valuable customer service that guarantees resale tickets are legitimate.

Ticketmaster and concert promotion giant Live Nation announced a merger on Tuesday morning in a stock-for-stock transaction that will result in a company called Live Nation Entertainment that has a combined enterprise value of approximately $2.5 billion U.S. 

The two parties claim they'll be better positioned to improve access and transparency, improve ticket pricing options, invest in better ticketing technology and increase event attendance while saving about $40 million U.S. in annual operating costs by joining forces.

"This combination will drive measurable benefits to consumers and accelerate the execution of our strategy to build a better artist-to-fan direct distribution platform," says Live Nation's Canadian-born CEO, Michael Rapino. "As every industry observer knows, too many tickets go unsold and too many fans are frustrated with their ticket-buying experiences.

"The current inefficiencies in the system result in higher costs and confusion over access to seats. Together, we will work to simplify the ticketing process and ultimately increase attendance at live events. This is also a logical step in the evolution of our business model, creating a more diversified company with a stronger financial profile that will drive improved shareholder value over the long term."

The merger will likely be examined closely by antitrust regulators before it can become official.

Bruce Springsteen complained last week in a MySpace blog post after tickets for his upcoming shows were resold on TicketsNow for hundreds of dollars more than face value.

"There are rumors that some artists or managers participate in Ticketmaster charges--we do not," he wrote. "There are rumors that some artists or managers are receiving a percentage of the amount above face value at secondary outlets like TicketsNow--we do not. Some artists or managers may not perceive there to be a conflict between having the distributor of their tickets in effect 'scalping' those same tickets through a secondary company like TicketsNow--we do."

Springsteen also stated his opposition to the Ticketmaster-Live Nation merger.

"The one thing that would make the current ticket situation even worse for the fan than it is now would be Ticketmaster and Live Nation coming up with a single system, thereby returning us to a near monopoly situation in music ticketing," he wrote.

"The abuse of our fans and our trust by Ticketmaster has made us as furious as it has made many of you. We will continue to do our utmost now and in the future to make sure that these practices are permanently curtailed on our tours."