Question

Live Nation operates music venues, provides management services to music artists, and promotes more than 22,000 live music events annually. The company merged with Ticketmaster and acquired concert and festival promoters in the United States, Australia, and Great Britain. How has the company used horizontal mergers and acquisitions to strengthen its competitive position? Are these moves primarily offensive or defensive? Has either Live Nation or Ticketmaster achieved any type of advantage based on the timing of its strategic moves?

Answer 1

Strategic mergers is business model adopted by growing and expanding companies to extend the product portfolio and get strategic advantages in the market. Few major types of merger is to do backward integrations, horizontal mergers, downstream acquisition etc. In backward integrations, the company’s would often look at doing strategic tie ups or acquisition of their suppliers in order to have continuous supply of raw materials at profitable prices. In downstream acquisitions, companies would often acquire the distribution channels, logistic providers etc. to have complete control over the last mile delivery. In horizontal mergers, the companies would do tie ups with companies who help in selling the product or service to a larger audience.

As mentioned in the case, in 2009, Live Nation has done a strategic merger with Ticketmaster who are into selling tickets and promoting live events. This would be an offensive move which ensures a collaborative approach to promotion of events. The financial reports of both companies show tremendous rise in the valuation of both of them. Both have benefited from the deal but it has to be noted that Live Nation`s brand value and promotion has gone higher and achieved all major target they have kept. There were multiple parties who opposed the deal stating it could lead to monopoly but in spite of such issues, the deal went forward and was completed. The major advantages for each company can be highlighted as follows:

• Less investment in promotion and information sharing platforms
• Easier to meet customer and artist demands and plan tour schedules
• Easy access to multiple venues across the globe
• Less competition with each other, since both are leading companies in the same space
• Easier to access new markets and promote artists
• Ensure ticket pricing is competitive and pass on benefits to customers