Liberty’s plan to expand iHeart’s involvement – There is hindsight and the DOJ is listening

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Liberty, the Denver-area media conglomerate run by billionaire John malone, has slowly expanded its music portfolio over the past decade, hitting during downturns and targeting struggling companies before turning them around. The company currently owns 71% of SiriusXM, 34% of Live Nation, all of Pandora and nearly 5% of iHeartMedia, which has over 850 broadcast stations, an app with 138 million users and a monthly reach of 275 million listeners. Liberty’s potential dominance in broadcasting has raised antitrust alarm bells.

Opponents of the merger fear that the resulting broadcast power will streamline the airwaves, cutting costs by reducing playlists to established hits and syndicating content, just as Clear Channel Communications has done to the late 1990s and early 2000s. An April 15 letter to DOJ from the nonprofit Artist Rights Alliance stated that “the potential impact of the merger on radio markets is evident and probably catastrophic, removing competitive discipline in several market segments “.

“There is an anti-competitive story to tell. It is possible that listeners have less choice, that artists have a harder time breaking through,” says Michael carrier, a professor of law at Rutgers University and an antitrust expert who studies the music business. “Anytime an organization controls so many different steps in the distribution process, it becomes problematic.”

Neither Liberty nor iHeart would comment on the DOJ review, but Josh hill, a Minneapolis-based Liberty investor, said the resulting company would “use data a lot, much more efficiently” and boost the advertising that it serves.

“You could reduce redundant cost functions like finance, human resources, and marketing and reinvest in the business through technology and data collection,” says Hill. “You can see what people are listening to on playlists. You can go to the advertisers and say, “We have this podcast and the main listening demo is for women aged 35-45 who have kids and jobs.” You say to the Department of Justice: “We are going to make this more, instead of less, attractive to the consumer. “

Department of Justice officials also didn’t comment, so it’s unclear how the United States might build on the proposal. Some say the Trump administration promotes business growth, so the department may be inclined to approve the merger. And Liberty could argue that it competes not only with other streaming companies like Entercom and Cox, but with Apple, Amazon, Google and Spotify.

“Liberty Media is going to say, ‘It’s a whole new world out there,'” says Steven madoff, an entertainment lawyer specializing in antitrust matters. “Previously, AM / FM stations really dominated the music business; now you have satellite radio and big companies in the streaming business. Their argument is, ‘We think we need this merger to compete. these giant corporations. ‘”

But as the Justice Department has opposed another high-profile media merger during Trump’s time – AT&T’s purchase of Time Warner for $ 85 billion – it’s hard to say whether the move is a Previous: Trump’s loathing for Time Warner-owned CNN fueled his opposition. In February 2019, a US appeals court overturned the DOJ’s decision and approved the merger.

Another possible threat to Liberty’s iHeart proposal: The DOJ’s antitrust division last December said Live Nation “on several occasions and over the course of several years” had violated the consent decree attached to its 2010 merger with Ticketmaster. Among other things, the division suggested that Live Nation suspend concerts in theaters when those venues sell tickets through a competitor of Ticketmaster. Because Liberty has such a large stake in Live Nation, the DOJ might be wary of further expansion. “It’s hard for me to see them agree to this unconditionally, given that the DOJ just extended the consent decree for 10 years,” Madoff said.

At the center of the merger proposal is most likely Greg Maffei, CEO of Liberty, who led the company into its 5% stake in iHeart in 2018, when the broadcaster restructured its debt in bankruptcy proceedings. Liberty failed to expand its involvement at the time.

“We haven’t done it, but you’ll be pragmatic and opportunistic about ‘maybe it will happen in the future’,” Maffei said. Billboard Last year.

LaPolt, the music lawyer, accused Maffei in 2018 of paying lobbyists to remove the Music Modernization Act, which extended copyright protection to songwriters and artists; Liberty-owned SiriusXM ultimately struck a deal and backed the legislation. She is concerned that Liberty favors the interests of companies before artists and consumers.

“He didn’t get where he is by not being a wise businessman,” LaPolt said of Maffei. “I only hope he’s a good person.”

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