Live Nation would be 'a shell of itself' without Ticketmaster: Analyst

Some parts of this page are not supported on your current browser version. Please upgrade to a recent browser version.

In the wake of Tuesday's into the ticketing industry, one analyst is warning a potential forced uncoupling of Live Nation () and Ticketmaster would be dire for the company.

"Live Nation would be a shell of itself without Ticketmaster, in my view, because that's where they get all the data on consumers that powers the rest of their business," Douglas Arthur, analyst at Huber Research Partners, .

Arthur explained the concert business is a loss leader with margins hovering around 1%, with Live Nation through ticketing, sponsorships, and advertising.

"Without Ticketmaster in the center of that cog, or that machine, the parts wouldn't hold together as well."

A previous court filing from the Department of Justice revealed Live Nation commands more than 80% of the market, although Live Nation President and CFO Joe Berchtold contended Live Nation's market share is now closer to 50%-60% during Tuesday’s Senate hearing

"This is all the definition of monopoly," Sen. Amy Klobuchar, D-Minnesota, said during Tuesday's hearing. "Live Nation is so powerful that it doesn't even need to exert pressure, it doesn't need to threaten, because people just fall in line."

Investors seemed to shrug off the initial impact of Tuesday's hearing, with shares of Live Nation rising about 2% at its conclusion.

The stock, which hit its lowest level since February 2021 in the immediate wake of the Swift debacle, has climbed more than 10% since the start of the year, though is still off roughly 20% from a year ago.

"The uncertainty over the future of Ticketmaster, which led up to this hearing, is another overhang on the stock," Arthur said, noting the company's increased debt and an elevated valuation relative to the overall industry have also weighed on the stock.

Still, the analyst highlighted Live Nation's underlying numbers remain incredibly strong.

In its latest earnings report, the company set records for both concert sales and ticket sales with Q3 revenue coming in at $6.2 billion, a 66.8% increase compared to the same period in 2019.

Thanks to sold-out tours from Coldplay and the Red Hot Chili Peppers, among other major acts, the company notched its highest quarterly attendance ever as over 44 million fans attended 11,000 events in the third quarter, up 40% versus the same period in 2019.

"It's an interesting situation from an investment point of view [but] you have to look at the Live Nation outlook going into 2023," Arthur said. "There is a tsunami of big acts that want to get in on this reopening surge."

The Justice Department (DOJ), which opened an antitrust investigation into Live Nation's practices prior to November's , approved the Live Nation-Ticketmaster merger .

Ten years later, in 2020, the department the company's consent decree and extended it until 2025 after finding evidence the company repeatedly and over the course of several years engaged in conduct that violated its earlier agreement.

Arthur noted the difficulties that come along with updating or adding to existing antitrust laws, explaining: "The Senate acknowledged that they can only present the facts of the industry dynamics and what's broken. It's up to the DOJ to do something about it...The question is, 'What do you do?'"

As a result of those complexities, coupled with the notion solve the problems surrounding the unregulated secondary ticket market, the analyst predicted "it's highly unlikely that Ticketmaster is divested from Live Nation."

Still, he acknowledged "when you rise to the level of a Senate hearing, and those are pretty senior senators, there's heat."

"Whether the DOJ responds to that or not, there will be heat to do so," he added.

Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter