S&P Global on Thursday cut its outlook for the company to negative, citing the Department of Justice's antitrust lawsuit against ticketing giant Live Nation Entertainment (LYV).
“While the impact on the company and the live events industry is uncertain, we believe the litigation could have a negative impact on Live Nation's financial performance,” S&P said in the report. “As a result, we have revised our outlook on Live Nation to negative from stable. We have also revised our management and governance assessment to moderately negative from neutral.”
Last week, U.S. prosecutors and state governments accused Live Nation of using Ticketmaster's ticketing monopoly to stifle competition and drive up prices and fees. The lawsuit, which seeks to break up the company, follows a two-year investigation into Live Nation's practices.
“The negative outlook reflects our view that increased regulatory scrutiny due to the antitrust litigation, financial costs and potential disruptions to Live Nation's competitive position in the live events industry could impair the company's credit profile, resulting in a downgrade of the ratings,” the agency added.
S&P maintained all of its ratings on the company, including its 'BB-' credit rating, which is a speculative rating assigned to companies facing “significant and ongoing uncertainty due to adverse business, financial, or economic conditions,” according to S&P.
Ever since the Live Nation-Ticketmaster merger was approved in 2010, the company has been at the center of antitrust concerns, with critics denouncing inflated ticket prices and accusing the entertainment giant of anti-competitive behavior.
In 2020, the Department of Justice renewed Live Nation's consent decree banning the company from forcing venues to use Ticketmaster for tours, extending it through 2025.
The company said it had uncovered evidence that the company had engaged in repeated violations of the previous agreement over several years.
Meanwhile, Congress stepped up its fight against Live Nation at a Senate Judiciary Committee hearing earlier last year, following the fiasco over Taylor Swift's 2022 concert tickets.
Ticketmaster's online software has struggled to handle demand for pre-sale orders, and fans have complained that their attempts to purchase tickets have been rejected.
A breakup is a big risk for the company, but some Wall Street analysts see it as unlikely. Benchmark analyst Matthew Harrigan said he sees the Justice Department's case against Live Nation as “highly politicized” in a US presidential election year, and that the Justice Department has “largely failed to apply horizontal M&A theory.”
“While we maintain that any targeted de-merger of the 2010 Live Nation Ticketmaster merger is highly unlikely under the antitrust laws, we are wary of the possibility of initial venue being in New York federal court,” he said.
Alexandra Canal She is a senior reporter at Yahoo Finance. Follow her on X translator, LinkedIn, Please email me at alexandra.canal@yahoofinance.com.
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