S&P Global downgraded its outlook for Live Nation Entertainment (LYV) to negative on Thursday citing the Justice Department’s antitrust lawsuit against the ticketing giant.
“While the impact on the company and live events industry are uncertain, we believe Live Nation’s operating performance could be hurt by the lawsuit,” S&P said in its report. “As a result, we revised our outlook on Live Nation to negative from stable. We also revised our management and governance score to moderately negative from neutral.”
Last week, US prosecutors and a group of states argued in a complaint that Live Nation used its alleged Ticketmaster ticketing monopoly to suppress competition, resulting in higher prices and fees. The lawsuit, which is seeking a breakup of the company, follows a two-year investigation into Live Nation’s practices.
“The negative outlook reflects our view that the heightened regulatory scrutiny, financial costs, and potential disruption of Live Nation’s competitive position in the live events industry from the antitrust lawsuit could impair the company’s creditworthiness and thereby potentially result in a lower rating,” the agency added.
S&P maintained all of its ratings on the company, including its ‘BB-‘ credit rating. According to S&P, a ‘BB-‘ speculative grade is assigned to companies that face “major ongoing uncertainties to adverse business, financial, and economic conditions.”
Since the Live Nation-Ticketmaster merger was approved in 2010, the company has been at the center of antitrust concerns, with critics taking aim at sky-high ticket fees and accusing the entertainment giant of anticompetitive behavior.
In 2020, the Justice Department updated the company’s consent decree, an agreement that barred Live Nation from strong-arming venues into using Ticketmaster for its tours, and extended it until 2025.
It did so after it said it found evidence the company repeatedly and over the course of several years engaged in conduct that violated its earlier agreement.
Meanwhile, Capitol Hill ramped up its fight against Live Nation during a Senate Judiciary Committee hearing at the start of last year following a 2022 fiasco with Taylor Swift concert tickets.
Ticketmaster’s online software struggled to handle the demand for presale orders and fans complained they were denied tickets as they tried to buy them.
While a breakup is a major risk for the company, some Wall Street analysts view it as unlikely. Benchmark analyst Matthew Harrigan sees the DOJ lawsuit against Live Nation as being “significantly politicized” amid the US election year and says the department “has been generally unsuccessful in applying horizontal M&A theories.”
“We remain adamant that any targeted unwinding of the 2010 Live Nation Ticketmaster merger likely has only a remote likelihood under accepted antitrust law although we would be wary of the likely initial New York State Federal Court venue,” he said.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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