We’ve previously asked whether Denver-based Liberty Media could become king of the global music business through its ownership of stakes in some of the biggest players across the live music, streaming and broadcast sectors.
Led by Chief Executive Greg Maffei (pictured), Liberty owns SiriusXM (which owns Pandora), around a third of Live Nation, and a 4.8% stake in US radio giant iHeartMedia, which reaches over 250m Americans each month across digital, podcast and 850 live broadcast stations.
The New York Post reported in December 2018 that Liberty was seeking to acquire a 35% stake in iHeart, which had filed for bankruptcy in the US in March that year, but successfully completed a restructuring process in May 2019, reducing its debt from $16.1billion to $5.75bn.
In mid December 2019, the Wall Street Journal reported that Liberty Media was seeking Department of Justice approval to increase its stake in the US radio giant and the New York Post reported later that month that the DOJ was considering blocking that plan.
Now, a potential larger Liberty/iHeart deal is being opposed by a number of US consumer rights and artist advocacy groups, who say, in no uncertain terms, that it would give Liberty way too much of a competitive advantage, calling it an “overreaching effort to monopolize music radio” in the United States.
In a statement issued to the press today (April 15) with an attached open letter to the DOJ and the House and Senate Judiciary Committees, the collective suggests that ‘Liberty Media already has far too much control over the music ecosystem,’ for the DOJ to warrant approving the move.
The organizations, including the American Economic Liberties Project, Artist Rights Alliance, Center for Digital Democracy, Institute for Local Self-Reliance, Open Markets Institute and Public Citizen, argue that “this unacceptable new proposal will put a broad array of music creators at a massive disadvantage in an arena that is already massively stacked against them”.
“this unacceptable new proposal will put a broad array of music creators at a massive disadvantage in an arena that is already massively stacked against them”.
Adds the letter: “For listeners, it will almost certainly mean fewer options, less diversity, and higher prices. It’s easy to see ticketing offers and exclusives steered to Liberty’s radio channels, shutting out non-Liberty listeners and further undermining competition on the radio subscription side.
“And will Liberty even continue to invest in its free-to-listeners AM/FM product when that is competing with its lucrative satellite and streaming businesses?
“For artists, the prospects are even direr. Up and coming talent will face an even greater challenges cracking through shrinking nationalized playlists. This challenge will be more daunting if a new Liberty music conglomerate gives preferential airplay and venue access/promotion to its own signed artists. Such preferential treatment would disfavor everyone else and squeeze more diverse voices off digital, AM/FM, and satellite distribution.
“This merger will also be a setback in the struggle for fair economics for music distribution, as the new conglomerate uses its massive power to demand cut-rate, below-market royalty rates at the pain of being shut out across these major platforms altogether.”
They sign off with a simple plea: “Please reject Liberty Media’s bid to acquire any meaningful portion of iHeartMedia”.
You can read the letter in full below:
Dear Assistant Attorney General Delrahim:
Press reports indicate the Department is currently evaluating Liberty Media’s potential acquisition of iHeartMedia.
Musicians, songwriters, and performers depend upon a vibrant, competitive media ecosystem to find and reach fans and audiences and earn fair compensation for their work. On behalf of musicians, songwriters, and performers and groups that oppose corporate concentration, we urge you to reject this massively overreaching effort to monopolize music radio in this country.
With a controlling stake in “satellite radio behemoth” Sirius XM, the largest provider of satellite radio in the US, Liberty dominates non-streaming, non-retail music distribution. Sirius’s recent purchase of Pandora marries that dominance with the free streaming pioneer’s 70 million monthly active users.
Liberty’s 33% stake in Live Nation/Ticketmaster also gives the company substantial influence in the live performance and ticketing sector. Live Nation also has a hand in artist representation, managing 500 artists as of 2016. The Department is familiar with the anti-competitive practices of the events/ticketing portion of Liberty’s business, having just settled substantial antitrust claims based on the company’s forcing concert venues into using its ticketing product and other apparent violations. That settlement extended the original Live Nation/Ticketmaster consent decree for five years and imposed significant additional conditions.
In sum, with its current holdings, Liberty already has amassed monopoly control of the satellite radio market, substantial control over the concert/live performance market, and ownership of one of the top three music streaming companies.
Now, Liberty has expressed interest in acquiring iHeartMedia which is, among other things, the single biggest AM/FM radio broadcaster and a massive nationwide streaming competitor as well. The iHeartRadio streaming service alone has more than 120 million registered users, and the combined broadcast/streaming company touts itself as “the number one audio media company in the US based on consumer reach” with a monthly total reach of 275 million listeners, “greater than the digital audience of Google (251 million, including YouTube) and Facebook (215 million, including Instagram and Messenger) in the US.”
The potential impact on radio markets is evident and likely catastrophic, removing competitive discipline across multiple market segments. The merger of Sirius and XM removed one vector of potential competition. Then, the consolidation of SiriusXM and Pandora removed another. Now consumers face the prospect of their top local broadcast music stations (including markets in which iHeart already owns multiple stations), the massive iHeart streaming network, Pandora, and SiriusXM all being under one roof. Not to mention sharing space there with the Live Nation/Ticketmaster monopoly.
For listeners, it will almost certainly mean fewer options, less diversity, and higher prices. It’s easy to see ticketing offers and exclusives steered to Liberty’s radio channels, shutting out non-Liberty listeners and further undermining competition on the radio subscription side. And will Liberty even continue to invest in its free-to-listeners AM/FM product when that is competing with its lucrative satellite and streaming businesses?
For artists, the prospects are even direr. Up and coming talent will face an even greater challenges cracking through shrinking nationalized playlists. This challenge will be more daunting if a new Liberty music conglomerate gives preferential airplay and venue access/promotion to its own signed artists. Such preferential treatment would disfavor everyone else and squeeze more diverse voices off digital, AM/FM, and satellite distribution.
This merger will also be a setback in the struggle for fair economics for music distribution, as the new conglomerate uses its massive power to demand cut-rate, below-market royalty rates at the pain of being shut out across these major platforms altogether.
Will anyone be surprised if artists, songwriters, record companies, and PROs that refuse to give in to Liberty’s demands on royalty rates find themselves shut out of access to Live Nation venues and Ticketmaster promotion? Will the new entity squeeze royalties even further for working artists and songwriters – piling on to the lost working-class music jobs seen in places like Nashville, where since 2000, the number of working songwriters has collapsed by 80%?
Independent artists and diverse new voices are already struggling in a consolidated industry, and this will only narrow their opportunities to be heard.
This unacceptable new proposal will put a broad array of music creators at a massive disadvantage in an arena that is already massively stacked against them. Please reject Liberty Media’s bid to acquire any meaningful portion of iHeartMedia.
Sincerely,
American Economic Liberties Project
Artist Rights Alliance
Center for Digital Democracy
Institute for Local Self-Reliance
Open Markets Institute
Public CitizenMusic Business Worldwide
