Report: Potential iHM, Liberty Deal Gets Pushback

Department of Justice officials are talking to music companies about Liberty Media's request to expand its 5% stake in iHeartMedia, according to Billboard citing several sources -- and many are pushing back.

"Having too much power in one industry is very dangerous," says Dina LaPolt, a board member of the Songwriters of North America and owner/founder of LaPolt Law P.C. "I would not want to see it go through. I like having diversity. With diversity, people are able to thrive."

Liberty, the media conglomerate run by billionaire John Malone, has slowly expanded its music holdings over the past decade, striking during downturns and targeting ailing 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 more than 850 broadcast stations, an app with 138 million users and a monthly reach of 275 million listeners. Liberty’s potential broadcast dominance has raised antitrust alarm bells.

Merger opponents fear the resulting broadcast powerhouse might streamline the airwaves, cutting costs by reducing playlists to established hits and syndicating content -- just as Clear Channel Communications did in the late 1990s and early 2000s.

"There is an anti-competitive story to be told. There's a potential that listeners will have fewer choices, that artists will have a tougher time to break through," says Michael Carrier, a Rutgers University law professor and antitrust expert who studies the music business. "Any time one organization has control over so many different steps of the distribution process, that presents concern."

"Liberty Media is going to say, 'It's a whole new world out there,'" says Steven Madoff, an entertainment attorney who specializes in antitrust issues. "It used to be that the AM/FM stations really dominated the music business; now you have satellite radio and big companies in the streaming business. Their argument is, 'We feel we need this merger to compete with these giant companies.'"

At the center of the merger proposal, reports Billboard, is Greg Maffei, Liberty's CEO, who led the company into its 5% iHeart stake in 2018, when the broadcaster was restructuring its debt as part of a bankruptcy proceeding. Liberty failed to expand its stake at the time.