Music Coalition Opposes Potential Liberty Media/iHM Deal

Groups backing music creators and opposing media concentration have asked the Justice Department to reject what they said is John Malone's proposed purchase of iHeartMedia, the nation's largest radio station owner.

Multi-Channel News reports Justice is reportedly vetting a Liberty Media's proposal to boost its current stake in the radio/online audio giant to a controlling interest or ownership.

In a letter to Antitrust Division chief Makan Delrahim, the Center for Digital Democracy, American Economic Liberties Project, Artist Rights Alliance, Institute for Local Self-Reliance, Open Markets Institute, and Public Citizen, said it should nix the deal.

They argue that the combination of iHeartMedia with Liberty's controlling stake in satellite radio service Sirius/XM (which now owns Pandora) and 33% stake in LiveNation/Ticketmaster would create a dominant non-streaming and streaming audio distribution giant with likely "catastrophic" consequences for competition.

"For listeners, it will almost certainly mean fewer options, less diversity, and higher prices," they argued. And for artists, "[u]p and coming talent will face an even greater challenges cracking through shrinking nationalized playlists."

"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 predicted, adding: "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."

The full text of the letter:

Assistant Attorney General Makan Delrahim
United States Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530

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 Libertyeven 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 Citizen