OP-ED - Glenn Peoples at Billboard.biz recently caught an interesting drift on the Live Nation Ticketmaster (NYSE: LYV) merger and some critical notes from one stock guru and author, Morningstar equities strategist Paul Larson,  who dumped them out of his portfolios after the merger.

First, to get the merger past the antitrust hurdles, the company had to agree to license its ticketing software, providing a potential bridge across the moat of the ticketing business. Yet even if the ticketing business retains its moat (something with decent odds of happening, in my view), Live Nation's other operations are quite unattractive. It owns several concert venues, a business with a high degree of rivalry and modest barriers to entry…Live Nation is also involved in promoting concerts and managing artists, businesses for which I fail to see a moat. The old Live Nation generated an operating loss in four of the past six years, and the combined entity will also have to deal with roughly $1.5 billion in debt.

In sum, Live Nation is a financially levered firm with a declining moat and a management team that have done a good job destroying value. No thank you!

Peoples at Billboard continues:

One could point to Live Nation’s top market share in concert promotion, or Front Line’s dominance in artist management, as being competitive advantages. But Larson’s point is neither has the kind of sustainable competitive advantage that creates long-term value. Ticketmaster’s technology and expertise has created a definite competitive advantage. Promoters and managers, on the other hand, exist in markets with lower barriers to entry. Talent can move from one company to another while technology remains in one place.

In fact, the very thing that could give Live Nation its greatest competitive advantage would run it afoul of the Department of Justice: leveraging its artist management division to sign ticketing clients. Instead, the value in the merger will be realized through the synergies found at the intersection of ticketing, promotion and artist management. Only Live Nation can boast three such divisions. It’s not a traditional competitive advantage, but Live Nation is hoping to make it work.

Technology can also move from one company to another, while artists remain in one place. Live Nation Entertainment (LNE), has longevity and a reasonable brand (since they can now move away from the despised Ticketmaster reputation), lacks the agility of smaller ticketing company to make paradigm shifts in ticket technology and create cheaper, better alternatives to LNE's ticketing system. Couple that with the anti-retaliatory clause put in by the US Department of Justice (USDOJ), and you have a host of reasons for independent venues and promoters to shift to other ticketing solutions.

Online ticketing is not rocket science. And the dominance that Ticketmaster possessed with its brick and mortar network is diminished due to new disruptive online technologies. There are a slew of startups we have written about in Europe (Paylogic, Fatsoma, Glubbin) and other sectors ( HMV Targets Ticketing, Live Music Market), that will more-than-likely take market share from all the major primaries, LNE, Eventim, Seetickets et al. in the European ticketing landscape in the future.... similar to Merriweather's move from LNE to newcomer Ticketfly in the USA. The real future battleground for new ticketing contracts will be in the box offices of arenas and stadiums.

Larson was smart.