DOJ Case Against Live Nation Is 'Weak,' Analysts Say: 'Separating Ticketmaster... Is Unlikely To Lower Ticket Prices'

The Department of Justice filed an antitrust lawsuit against Live Nation Entertainment LYV, which sent shares down during the week.

Analysts react to the news and share what's ahead for the entertainment company.

The LYV Analysts:

• Guggenheim analyst Curry Baker has a Buy rating and $128 price target.
• Roth analyst Eric Handler has a Buy rating and $120 price target.

Related Link: US Targets Ticketmaster Parent In Antitrust Lawsuit, Live Nation Responds: ‘It Ignores Everything That Is Actually Responsible’

Guggenheim on LYV: The Department of Justice suit against Live Nation is weak and could fail, Baker said.

"We are not at all surprised by today's action by the DOJ which caps off a nearly two-year investigation into LYV," Baker said.

The analyst said the investigation could be driven by politics and consumer complaints over ticket prices.

"We expect LYV to vigorously defend itself against this lawsuit. Our view remains unchanged that the DOJ does not have a substantive or winnable case."

Baker notes that the merger of Live Nation and Ticketmaster was approved by the Obama DOJ in 2010.

The analyst said that a common thought of breaking up Live Nation will lower prices for consumers is false.

"Ticket prices are set by artists and governed by market forces. Separating Ticketmaster and Live Nation is unlikely to lower ticket prices going forward."

Baker said Live Nation "does not wield monopolistic power."

Roth on LYV: The entertainment company appears ready to vigorously defend itself against the DOJ, Handler said.

"The DOJ appears to be fighting an uphill battle," Handler said. "In our view, the DOJ's lawsuit which aims to breakup Live Nation will have difficulty in succeeding."

The analyst said Live Nation was not surprised by the case, although it was surprising that the DOJ did not raise any claims regarding secondary markets.

"Live Nation would like to move the case along as quickly as possible."

The analyst said the process could take 12 to 18 months with a high probability that Live Nation files to dismiss part or all of the case over the next 60 days.

Handler said the DOJ is seeking structural relief in the antitrust case, which is a challenging demand. "The last time the DOJ won a structural relief decision was in 1981 with AT&T."

The analyst said the claims of monopolistic and anti-competitive behavior will be tough for the DOJ to prove.

LYV Price Action: Live Nation shares are up 1.7% to $95.06 on Friday versus a 52-week trading range of $76.48 to $107.24. Live Nation shares are up 16% over the last year.

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