# 702 – 🎭 Ticketmaster’s judgment day – The Average Joe

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    # 702 – 🎭 Ticketmaster’s judgment day

    victorlei

    May 24, 2024

    Good morning. With 859 tornados so far this year, 2024 is the most active since 2017 — putting it on track to be one of the highest years of tornado activity in history. And for those who think they’ll never experience one in their lifetime, well, never say never.

    • Studies show tornados are occurring less often in the traditional Tornado Alley states of Texas, Kansas, and Oklahoma.

    • Instead, they’re increasing in the upper Midwest states like Minnesota, Illinois, and Iowa — this month, Michigan had its first-ever “tornado emergency.”

    This shift leaves many states and insurers unprepared, especially as they are just starting to recover from recent spikes in catastrophe losses.


    ENTERTAINMENT

    The Department of Justice Says It’s “Time To Break Up Live Nation” After Ticketmaster Controversy

    There’s nothing more dangerous than a passionate group of fans — just ask Ticketmaster. Last year, the world’s largest ticketing platform crashed as Swifties swarmed the site to buy tickets for Taylor Swift’s “Eras Tour.”

    Since then, Ticketmaster’s hefty 20-33% cut of ticket sales has caught the attention of media, Congress, and government regulators. But that was just the opening act. The Department of Justice (DOJ) and 30 states have been preparing for the main attraction — an effort to break up its parent company, Live Nation ($LYV).

    The main act: Last year, Live Nation’s revenue jumped 36% to $22.7B, with nearly 80% of US major concert venue tickets sold through Ticketmaster. But on Thursday, the DOJ filed a long-anticipated suit against Live Nation, which could break up its “monopolistic control over the live events industry in the United States.” The case alleges that the company’s dominance has stifled innovation and competition — increasing prices for fans and harming the industry.

    • The complaint says that Live Nation and Ticketmaster “exploit their conflicts of interests as a promoter, ticketer, venue owner and artist manager” to “entrench their dominant position” (CNBC).

    • Live Nation denied the claims, blaming ticket scalping and artist popularity for higher prices — despite its reported role in facilitating scalping and selling tickets directly on resale sites.

    The biggest breakup since the Beatles

    If the DOJ is successful, separating Ticketmaster and Live Nation could impact 80% of the concert ticketing market, over 265 venues, and the management of 400 A-list artists. Such a move could change global entertainment… or not.

    • In 2010, Live Nation was cleared to acquire Ticketmaster under an agreement not to exploit its power against venues — but it did that anyway.

    • Northeastern University law professor John Kwoka, who worked on the 2010 case, says, “You can’t just reverse the merger” due to the company’s exclusivity, assets, and control.

    The DOJ’s busy tour: It’s hard to predict the case’s outcome, especially with the DOJ’s busy schedule. This is the third antitrust case filed by the DOJ, following cases against Google ($GOOGL) and Apple ($AAPL). But after successfully stopping a tie-up between airlines Spirit ($SAVE) and JetBlue ($JBLU) earlier this year, anything could happen… so long as this year’s election doesn’t derail it.


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    LARGECAP RECAP

    🏦 First US Spot Ether ETFs Set to Start Trading in Coming Weeks

    Earlier this week, the Securities and Exchange Commission (SEC) shocked the crypto community by asking exchanges to amend their filings for Ethereum exchange-traded funds (ETFs) ahead of the agency’s review. Investors anticipated the approval of spot Ether ETFs yesterday, and that’s exactly what happened — sending $ETH up 4%, with a weekly return of 32%.

    • A source close to the matter says that the SEC’s unexpected rule change means asset managers still have “a lot of work” to do on the S-1 filings required to list the ETFs.

    • These funds will begin trading once the SEC approves applications from nine asset managers, including Fidelity, BlackRock, and Grayscale.

    What this means for ETH: Since the first spot bitcoin ETF was approved on Jan. 10, $BTC is up nearly 45%, partly boosted by its halving event last month. Analysts at AllianceBernstein predict the approval could spur a 75% $ETH rally, but Amplify ETFs’ Christian Magoon warns it might be a “sell the news” event. Regardless, these ETFs could generate hundreds of millions in extra fees for issuers, with Bloomberg’s Eric Balchunas expecting Ether ETFs to receive 10-15% of the inflows that Bitcoin ETFs got — potentially more than $10B.

    👨‍🔬 American Chemical Giant DuPont Makes a Radical Move to Turn Itself Around

    It started with General Electric ($GE), continued with Kellogg ($K), and now DuPont ($DD) is joining the trend of conglomerate breakups, a move seen as a strategy to boost stock prices. The chemicals provider is splitting into three sectors: electronics, water, and biopharma/medical devices. This move sent DuPont’s stock up by ~3% yesterday, although it ended the day flat. DuPont investors are familiar with this trend, as the stock has gone virtually nowhere over the past five years.

    • The restructuring, expected to be completed in 18-24 months, aims to distance DuPont from its toxic “forever chemicals” class action lawsuit.

    • According to Melius Research analyst Scott Davis, “These assets together perhaps didn’t play well together, but separately they look pretty darn interesting” (BBG).

    Three’s a crowd: Other conglomerates have also found it hard to play nice and manage diverse sectors. In March, GE decided to split into three separate companies. This week, GE Vernova ($GEV) became the fifth best-performing stock in the S&P 500 since separating from GE. Last month, Embracer Group ($THQQF), the Swedish gaming company behind Borderlands, announced plans to split into three companies — following French conglomerate Vivendi’s ($VIVEF) plans to split into four.


    JOE’S MARKET PULSE

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    Markets & Economy

    Growth is executives’ priority, says Gartner: In the management consulting company’s 2024 CEO and Senior Business Executive Survey, 62% of CEOs said growth is their top priority for 2024 — up from 49% last year. [Read]

    Americans blame corporate greed for inflation: The Guardian’s Matt Stoller argues that record profits support the controversial idea that corporate greed, not money printing, caused inflation — a theory gaining traction in mainstream American culture. [Read]

    House Democrats to investigate Big Oil: With five months until the next milestone election, House Democrats are investigating if large US oil companies colluded with each other and OPEC+ to keep prices high. [Read]

    Business & Wealth

    Neobank users locked out of their accounts: Due to a weeks-long technical issue with bankrupt banking intermediary Synapse, Americans using fintech banks can’t access or spend their money. [Read]

    Warner Bros scores CFP games: With a new 12-team College Football Playoff system starting this fall, Warner Bros. Discovery ($WBD) is paying ESPN ($DIS) billions to sublicense its games — extending their sports streaming partnership. [Read]

    T-Mobile ($TMUS) to raise prices: Known for its “Price Lock” promise, the company will raise some legacy plans by $5/mo this month to “respond to rising costs.” [Read]

    *Thanks to our sponsors for keeping the newsletter free.


    CHART


    DIGIT OF THE DAY

    We're Not In A Recession, Yet Over Half of Americans Believe Otherwise

    In a time when seeing is believing, Americans show a clear disconnect between economic data and their perceptions. According to a new poll by The Guardian, 56% of Americans think the US is in a recession — defined as two consecutive quarters of negative GDP growth. However, they’re mistaken: GDP is still growing, unemployment is near 50-year lows, and US business activity is expanding rapidly. This highlights the outsized impact of higher inflation and living costs on Americans.

    • 72% of Americans believe inflation is increasing, while 55% think the economy is shrinking.

    • 49% think unemployment is at a 50-year high, and the S&P 500 is down year-to-date — almost the opposite of the actual situation.

    Future forecast: JPMorgan CEO Jamie Dimon warns of a possible severe downturn in the US economy. He notes signs of stagflation, with stalled growth, rising inflation, and persistent unemployment. Dimon points out that consumer prices have jumped 22% in the past five years, impacting corporate profits and widening economic gaps. Looking ahead, he anticipates continued inflationary pressures and potential interest rate hikes, cautioning, “I think inflation is stickier than people think,” indicating prolonged economic challenges.


    EXTRA JOE

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