UK body opposes Ticketmaster/Live Nation merger

LONDON/NEW YORK (Reuters) - A planned merger of Ticketmaster Entertainment Inc TKTM.O and Live Nation Inc (LYV.N) hit a stumbling block on Thursday, when Britain's competition regulator provisionally ruled against it and suggested that a merged company might have to sell part of its business.

Shares of Ticketmaster dropped over 6 percent and Live Nation fell over 5 percent as the ruling added to concerns about a combination that has frequently met with disapproval from artists, fans and politicians since it was announced earlier this year. The U.S. Department of Justice is still examining it.

In its provisional ruling, Britain's Competition Commission warned that music fans could wind up paying more to see live shows if the deal moved forward, since it would combine the world's largest concert promoter, Live Nation, and a powerhouse ticketing group, Ticketmaster.

A merger could also hurt an existing partner of Live Nation's, CTS Eventim AG (EVDG.DE), a new competitor in the British market, the Commission said.

It said it would propose remedies that could include divestment of the British business of either Ticketmaster or Live Nation, or measures to ensure that a smaller player could survive. The Commission's final report is due November 24.

In a statement, Ticketmaster said it believes that the deal will ultimately be approved and that the combination "will be able to help achieve needed change that will strengthen a flagging music industry,"

Privately, Live Nation and Ticketmaster executives have said they expect some objections from regulators and are prepared to make concessions to seal the deal.

"It's never been realistic they are going to give us the nod without making concessions," one person close to the talks said after Thursday's ruling.

Antitrust experts in Washington D.C., where the deal will ultimately be decided, believe the UK decision is a good indication that U.S. regulators will likely challenge the merger.

"The problems are far less significant in the UK than the U.S.," said David Balto, a former U.S. Federal Trade Commission policy director. "It's hard to predict the World Series, but it's not hard to predict this."

Industry analysts believe that if the merger were indeed challenged by U.S. regulators, it would likely lead to the sale of some part of the business in the United States.

"Live Nation's and Ticketmaster's managements entered this deal expecting to give something up," said David Joyce, analyst at Miller Tabak. "They knew minor, non-core asset sales or some sort of market share carve-out would be a likely result as they attempt this vertical merger."

Shares of Live Nation fell 45 cents to $8.17, while Ticketmaster dropped 81 cents to $11.65.

(Reporting by Kate Holton in London, Yinka Adegoke in New York and Diane Bartz in Washington D.C; Editing by Gerald E. McCormick and Paul Thomasch)