(CN) – A class that purchased shares from an entertainment provider sued in Los Angeles federal court Wednesday over claims that stock prices plummeted when the provider failed to adhere to an antitrust agreement with the Department of Justice.
Live Nation Entertainment, Inc., produces live concerts and other events, operates event venues throughout the country and sells tickets over the internet. When the company purchased Ticketmaster Entertainment in 2010, it signed a consent agreement with the Department of Justice to keep it from monopolizing the live musical performance market, according to the complaint.
On April 1, 2018, the New York Times published an article titled, “Roster of Stars Lets Live Nation Flex Ticket Muscles, Rivals Say,” which accused the entertainment giant of violating the terms of the consent decree.
“The company’s chief competitor, AEG, has told [Department of Justice] officials that venues it manages that serve Atlanta; Las Vegas; Minneapolis; Salt Lake City; Louisville, Ky.; and Oakland, Calif., were told they would lose valuable shows if Ticketmaster was not used as a vendor, a possible violation of antitrust law,” the article says, as quoted in the 27-page complaint.
Lead plaintiff Kathryn A. Poser says the company’s stock prices plummeted by $3.97 per share – almost 10 percent – the next day.
According to the complaint, the company tickets 80 percent of the top arenas in the country.
But prior to the New York Times story, Live Nation assured shareholders that all was well, and that it expected “to have strong growth for years to come,” according to reports cited in the complaint.
“Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects,” the complaint says. “Specifically, Defendants failed to disclose: (1) that the Company failed to abide by the terms of the Consent Decree; (2) that the Company lacked adequate internal controls to prevent a violation of the Consent Decree; and (3) that, as a result of the foregoing, the Company’s financial statements and Defendants’ statements about Live Nation’s business, operations, and prospects, were materially false and misleading at all relevant times.”
In addition to Live Nation, the company’s CEO and former president Michael Rapino, its current president Joe Berchtold, and Ticketmaster’s president Jared Smith are also named as defendants.
Poser seeks class certification for all purchasers of Live Nation stock from Feb. 23, 2017 to March 30, 2018.
Robert Prongay of Glancy, Prongay and Murray out of Los Angeles is representing the class.