Liberty, the Denver-area media conglomerate run by billionaire John Malone, has slowly expanded its music holdings over the past decade, striking during downturns and targeting ailing companies before turning them around. The company currently owns 71% of SiriusXM, 34% of Live Nation, all of Pandora and nearly 5% of iHeartMedia, which has more than 850 broadcast stations, an app with 138 million users and a monthly reach of 275 million listeners. Liberty’s potential broadcast dominance has raised antitrust alarm bells.
Merger opponents fear the resulting broadcast powerhouse might streamline the airwaves, cutting costs by reducing playlists to established hits and syndicating content -- just as Clear Channel Communications did in the late 1990s and early 2000s. An April 15 letter to the DOJ from the nonprofit Artist Rights Alliance declared the merger's "potential impact on radio markets is evident and likely catastrophic, removing competitive discipline across multiple market segments."
"There is an anti-competitive story to be told. There's a potential that listeners will have fewer choices, that artists will have a tougher time to break through," says Michael Carrier, a Rutgers University law professor and antitrust expert who studies the music business. "Any time one organization has control over so many different steps of the distribution process, that presents concern."
Neither Liberty nor iHeart would comment on the DOJ review, but Josh Hill, a Liberty investor based in Minneapolis, says the resulting company would "use data much, much more efficiently" and boost broadcast advertising.
"You could cut duplicative cost functions like finance, HR and marketing and reinvest into the business through technology and data collection," Hill says. "You can see what people are listening to on playlists. You can go to advertisers and say, 'We have this podcast and the prime listening demo is women aged 35 to 45 who have kids and jobs.' You say to the DOJ: 'We're going to make that more, instead of less, attractive to the consumer."
DOJ reps didn't comment either, so it's unclear how the U.S. might lean on the proposal. Some say the Trump administration favors corporate growth, so the department might be inclined to approve the merger. And Liberty could argue it is competing not just with other broadcast companies like Entercom and Cox, but with Apple, Amazon, Google and Spotify.
"Liberty Media is going to say, 'It's a whole new world out there,'" says Steven Madoff, an entertainment attorney who specializes in antitrust issues. "It used to be that the AM/FM stations really dominated the music business; now you have satellite radio and big companies in the streaming business. Their argument is, 'We feel we need this merger to compete with these giant companies.'"
But while the Justice Department opposed another high-profile media merger during the Trump era -- AT&T's $85 billion purchase of Time Warner -- it's hard to say whether the ruling is a precedent: Trump's distaste for Time Warner-owned CNN fueled his opposition. In February 2019, a U.S. appeals court overturned the DOJ decision and approved the merger.
Another possible threat to Liberty's iHeart proposal: The DOJ's antitrust division last December declared Live Nation "repeatedly and over the course of several years" violated the consent decree attached to its 2010 merger with Ticketmaster. Among other things, the division suggested Live Nation withheld concerts from venues when those venues sold tickets through a Ticketmaster competitor. Because Liberty owns such a large Live Nation stake, the DOJ could be suspicious of further expansion. "It's hard for me to see them agreeing to this with no conditions, considering the DOJ just extended the consent decree 10 years," Madoff says.
At the center of the merger proposal, most likely, is Greg Maffei, Liberty's CEO, who led the company into its 5% iHeart stake in 2018, when the broadcaster was restructuring its debt as part of a bankruptcy proceeding. Liberty failed to expand its stake at the time.
"We didn't get it done, but you'll be pragmatic and opportunistic about 'maybe it'll get done in the future,'" Maffei told Billboard last year.
LaPolt, the music-business attorney, accused Maffei in 2018 of paying lobbyists to kill the Music Modernization Act, which expanded copyright protection for songwriters and artists; Liberty-owned SiriusXM eventually made a deal and supported the legislation. She fears Liberty favors corporate interests above artists and consumers.
"He didn't get to where he is by not being a savvy businessman," LaPolt says of Maffei. "I would only hope that he's a good person."