Last week, Senator Chuck Schumer recused himself from further oversight of the Comcast-Time Warner Cable merger after we reported that his brother had played a key role in the deal. Schumer had initially called the merger “a good deal for New York.” His office later claimed that the Senator had not known that his brother was involved.
Schumer’s recusal raises an important question: as a powerful Senator, a member of the antitrust subcommittee, and the brother of a top M&A attorney, is this the first time he recused himself from oversight of a merger deal? His brother has been a key dealmaker on many mergers which required antitrust approval, and several have triggered regulatory action – in the US and abroad. Schumer’s office has not responded to multiple requests for information about past recusals. A Senate Judiciary Committee official turned up no past recusals in a review, but suggested that Schumer’s office would be a better source.
In any case, Robert Schumer did not put together the merger that really caught our eye – his wife did. Pamela Seymon, the Senator’s sister-in-law, was Ticketmaster’s lead outside counsel on its 2009 merger with Live Nation, a $2.5 billion deal which drew the ire of consumer groups, musicians, and lawmakers. Initially, Schumer opposed the merger. Then he seemed to have a change of heart, and began lauding Ticketmaster for collaborating with him on legislation targeting the ticket resale market. On the antitrust implications of the deal, he went silent.
The Ticketmaster-Live Nation merger was completed several years ago, and may seem like old news. But a closer look at Schumer’s behavior as the merger ran its course raises further questions about how the Senator handles familial conflicts related to antitrust oversight. The story also opens a window onto social dimensions of the cozy relationship between Washington and Wall Street that often escape public scrutiny.
“I agree with the Boss”
The Ticketmaster-Live Nation merger inspired a great deal of opposition. Ticketmaster, after all, already controlled two thirds of the primary ticket market and was one of the most hated companies in the country. Live Nation was the biggest concert promoter in the world, and also had 15% of the primary ticket market. The merger raised obvious antitrust concerns.
Bruce Springsteen was a leader of the opposition. News of the deal was just starting to break in February 2009 when many of his fans fell victim to a Ticketmaster scheme – the company blamed a “computer glitch” – in which the company’s website redirected them to a subsidiary website, TicketsNow. The website sold the fans secondary tickets at a high markup. In a letter to his fans, Springsteen blasted Ticketmaster and criticized the “near-monopoly” that would result from the planned merger.
“If you, like us, oppose that idea,” Springsteen wrote, referring to the merger, “you should make it known to your representatives.”
Taking his cue from Springsteen, Schumer initially opposed the merger and blasted Ticketmaster in a series of statements and press conferences. “Bruce Springsteen says Ticketmaster abused his fans,” he said at a hearing of the Senate Judiciary’s antitrust subcommittee, “and I agree with the Boss.”
Shortly after the merger was announced, he joined with Representative Bill Pascrell of New Jersey in calling on the Obama administration to block the deal and investigate Ticketmaster’s anticompetitive practices. At a press conference with Pascrell, Schumer made it clear that he was against the merger in no uncertain terms. “Now we’re here today to announce that we vehemently oppose the proposed Ticketmaster merger with Live Nation that was announced yesterday,” he said.
Schumer explained that the merger would create a company that controlled 80% of the ticket sales market. “And no one company should have 80 percent of the market,” he argued. “And when you have 65 and you’re ready to pluck out the strongest competitor, what does that say? Does that say you want to lower prices or you want to control competition?”
Later: “Everyone – consumers, venues, artists — will be better off, much better off, if the merger doesn’t go through.”
Schumer’s steadfast opposition to Ticketmaster and the merger, expressed with such clarity and purpose at the press conference with Pascrell, soon melted away.
A change of heart?
The tide seemed to turn on Schumer’s opposition to the deal less than two months after it was announced.
In early April, the Senator hailed a close working relationship with the company in a press release announcing plans for legislation to curb abuses in the ticket resale market:
Schumer today also announced that he has discussed his proposed legislation with Ticketmaster and that Ticketmaster supports his proposal as well as his efforts to reform and bring more transparency to the resale industry. Schumer said that he will meet with the heads of Ticketmaster and other ticket distributors to discuss a possible code-of-conduct for ticket reselling in New York and across the country.
Schumer’s press release included a quote from Ticketmaster CEO Irving Azoff, relating how “very happy” he was to support Schumer’s proposal, and a final paragraph thanking Ticketmaster for its responsible behavior:
Schumer today also commended Ticketmaster for acting responsibly in early February by announcing a policy to no longer allow the prelisting of tickets on TicketsNow prior to onsales and for working cooperatively with him to enhance consumer protection and make the ticket sale process more transparent to the public.
The release stands in stark contrast to the cutting remarks Schumer made about Ticketmaster less than two months prior.
Schumer doubled down on his praise in a June press release. The new release lifted the sentence from the April version, in which Schumer “commended” the company, and added a quote about how happy the Senator was to be working with Ticketmaster:
“I’m thrilled that Ticketmaster is listening and implementing a 48-hour window similar to the one I proposed to them and is now the center of my legislation,” Schumer said. “Now we need to extend the practice to the whole industry.”
Diller remarked on the blossoming Schumer-Ticketmaster relationship during an earnings call in May 2009. “While the Senator and I had an unfortunate beginning,” he told analysts, referring to his earlier criticism of Schumer, “we actually share the same goal: a transparent and open marketplace. And our staffs have been talking to each in the hopes of having legislation to solve these issues by cracking open much of this hidden market.”
The Schumer-Ticketmaster proposal never went anywhere, but not because it died in committee or faced intransigent Republican opposition.
Schumer, quick to issue a press release announcing his plans, never got around to actually introducing a bill, according to a review of legislation on congress.gov.
Schumer family stake in a “deal addiction”
No one connected the dots between Schumer and Ticketmaster’s M&A lawyer, Pamela Seymon, during this whole saga. If someone had – as LittleSis did with Robert Schumer and Time Warner Cable – perhaps the Senator would have recused himself, instead of developing a close working relationship with Ticketmaster and lauding the company in his press releases.
But it’s not hard to see why it slipped under the radar. Seymon’s marriage to Robert Schumer has gone essentially unreported in the press over the years, even though the two seem to be quite the Wall Street power couple. This picture from 2011 is the only reference google turns up of Seymon being Schumer’s sister-in-law.
Seymon was an M&A attorney at powerful Wall Street law firm Wachtell, Lipton at the time of the Ticketmaster merger. She served as Ticketmaster’s lead outside counsel on the deal, a fact that was reported in several places – at the time the merger was first announced and in later months (The American Lawyer published several pieces, The New York Law Journal published one).
Seymon, in fact, had long been a key lawyer to Barry Diller, the Ticketmaster chairman and CEO of IAC at the time, who had traded barbs with Schumer and then made nice. In 2008, The American Lawyer described Seymon and Wachtell’s lucrative role in servicing Diller’s “deal addiction”:
Nobody could be happier to serve Diller’s deal addiction than Wachtell, Lipton, Rosen & Katz, particularly Martin Lipton and Pamela Seymon, who have handled many of the deals. The firm has been representing the media mogul and his many companies for more than 15 years, and more work appears to be on the way.
In July 2009, The American Lawyer ran another article on the Ticketmaster-Live Nation deal, under the headline “Antitrust hurdles could tear up Ticketmaster, Live Nation merger.” The first sentence: “Lawyers from Latham & Watkins and Wachtell, Lipton, Rosen & Katz are nervously eyeing a call by the chair of the Senate Judiciary committee on Monday for antitrust review of the $2.5 billion merger between Live Nation and Ticketmaster” (emphasis added).
The article named Seymon but did not note that her brother-in-law sits on the antitrust committee. The committee does advises the Justice Department and Federal Trade Commission on antitrust matters.
Seymon’s work at Wachtell was lucrative. Profits per partner were reported to be more than $4 million in 2010, ranking the firm #1 on The American Lawyer‘s list of the most profitable law firms for that year.
Seymon retired three years ago. Reached at home, she declined to discuss the Ticketmaster-Live Nation deal.
Seymon’s longstanding relationship with Diller and the fact that the deal played out over the course of a year – during which Seymon was named in press reports as Ticketmaster’s attorney – would seem to foreclose on the possibility that the Senator did not know of the conflict, as he claimed was the case with his brother and the Time Warner Cable merger. The nature of his relationship with his sister-in-law is not clear, but if his brother’s work warranted disclosure and a recusal, his brother’s wife’s work would seem to, as well.
His office did not respond to inquiries about whether he recused himself from oversight of the Ticketmaster deal.
The deal goes through
At first, it looked like the Obama administration would have a strong case against the Ticketmaster-Live Nation merger. Washington Post columnist Steven Pearlstein later wrote that the Ticketmaster-Live Nation deal had “looked like a slam-dunk antitrust case for the government.” Time called it “Obama’s anti-trust test.”
“I just always thought the merging parties had a tough row to hoe,” a former FTC official, Marc Schildkraut, told Reuters while the deal was still pending. “The lawyers for those parties are going to have to be pretty good.” Another former FTC official, David Balto, argued that the deal would not go through “if antitrust laws mean anything.”
When a coalition called TicketDisaster.org formed to oppose the merger in December 2009, its leaders pointed to an “unprecedented groundswell of consumer outrage.”
Despite all that, the Obama administration approved the deal, with some conditions attached.
Pascrell – who Schumer had joined in shaking his fist at Ticketmaster a year earlier – did not mince words. “These concessions don’t mean a hill of beans,” he said. “If that is as far as the Obama administration is going to go, then we simply have Bush lite. We can guarantee higher prices and higher fees because these people control the industry, as everyone knows.”
Schumer was silent, making no further public statements about the merger. In the absence of a public recusal, his silence looked like support, an about-face from his early outspoken opposition.
What prompted the shift? Schumer’s initial handwaving and subsequent lapdog behavior looks like standard political fare until you consider his sister-in-law’s role in the merger. Then it all looks a bit more extraordinary. One of the most powerful Democrats in the Senate, awkwardly twisted round by personal conflicts? Or happily riding the wave of corporate consolidation that has enriched both his family members and his Wall Street base?
Maybe Schumer’s family had nothing to do with why he stopped shaking his fist at Ticketmaster, and why the merger eventually sailed through. Wall Street’s capture of Washington is bigger than one familial tie, and the parties to the merger certainly had other friends in high places.
But like the Time Warner Cable incident, the Schumer-Ticketmaster saga suggests that there are significant gaps in how the Senator discloses and manages conflicts of interest related to antitrust matters. Furthermore, should a Senator whose family members have such a direct financial interest in navigating antitrust laws serve on the antitrust subcommittee, especially when he seems to make little effort to manage conflicts appropriately?
What would the Boss say?