It’s ‘time to break up’: DoJ sues Live Nation

One restricting redemptions to start: A $10bn property fund managed by Barry Sternlicht’s Starwood Capital is strictly limiting its investors’ ability to exit their investments as it preserves liquidity and avoids a fire sale of assets in what it believes are poor markets.

And a big funding round to start: Elon Musk’s xAI has secured new backing from Silicon Valley venture capital giants Lightspeed Venture Partners, Andreessen Horowitz, Sequoia Capital and Tribe Capital, as the tech billionaire closes in on a new funding round valuing the artificial intelligence start-up at $18bn.

In today’s newsletter:

• DoJ takes on Live Nation

• Activist investor déjà vu

• FTX examiner report drops 

DoJ to Live Nation: it’s ‘time to break up’

Ticketmaster’s had a rough few years.

Hatred for the ticketing giant has become somewhat of a unifying force recently, with pop stars, fans and politicians all aligning in their frustrations with the company’s sweeping control of the market for live events.

Things really took a turn for the worse when Taylor Swift got involved. A ticket sale for her Eras Tour in 2022 was cancelled after Ticketmaster was overwhelmed by demand. (She didn’t hide her frustration with the debacle either.)

But on Thursday, the company’s problems increased a notch. The US Department of Justice sued its owner Live Nation in a landmark antitrust lawsuit that accused the company of operating a monopoly that “suffocates its competition”, the FT’s Stefania Palma and Anna Nicolaou report.

The civil complaint was joined by a group of state and district attorneys-general. It says the company illegally dominates the market for tickets and concert promotion.

The justice department described how the company allegedly gained a chokehold on the live entertainment market — controlling everything from how artists are paid to which performances take place across the US.

The victims of all this market control? Basically everyone. US attorney-general Merrick Garland said: “Fans pay more in fees, artists have fewer opportunities to play concerts, smaller promoters get squeezed out, and venues have fewer real choices for ticketing services.”

He didn’t mince words: “It is time to break up Live Nation-Ticketmaster.”

For those who attend events, fees have surfaced as one of the biggest sticking points associated with the company’s dominance. Jonathan Kanter, the head of the DoJ’s antitrust unit, described it as the “dreaded Ticketmaster tax”.

There’s a “seemingly endless set of fees ironically named ‘service fee’ or ‘convenience fee’, when they’re anything but,” he added.

Activist déjà vu: ex-Elliott investor goes after mining giant Rio Tinto

In 2017, the feared activist hedge fund Elliott Management led a campaign against the world’s largest miner BHP.

Elliott’s push, led by one of its investors James Smith, included a call for BHP to abandon its dual corporate structure based in Australia and the UK, touting benefits including greater flexibility to pursue acquisitions paid with stock.

In 2021, BHP announced it would shift its main stock market listing from London to Sydney. That move helped set up its current nearly £40bn all-share takeover bid for UK rival Anglo American.

Seven years since Elliott’s campaign against BHP, one of the original investors has embarked on a similar push.

Smith, now the chief investment officer of UK-based activist Palliser Capital, has taken a stake in another dual-listed miner and urged it to unify its structure. This time, the target is the world’s second-biggest mining company: Rio Tinto.

On Thursday at the Sohn Hong Kong investment conference, Smith unveiled his latest push — although Palliser has been building up the position for more than a year.

“What we think is the root cause of the undervaluation is an extremely clunky and outdated dual-listed corporate structure,” Smith said in the presentation, adding that he believed there was upside of “nearly 40 per cent” in Rio’s shares.

However, there are some key differences this time around. About 77 per cent of Rio’s share capital is held by investors in its UK company, in contrast to BHP, which was more heavily weighted towards the Australian entity.

Palliser’s call will also heighten further anxiety around an exodus of London listings. While Rio would still retain a secondary listing in the UK, it would no longer have a primary listing in London or be part of the FTSE 100.

Rio for its part said it had a “policy of open dialogue with all shareholders around these topics” and regularly looks at strategies to optimise shareholder value.

If Rio ends up following BHP’s suit with a unified structure, it could enable it to more easily play in the major M&A deals shaping the sector.

FTX probe finds no ‘error’ in hiring Sullivan & Cromwell

The elite Wall Street law firm representing FTX in bankruptcy is very likely popping champagne right now. And not just because it’s already billed $200mn.

A court-ordered investigation into the crypto exchange’s bankruptcy largely absolved Sullivan & Cromwell of any disqualifying conflicts of interest that would’ve blocked it from representing FTX through Chapter 11.

Robert Cleary, a former federal prosecutor — who also happened to lead the notorious Unabomber case — wrote in the report that he “did not identify any error in the bankruptcy court’s decision authorising the debtors to retain S&C”.

One of the main concerns had been that S&C did legal work for the exchange in the months leading up to FTX’s implosion, which was not fully disclosed when it applied to represent it through Chapter 11.

Shortly after FTX filed for bankruptcy in November 2022, questions started to pop up about whether the law firm should be allowed to have such a prominent role in the case. Initially, a watchdog for the US Department of Justice objected to hiring S&C.

One problem was that S&C left out a few important details from its initial application to represent FTX — including the fact that Ryne Miller, a top in-house lawyer for the exchange, was a former S&C partner.

But eventually it disclosed more. S&C divulged details about how it had worked on more than a dozen assignments for FTX before it filed for bankruptcy, earning $8.5mn in the process. 

Concerns didn’t stop with the DoJ, though. FTX account holders accused S&C of being too conflicted to adequately try to recover funds for customers, and two prominent law professors claimed S&C’s conflicts “permeated” FTX’s bankruptcy.

(Even Sam Bankman-Fried, who’s now behind bars, weighed in with his own criticism of S&C.)

S&C’s retention was one of the big questions the report set out to resolve, but we’re still poring over more than 200 pages that surely include a trove of other details.

Job moves

• Goldman Sachs has promoted Jens Hofmann and Tibor Kossa to co-heads of investment banking in Germany and Austria. Tibor previously worked as co-head of M&A for the two countries, while Hofmann will continue to oversee the financing group in the German, Swiss and Austrian region.

• RBC has promoted Allison MacKinnon to head of corporate debt capital markets, Europe and UK, adding to her current mandate for Europe. She’s been with the bank since 2019. She previously worked at ANZ and UBS.

• Deutsche Bank has appointed Alec Pratt and Simon Schneider as co-heads of Emea financial sponsors M&A. Pratt will remain in London, while Simon will stay in Frankfurt.

Smart reads

‘Selling out’ What do students at Harvard really want? Increasingly, to make a lot of money, The New York Times writes.

Sports mogul Mark Walter, one of the owners of Chelsea FC, pumped millions into a logistics business in India. A whistleblower says former partners stole the money, Bloomberg reveals.

Teenage weapons Investors gave a teenager $85mn to build hydrogen weapons. It’s not going well, Forbes investigates.

News round-up

Hargreaves Lansdown bid shows wealth managers as private equity target (FT)

Capital Group and KKR partner to offer private assets to wider audience (FT)

SpaceX weighs plan to sell shares valuing firm at $200bn (Bloomberg)

Royal Mail owner fails to publish results (FT)

Bridgewater founder Ray Dalio joins billionaires snapping up Singapore ‘shophouses’ (FT)

Jamie Dimon admits to ‘tough’ going for JPMorgan in China (FT)