USC business; Ticketmaster/Live Nation, Comcast/NBC mergers
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KPCC business analyst Mark Lacter talks about how USC may be affected business-wise by Pete Carroll's departure from the university's football program; he also talks about Live Nation and Ticketmaster's possible merger.
Susanne Whatley: Mark, how does Pete Carroll's departure from the USC football program affect the business side of USC?
Mark Lacter: The Trojans have a loyal core of fans no matter what, Susanne, but Pete Carroll had a large skill set that could be hard to match. The guy won lots of games, of course (that's important in a city of fair weather fans) and he also had great style.
From a marketing perspective he was the ideal front man for both the team and the school, the kind of guy you’d want to make speeches or get involved in community events (no wonder he was paid $4.5 million a year). Not every coach can offer all that. Also, if the team has some bad years it will be reflected in lower attendance, lower sales of merchandise and lower revenue overall.
Whatley: And, if the Trojans don't play well, it means fewer bowl games, which also spell less money.
Lacter: That’s right – and we’re talking some serious money. An appearance in the BCS championship is worth about $18 million per team. What's really important about the football revenue is that it bankrolls a lot of the school's athletic department with money for scholarships and operating costs.
Last year the USC football program had revenues of a little over $35 million and overall profits of $14 million, and that’s come in handy considering that the basketball program is in the red and the other sports also operate at a loss.
Whatley: How does 'SC compare nationally?
Lacter: Well, what's interesting about these numbers is that they're nowhere near the top of the biggest college football programs in the country. If you think USC's $35 million is a lot, look at Texas, which had almost $88 million in revenue from football.
After Texas comes Ohio State at $68 million and then Florida at $66 million. USC ranks 21st. So now there's no coach and a bunch of assistant coaches are leaving and a number of promising high school prospects aren't signing. It could be a tough few years.
Whatley: Mark, is the merger of Live Nation and Ticketmaster a go or no go?
Lacter: Good question. First there was a report that the Justice Department was ready to approve the deal. Then the next day came word that the Justice Department was ready to block it.
And Susanne, this is a huge one for the music business: Live Nation is the biggest concert promoter and Ticketmaster is the big ticketing service. It’s pretty likely that the merger will eventually be approved, in some form, but there's a lot at stake for these two companies (both based in L.A., by the way), as well as for the entire music industry.
Whatley: What's the rub against the merger?
Lacter: Opponents say it’ll be harder for other concert promoters and ticketing agencies to compete because the new company would be too big – and that concert goers would end up paying more for tickets. Live Nation and Ticketmaster say not to worry – that there would still be plenty of competition.
It's an important decision, the first major antitrust decision made during the Obama administration, which has been promising that it would block deals that are not competitive. That would be quite a contrast to the Bush administration, which had a very light hand.
Whatley: Do you expect a resolution soon?
Lacter: Yes, and whatever the decision, it'll set the stage for another huge deal with lots of local interest – that of Comcast, the big cable company, taking over a controlling stake of NBC Universal. There’s already concern about one company having so much control over programming content and the means of distribution.
That case could require Comcast to sell off certain assets that would make the company more competitive. There’s a lot riding on this deal, so you can expect all sides to do what needs to be done.
Mark Lacter is a contributing writer for Los Angeles Magazine and writes a business blog at LAObserved.com.
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