April 12, 2024 • 29 mins
First, James Li looks at the recent Boeing whistleblower death and speaks to an investigations editor at The American Prospect, then Matt Stoller does a Big breakdown on Livenation Ticketmaster's control of the live industry so corrupt it verges on criminal conspiracy.
James Li: https://www.youtube.com/@5149jamesli
Matt Stoller: https://www.thebignewsletter.com/
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hey, guys, ready or not, twenty twenty four is here,
and we here at Breaking Points, are already thinking of
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But enough with that, let's get to the show.
Speaker 1 (00:22):
Would Boeing murder a whistleblower? My name is James Lee,
and you're watching Beyond the Headlines on Breaking.
Speaker 4 (00:29):
Points this morning.
Speaker 1 (00:37):
Police in Charleston, South Carolina tel NBC News they are
aware of the death of a former Boeing employee turned whistleblower,
John Mitchell Barnett, a notable whistleblower known for his substantial
safety and quality reports to the Federal Aviation Administration concerning
Boeing's production of the seven eighty seven Dreamliner, who also
appeared in the twenty twenty two Netflix documentary Downfall the
(01:00):
case against Boeing, tragically passed away on March ninth, twenty
twenty four. The mainstream media have mostly reported his death
as an apparent suicide. Barnett was found dead in his
car in the parking lot of his hotel on the
final day of depositions in his whistleblower case against Boeing.
The curious timing of his death have sparked some suspicions
(01:21):
of foul play, and adding to that mystery, reports also
indicate that he had previously cautioned a family friend not
to accept any official narratives about his death as a suicide.
Speaker 3 (01:33):
He wasn't concerned about, thank you, because I asked him.
I said, aren't you scared?
Speaker 2 (01:37):
And he said in his boy and hit the.
Speaker 3 (01:41):
Way he which are I ain't scared? He said, but
if anything happens to me, it's not suicide.
Speaker 1 (01:50):
Joining us today is mode tactic. She is the investigations
editor at The American Prospect who has done some fantastic
reporting on Boeing. Thank you for being here.
Speaker 5 (02:00):
Thanks for having me. I really appreciate it.
Speaker 1 (02:02):
All right, we're not going to bury the lead today.
Did Boeing put out a hit on whistleblower John Barnett?
Obviously everything is still under investigation, but I know in
your recent article you mentioned talking to a few of
his old colleagues. Also, a former Boeing executive. What are
their thoughts also at this point, what do we know
for sure?
Speaker 4 (02:22):
Well, what we know for sure is that John Barnett
was found dead in his Dodge Ram in the parking
lot of a hotel where he was staying in Charleston,
South Carolina, to give a deposition that had lasted.
Speaker 5 (02:40):
It was a three day deposition.
Speaker 4 (02:42):
He was on the third day and he was founded
in his car from an apparently self inflicted gunshot wound.
He was holding a silver pistol. My sense is that
the pistol did belong to him, but that that hasn't
been confirmed one way or the other. And there was
something that was in the driver's seat that looked like
(03:06):
something like a note. Again, the details of that have
not really released yet, you know. So my first impression
was that, oh, this, you know, this guy must have
killed himself, right, I mean it kind of doesn't you
know it? Really Like, I'm always open to the idea that,
you know, you know, foul play might be there.
Speaker 5 (03:27):
I started to change my mind when I think.
Speaker 4 (03:31):
A lot of a lot of workers for former boat
Boeing workers in both the factories and in the executive offices,
were completely open to the notion that Boeing might have
done it. I spoke to uh one of his former
co workers in particular, who was very terrified. This person
did not want to be identified, didn't want you know,
(03:52):
anything that they told me to be you know, to
make them identifiable. But this person told me that in
this person and had you know, blow in the whistle
at this same Boeing factory and dealt with a lot
of fallout as a result of that. And this person
told me straight up, if I die, you know, please
like I'm There's no way I would ever commit suicide,
(04:16):
like even if it is a car accident, like, please
like get it investigated. I mean, that was just not
what I expected. I didn't I did not expect anybody
who worked at Boeing to think that Boeing would do this.
There's incredibly bad morale within that company. Everybody who cared
about the company for decades, sometimes a half century, you know,
(04:38):
the people who have you know, I've written about Boeing
for about five years on and off, and most of
my sources you know, worked there for at least thirty years.
Speaker 5 (04:47):
They it was very close to their heart.
Speaker 4 (04:49):
And that's why, you know, when you hear when you
talk to the old Boeing heads, they always bring up
the McDonald Douglas merger. You know, this is twenty six
years ago, but it feels like yesterday to a lot
of these because that is when everything changed. And learning
more about John Barnett, he was at this point in
his in his case where the home stretch was in sight.
(05:09):
He was really excited. He was thinking about writing a book.
He was thinking about trying to, you know, do some
sort of a podcast. He was thinking about, you know,
finally enjoying his retirement for once. He was slated to
likely you know, receive a fair bit of money because
he'd been kind of pushed out of the company early.
He had no real motive to kill himself, especially on
(05:31):
day three of a three day deposition. On the other's hand.
Of course, again, they did a very good job. Anyone
who's seen the Octopus murders, you know, if somebody assassinated him,
they weren't sloppy about it, you know, they they really
did a very good job at making it look like
a potential suicide. Of course, you know, there's a lot
(05:52):
that we don't know. We don't know what that note
looks like, that's extremely important evidence. We don't know what
the you know, what the wound looks like. All of
that has yet to come out.
Speaker 1 (06:01):
Yeah, do we have a I'm wondering if we have
a timeline for the investigation. So you said it was
the Charleston Police Department that's involved. Is it just them
or they're federal agencies getting in on the action.
Speaker 5 (06:13):
No federal agencies as of yet.
Speaker 4 (06:16):
I you know, again, the law enforcement has has been,
you know, repeatedly said hey, it's still under investigation, and
everybody who knows anything, like his family and his lawyer,
they've been pretty tight lipped because they don't want to
antagonize the thing that I you know, that is a
little bit bit troubling. I spoke with I'm a medical
examiner in Jacksonville.
Speaker 5 (06:38):
And he said, you know, like in suicide.
Speaker 4 (06:42):
And one thing about suspected suicides is that generally the
in a lot of you know, bigger areas these days,
they don't actually have medical examiners doing the autopsies. Those
autopsies are oftentimes performed by corner assistants. And I spoke
to some a criminal profile or from you know, who
(07:03):
haven't been with the FBI for a long time worked
on the UNI bomber case, and this guy, Jim Fitzgerald,
told me that.
Speaker 5 (07:11):
It seemed like it was the type of.
Speaker 4 (07:15):
The type of thing that, you know, if you were
going to look at it as a potential assassination. The
whole aspect, you know, that the whole saga made him
think that it was like a warning sign. That it
wasn't necessarily that they were trying to prevent him from testifying,
since he had already given two days of depositions, but
that they were trying to send out a warning to
(07:36):
anybody else who might think about, you know, potentially blowing
and the whistle themselves.
Speaker 1 (07:41):
Yeah, I wanted to ask you about There's one interesting
quote that I read in your article. I believe it
was an anonymous quote from a former Boeing executive and
you wrote or he said that it's a top secret
military contractor remember there are spies everywhere. And more importantly,
there is a principle in American law that there's no
such thing as an accidental death during the commission of
(08:01):
a felony. I was wondering if you could expand on that,
what did he mean by this?
Speaker 4 (08:06):
So here's the thing. And this is the broader context here.
Boeing has been extraordinary lucky up till now. You know,
three hundred and three hundred and forty six people passenger
and crew died on seven thirty seven Max crashes in
twenty eighteen and twenty nineteen, four and a half months
apart unless identical crashes, and after the first one hundred
(08:31):
and eighty nine died on a liner accident, they knew
that there was something wrong. Everybody in Boeing knew that
this was going to happen again. It was just a
matter of when not if they did not. They should
have obviously grounded the plane after the first one hundred
and eighty nine passengers and crew died, That is obvious.
(08:55):
They did not do that. Instead of doing that, they
authorized twenty billion dollars in additional share buybacks and introduced
a program to eliminate quality control. Essentially, so when they
talk about the commission of a felony, they're talking about
that the murder of those one hundred and fifty seven
additional passengers. And this is a felony that required a
(09:18):
lot of, you know, a pretty vast conspiracy to actually
get away with because Boeing was under criminal investigation after
the first mcast crash in twenty eighteen. The criminal investigation
widn't understandably, after the second crash, it WI didn't to
include the seven eight seven factory. It WI didn't to
include an investigation that involved in you know, extensive interviews
(09:43):
of John Barnett, and then didn't narrow. Then sometime in
twenty twenty, the prosecutors that were handling the case against
Boeing got changed and the case got transferred to Texas
from New York Fraud Department, and Boeing ended up on
(10:04):
January sixth, twenty twenty one. Understandably, this knit never made
any headlines. But on January sixth, twenty twenty one, Boeing
stein what is in as a deferred prosecution agreement, and
the Justice Department essentially agreed to not prosecute Boeing because,
as it said, you know, the problems that they found
(10:25):
in the company were not systemic and they involved very
few people. So while Boeing got away with it, you know,
with this this real I mean, you can't even call
it a slap on the wrist. It's it's like a
risk massage.
Speaker 1 (10:38):
Yeah, I think you compared that, Yeah, I think you
compared that to in one of your articles as like
similar to the sweetheart deal that Jeffrey Epstein got in
two thousand and seven. So I'm wondering, how how is
Boeing able to secure such a deal from the DOJ.
Speaker 4 (10:51):
Well, it's it's not simply similar. It involves a lot
of the same people. It involves, you know, very senior
partners at the mega law firm kirk Ellis. Crucially, Boeing's
chief criminal defense attorney in this case was the Deputy
Attorney General under I believe it was mckayzy during the
Bish administration who is the highest known official to sign
(11:14):
off on Jeffrey Epstein's two thousand and seven non prosecution agreement.
Both of those agreements were very similar in that they
required lies, right, you know that the government actually lies,
and it's the third prosecution agreement on Boeing saying that
you know, there were no systemic problems everything that we found.
(11:35):
You know, this is this is a solidly ethical company.
Nothing happened. This is just provably false. And similarly with Epstein,
you know, the I forget what the exact phrasing was,
but that agreement actually indemnified all of his conspirators, even
those who were not even named. Both agreements drafted by
senior partners at Kirkland and Ellis and put together by
(11:57):
a lot of there's a lot of cross pollination in
those two agreements. In fact, the Merrick Garlands DOJ made
the case that they aren't actually victims. The four people
who died on Ethiopia three oh one, they were not
actually the victims of the crime. The only victim of
Boeing's crime is the FAA.
Speaker 1 (12:20):
Yeah. Yeah, it's a lot of disturbing details coming out
right now. But before we wrap, I just I wanted
to ask or I wanted to talk about Boeing's future
for a minute, because I think it's important that maybe
it's in America's best interest to have a competent commercial
airline manufacturer. And we did see some leadership reshuffle after
the Max crashes you were talking about in twenty eighteen
twenty nineteen, and now we're also seeing another leadership reshuffle
(12:44):
with Dave Calhoun. He's stepping down along with some other
executives at the end of the year with some pretty
robust exit packages. And then it all depends on it's
like tied to the company's stock price in the coming years.
So my question is can Boeing actually course correct you
if stock performance is still the number one incentive that's
(13:04):
driving executive compensation.
Speaker 4 (13:06):
I I don't really understand the stock I you know,
I would say no, I would say that gowing that
the stock price, there needs to be some sort of
extreme management overhaul. When they did a point, I mean,
it was very obvious. Calhoun was like it was like
when Tim Geitner was nominated for Treasury Secretary. Pretty much
(13:30):
everyone who knew who Tim Geitner was was like, oh God,
this is nothing's gonna happen. No one's gonna get in
trouble city for everybody is just going to get away
with it. And that's what happened. And David Calhoun is
a similar figure. He was the lead, you know, director
of the board. He was the biggest. I mean he's
a guy who worked at ge and Blackstone. He doesn't
(13:51):
actually show up to the office ever. He changed where
the office was. He you know, uses the perch to
fly his plane around. I mean it's completely worthless piece
of shit. You know, I say that without knowing it.
But the latest trinity. Thing to say about Boeing is
that what they really need is Larry Culp, the current
CEO of GE. A sort of an irony because Boeing's
(14:14):
three out of their last four CEOs have come from
GE has been protegees of Jack Welch, and they've absolutely
fucked the you know, Boeing just the same way that
Jack Welch ultimately fucked GE by completely financializing it and
refusing to grapple with the fact that building something that
involves four million parts is not the same thing as
(14:37):
you know, like manufacturing light bulbs or post it notes,
which is what you know Narnie used to do. So
I think that there is a real effort within the
sort of you know, dog bos set to say hey, no,
you know that actually the market can take care of this,
and if they just hire the right guy, the right MBA,
(14:57):
this guy Larry Culp, who maybe isn't as much a sociopath,
who believe in building companies and putting them on the
road to growth and who believe in quality. Because it
has been such a you know, total it's very clear
to like everyone in aviation now that Boeing actually can't
build a plane that they have lost the ability to
(15:19):
competently build an airplane, and that is like an existential
problem and it's not reflected in the stock price. I
think a lot of that stuff is, you know, the
product of algorithms and and you know this sort of
conspiracy of algorithms and fraud. Yeah.
Speaker 1 (15:38):
As a as an MBA myself, I can confirm a
lot of sociopathic behavior that I see and they don't know.
They don't think that's it's that way, but it is
from outside looking in, it definitely is. Anyways, this is
obviously developing stories, so I hope to have you back
on really quick anywhere you want to point the audience too,
(16:00):
if they want to find or if you want them
to find more of your work.
Speaker 4 (16:03):
If you look at prospects dot org again and search
for Boeing, I think you'll find a lot of my stories.
I also write a lot about healthcare and you know.
Speaker 5 (16:13):
All kinds of things.
Speaker 4 (16:14):
So anything that involves the intersection of organized crime and finance,
I like to sniffer out on those cases.
Speaker 1 (16:23):
Awesome, Well, everybody go follow mo. Thank you so much
for coming on the show today.
Speaker 5 (16:29):
Awesome, Thank you so much for having me.
Speaker 1 (16:31):
That is it for me this week. If you're looking
for more documentary style deep dives on various topics related
to business, politics and society, you can follow me on
my YouTube channel fifty one forty nine with James Lee.
The link will be in the description below. As always,
keep on tuning into breaking points and thank you for
your time today.
Speaker 6 (16:58):
Hi, I'm author of monopoly focused newsletter Big and an
anti trust policy analyst. In this Big breakdown, I'm going
to ask the question, is Live Nation Ticketmaster, the company
that controls most of the live entertainment industry, in fact
a criminal conspiracy. You might think that's a bold question,
and it is, But some explosive new documents just came
(17:20):
to light that suggests that, well, it's a question worth asking.
Speaker 3 (17:24):
Let's dive in.
Speaker 6 (17:26):
In twenty ten, the live entertainment industry was in shock
when Live Nation, the nation's leading concert promoter, bought Ticketmaster,
which basically had a monopolist a monopoly over ticketing software
and was a major player in artist management. It was
a very controversial deal, and Ticketmaster had already bought out
most of its other competitors in ticketing software and really
upset Pearl Jam in the nineteen nineties was well known
(17:49):
market power problem, but the government's Anti Trust Division under
Obama allowed the deal to go forward anyway. In fact,
seems like they were sort of proud of doing that.
Let's take a look at this public picture that was
put on the DJ's website, So that publicly released photo
shows the head of the Anti Trust Division, Christine Varney,
her number two William Cavanaugh, and their advisor Gene Kimmelman
(18:10):
announcing that they were allowing that merger and talking to
reporters about it.
Speaker 1 (18:14):
Now.
Speaker 6 (18:14):
The Biden Anti Trust Division is very different than the
Obama Anti Trust Division, and they have been investigating Live
Nation Ticketmaster, the firm that the Obama administration allowed to form.
They've been investigating it for years. And when firmsby are
being investigated, they tend to lawyer up, and so that's
what Live Nation did, hiring an old anti trust lawyer
named Dan Wall to represent them against potential monopolization charges
(18:38):
that could be coming from the Anti Trust Division. Wall
defended Live Nation publicly as part of a PR campaign
earlier last month. In a blog post, he wrote that
you might think that Live Nation charges a lot for tickets,
but that's really just supply and demand for popular artists.
The corporation itself charges low prices, not high ones. He
(19:02):
even put up a comparison of commissions charged by online
marketplaces from Twitch to Airbnb to Uber to show how
little Live Nation charges.
Speaker 3 (19:12):
Let's take a look.
Speaker 6 (19:13):
You see Live Nation charges less than Twitch, stub Hub, Uber, Airbnb, etc.
Speaker 3 (19:17):
Etc.
Speaker 6 (19:18):
Concert promotion, Wall wrote, is not a highly profitable business,
even for a Live Nation end quote. So look at
that commission. It's a measly seven percent for Live Nation ticketmaster.
No sure, Live Nation charges consumers a lot of money
and doesn't pay much to artists. And this is Wall's argument,
But they don't, he wrote, set the ticket price and
even worse for Live Nation shareholders.
Speaker 3 (19:38):
At least, it's just not a very good business.
Speaker 6 (19:41):
Wall concluded, quote The narrative that ticketmaster fees are responsible
for high ticket prices makes no sense. According to Wall,
the middleman giant affects at most two percent of the
price of a ticket for its trouble. Still, all of
that that argument from Dan Wall from Live Nation ticketmaster
(20:01):
feels weird. It sounds like it's not true, considering that
Live Nation CEO Michael Rapino made one hundred and thirty
nine million dollars in twenty twenty two. That's a lot
of money for someone in just such a terrible business.
Speaker 3 (20:14):
Well, the reason it sounds.
Speaker 6 (20:16):
Like it's not true is because, well it's not true,
or at least it's not true, according to new documents
released by Congressman Bill Pascrell from litigation in twenty nineteen,
based on Live Nation's own financial data. These documents are
from a court case involving a concert at the New
Jersey State Fair in twenty eleven. Now, I just want
(20:37):
to tell you where these documents came from, because it's
kind of funny. We often think about Monopolis as sort
of dominant and powerful and all knowing, and that litigation
has been going on for thirteen years. At a certain point,
the plaintiff's hired an expert. His name is Richard Barnett.
He's one of the top scholars in the business, and
he looked at Live Nation's confidential records and he wrote
about how the corporation actually works in the blinktiffs then
(21:00):
submitted that report to the court, and the judge unfortunately
ordered it sealed so that no one could read it, saying, oh,
it's got confidential information or whatnot, and that should have
been that except and here's where the stupidity of a
monopolist comes in. Live Nation or someone's on Live Nation's
legal team or Dan Wall's team or someone like that,
they screwed up and they accidentally uploaded the report to
(21:23):
a public court site pacer where Pascrell got his hands on.
Speaker 3 (21:27):
He just downloaded. Then he sent it out at.
Speaker 6 (21:29):
A press release and that's how we have the documents. Okay,
so what's the case all about? That shows how Live
Nation really works. Well, it starts with a concert. In
twenty eleven, the head of the New Jersey State Fairs,
names Al Dorso, hired a company called Juice Entertainment run
by two experienced concert promoters to put on a concert.
Now Live Nation. They told Live Nation, do you want
(21:51):
to do this? Live Nation wasn't interested. But as soon
as I got win that Jeuwice Entertainment was doing it
and started to book acts, Live Nation demanded to co
produce the show and end Doorso, who was running the
state Fair, was just like, hey, you guys, work it out,
and he later put it.
Speaker 3 (22:07):
You know, Live Nation.
Speaker 6 (22:08):
They were the eight hundred pound gorilla I said, go
see if you can work out a deal.
Speaker 3 (22:13):
That's what he was saying to Juice.
Speaker 6 (22:15):
Now Juice and Live Nation couldn't work out a deal,
and then Live Nation managed to get Juice fired. How well,
the smaller firm sued Live Nation, claiming the giant coerce
performers into not signing with Jews to appear at the
fair and threaten to withhold its ticketing services to the
venue the state owned Metalands Sports Complex if it were
not allowed to be a partner.
Speaker 3 (22:35):
That's from public reporting.
Speaker 6 (22:36):
In other words, Live Nation used dominance in other lines
of business artists, promotion, and ticketing software to thwart arrival,
which exactly why the Obama staffers like Gene Kimmelman should
have blocked the merger in the first place. But this
situation leaves a question why didn't Jews consent to let
Live Nation co produce the event? I mean, half the
profit is still better than no profit, right. Well, the
(22:56):
reason is, according to Jews, that Live Nation offered a
deal that would have saddled the firman and artists with
the costs, while Live Nation itself took the profits. In
this purported arrangement, Live Nation and juice would have split
the cost of putting on the event, like renting the venue,
the sound stage, and so forth. They would have also
shared profits from ticket sales with artists and with each other.
(23:16):
And that sounds good so far. The problem is what
came next in the accounting. Here's the expert report. Live
Nation negotiated third party expenses like rental costs with the
venues directly with vendors in exchange for exclusive financial gains
not disclosed to their artists or their agents, managers or
independent co promoters in the form of rebates. So, in
(23:37):
other words, Live Nation had secret side deals with vendors
to inflate costs by overpaying those vendors and venues, which
meant that any profit from the event would evaporate.
Speaker 3 (23:48):
It would look like a loss.
Speaker 6 (23:49):
Co promoters and artists who share in profits would lose out,
but and would be told that the show just wasn't profitable.
But the thing is those vendors those venues who had
gotten extra money by being paid inflated costs, would in
turn remit that money back to Live Nation in the
form of secret rebates. In other words, JEUS would pay
the inflated costs that would get furtively funneled back to
(24:12):
Live Nation along with all the profits from the show. Now,
Live Nation didn't disclose any of this revenue diversion with
the artists to whom it had a legal obligation to
with whom it had contracts, which is why Jus's lawyer
said that the corporation quote essentially defrauds everyone involved. Now,
these kinds of secret kickbacks ensured what Jesus's lawyer called
(24:33):
the quote financial ruin end quote of co promoters. Now,
of course Live Nation claimed it was losing money or
not making very much money on any particular event, and
it wasn't. But that's because the profit was coming in
through rebates, which, according to this expert, Barnett went onto
a line in the accounting statement called quote contribution margin
(24:53):
end quote. So Jus's experts found so interestingly, Barnett even
found that Live Nation kept two sets of books, so
in one case they posted an entry of ninety thousand
dollars rent for settlement, but only seventy five thousand dollars
internally for the same item.
Speaker 3 (25:09):
They routinely put in profit and loss.
Speaker 6 (25:11):
Statements large losses while admitting that events actually made money.
So that's just one event, all right, as one a
state fair in New Jersey. How much was this contribution
margin across all of Live Nation. I don't precisely know,
and you can throw other things into that accounting line,
but there are hints of amounts. So in the third
(25:33):
quarter of twenty twenty one, which is the last time
they used the term contribution margin that I can find,
it was seven hundred and forty seven million dollars, probably
in the billions today. And that's where CEO Michael Rappino's
nine figure payday is probably coming from. Live Nation is
generating a great deal of revenue which somehow shows low margins.
(25:53):
Lots of events where they're not making money, somehow the cash.
Speaker 3 (25:56):
Is coming in.
Speaker 6 (25:56):
Now, that's just a price hike, right, It's a way
of distracting more revenue, but it's also hidden. And hiding
the price hikes is important because monopolization, which is about
controlling a market and then extracting by your pricing power,
is harder to prove if you show low margins, if
you show that you're not charging very much. Their anti
(26:18):
trust lawyer Dan Wall can just write, poor little Live Nation,
our business is terrible. Yeah, and we all know that
you build by the hour, Dan on your lovely silk sheets.
Now let's take a step back and recognize what we're
really looking at.
Speaker 3 (26:32):
It's not just an extractive scheme. This is about power.
Speaker 6 (26:38):
Power over our culture, power over an entire industry. Basically,
Live Nation can present venues or other people in the business,
anyone in the business pretty much with a choice. If
you cooperate quietly, you'll get extra hidden revenue, and that
means cooperating with knowing dishonesty in the business. If not well,
(27:01):
Live Nation will maybe work with your rival, or may
just buy into the market to compete with you directly.
May not let artists come to your shows at any
point too. I mean, it's not just the blunt instrument.
At any point, Live Nation can dial up or down
rebates to reward or punish. And that's increasingly true as
(27:21):
Live Nation buys more and more corporations in and around
the live event space, with each one presenting additional options
for fees and rebates and what is essentially financial engineering. Okay,
is this report true? I mean, why, like you know,
Live Nation would say, oh, they got it totally wrong.
They didn't disprove it because I don't think they can.
(27:44):
But you know, the question is reasonable. Is the report true?
Speaker 3 (27:49):
We don't know.
Speaker 6 (27:50):
It's the expert is well respected and he looked at
Live Nation's financial data, and it is easy to believe
the worst about Live Nation Ticketmaster. They have a really
bad reputation in the industry and then among consumers. But
the reason I think it's true, and I'm not sure,
but the reason I buy it is because this particular
story is consistent with the behavior of a lot of firms,
(28:14):
many dominant middleman firms in our economy, from pharmacy benefit
managers to Amazon, and their relationship with third party sellers,
how they mediate between third party sellers and consumers, to
big banks who securitized mortgages in the financial crisis, to
the advertising technology industry and so on and so forth.
Now they don't, most of them don't use two sets
of books. That's kind of like, you know, that's a
(28:35):
little bit, you know above the I'm not saying everyone's
a criminal conspiracy. Two sets of books kind of a
red flag, But in general, it's a business model. Middlemen
who have market power, they use fees and kickbacks, often
hidden through a complex maze of subsidiaries or overlapping lines
of business to extract in ways that are really hard
(28:58):
to see. It's in a face, it's immoral, and more importantly,
it creates a climate of fear. The problem is it's
also just the way that we do business today. Fortunately,
Live Nation is under investigation and there are a bunch
of companies that are under investigation. But this lesson if
this is true, and I think it is. But if
(29:20):
it's true, this is why Live Nation needs to be
broken up, and more broadly, why we need to get
rid of these this way of doing business, these secret
kickbacks and rebates throughout the whole economy. Thanks for watching
this big breakdown on the Breaking Points channel. If you'd
like to know more about how big business and our
economy really works, go to the link in the description
(29:41):
below and sign up for my market power focused newsletter.
Speaker 3 (29:44):
Big Thanks and have a good one.
Hey, guys, ready or not, twenty twenty four is here,
and we here at Breaking Points, are already thinking of
ways we can up our game for this critical election.
Speaker 2 (00:08):
We rely on our premium subs to expand coverage, upgrade
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Coverage that is possible.
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Speaker 3 (00:20):
But enough with that, let's get to the show.
Speaker 1 (00:22):
Would Boeing murder a whistleblower? My name is James Lee,
and you're watching Beyond the Headlines on Breaking.
Speaker 4 (00:29):
Points this morning.
Speaker 1 (00:37):
Police in Charleston, South Carolina tel NBC News they are
aware of the death of a former Boeing employee turned whistleblower,
John Mitchell Barnett, a notable whistleblower known for his substantial
safety and quality reports to the Federal Aviation Administration concerning
Boeing's production of the seven eighty seven Dreamliner, who also
appeared in the twenty twenty two Netflix documentary Downfall the
(01:00):
case against Boeing, tragically passed away on March ninth, twenty
twenty four. The mainstream media have mostly reported his death
as an apparent suicide. Barnett was found dead in his
car in the parking lot of his hotel on the
final day of depositions in his whistleblower case against Boeing.
The curious timing of his death have sparked some suspicions
(01:21):
of foul play, and adding to that mystery, reports also
indicate that he had previously cautioned a family friend not
to accept any official narratives about his death as a suicide.
Speaker 3 (01:33):
He wasn't concerned about, thank you, because I asked him.
I said, aren't you scared?
Speaker 2 (01:37):
And he said in his boy and hit the.
Speaker 3 (01:41):
Way he which are I ain't scared? He said, but
if anything happens to me, it's not suicide.
Speaker 1 (01:50):
Joining us today is mode tactic. She is the investigations
editor at The American Prospect who has done some fantastic
reporting on Boeing. Thank you for being here.
Speaker 5 (02:00):
Thanks for having me. I really appreciate it.
Speaker 1 (02:02):
All right, we're not going to bury the lead today.
Did Boeing put out a hit on whistleblower John Barnett?
Obviously everything is still under investigation, but I know in
your recent article you mentioned talking to a few of
his old colleagues. Also, a former Boeing executive. What are
their thoughts also at this point, what do we know
for sure?
Speaker 4 (02:22):
Well, what we know for sure is that John Barnett
was found dead in his Dodge Ram in the parking
lot of a hotel where he was staying in Charleston,
South Carolina, to give a deposition that had lasted.
Speaker 5 (02:40):
It was a three day deposition.
Speaker 4 (02:42):
He was on the third day and he was founded
in his car from an apparently self inflicted gunshot wound.
He was holding a silver pistol. My sense is that
the pistol did belong to him, but that that hasn't
been confirmed one way or the other. And there was
something that was in the driver's seat that looked like
(03:06):
something like a note. Again, the details of that have
not really released yet, you know. So my first impression
was that, oh, this, you know, this guy must have
killed himself, right, I mean it kind of doesn't you
know it? Really Like, I'm always open to the idea that,
you know, you know, foul play might be there.
Speaker 5 (03:27):
I started to change my mind when I think.
Speaker 4 (03:31):
A lot of a lot of workers for former boat
Boeing workers in both the factories and in the executive offices,
were completely open to the notion that Boeing might have
done it. I spoke to uh one of his former
co workers in particular, who was very terrified. This person
did not want to be identified, didn't want you know,
(03:52):
anything that they told me to be you know, to
make them identifiable. But this person told me that in
this person and had you know, blow in the whistle
at this same Boeing factory and dealt with a lot
of fallout as a result of that. And this person
told me straight up, if I die, you know, please
like I'm There's no way I would ever commit suicide,
(04:16):
like even if it is a car accident, like, please
like get it investigated. I mean, that was just not
what I expected. I didn't I did not expect anybody
who worked at Boeing to think that Boeing would do this.
There's incredibly bad morale within that company. Everybody who cared
about the company for decades, sometimes a half century, you know,
(04:38):
the people who have you know, I've written about Boeing
for about five years on and off, and most of
my sources you know, worked there for at least thirty years.
Speaker 5 (04:47):
They it was very close to their heart.
Speaker 4 (04:49):
And that's why, you know, when you hear when you
talk to the old Boeing heads, they always bring up
the McDonald Douglas merger. You know, this is twenty six
years ago, but it feels like yesterday to a lot
of these because that is when everything changed. And learning
more about John Barnett, he was at this point in
his in his case where the home stretch was in sight.
(05:09):
He was really excited. He was thinking about writing a book.
He was thinking about trying to, you know, do some
sort of a podcast. He was thinking about, you know,
finally enjoying his retirement for once. He was slated to
likely you know, receive a fair bit of money because
he'd been kind of pushed out of the company early.
He had no real motive to kill himself, especially on
(05:31):
day three of a three day deposition. On the other's hand.
Of course, again, they did a very good job. Anyone
who's seen the Octopus murders, you know, if somebody assassinated him,
they weren't sloppy about it, you know, they they really
did a very good job at making it look like
a potential suicide. Of course, you know, there's a lot
(05:52):
that we don't know. We don't know what that note
looks like, that's extremely important evidence. We don't know what
the you know, what the wound looks like. All of
that has yet to come out.
Speaker 1 (06:01):
Yeah, do we have a I'm wondering if we have
a timeline for the investigation. So you said it was
the Charleston Police Department that's involved. Is it just them
or they're federal agencies getting in on the action.
Speaker 5 (06:13):
No federal agencies as of yet.
Speaker 4 (06:16):
I you know, again, the law enforcement has has been,
you know, repeatedly said hey, it's still under investigation, and
everybody who knows anything, like his family and his lawyer,
they've been pretty tight lipped because they don't want to
antagonize the thing that I you know, that is a
little bit bit troubling. I spoke with I'm a medical
examiner in Jacksonville.
Speaker 5 (06:38):
And he said, you know, like in suicide.
Speaker 4 (06:42):
And one thing about suspected suicides is that generally the
in a lot of you know, bigger areas these days,
they don't actually have medical examiners doing the autopsies. Those
autopsies are oftentimes performed by corner assistants. And I spoke
to some a criminal profile or from you know, who
(07:03):
haven't been with the FBI for a long time worked
on the UNI bomber case, and this guy, Jim Fitzgerald,
told me that.
Speaker 5 (07:11):
It seemed like it was the type of.
Speaker 4 (07:15):
The type of thing that, you know, if you were
going to look at it as a potential assassination. The
whole aspect, you know, that the whole saga made him
think that it was like a warning sign. That it
wasn't necessarily that they were trying to prevent him from testifying,
since he had already given two days of depositions, but
that they were trying to send out a warning to
(07:36):
anybody else who might think about, you know, potentially blowing
and the whistle themselves.
Speaker 1 (07:41):
Yeah, I wanted to ask you about There's one interesting
quote that I read in your article. I believe it
was an anonymous quote from a former Boeing executive and
you wrote or he said that it's a top secret
military contractor remember there are spies everywhere. And more importantly,
there is a principle in American law that there's no
such thing as an accidental death during the commission of
(08:01):
a felony. I was wondering if you could expand on that,
what did he mean by this?
Speaker 4 (08:06):
So here's the thing. And this is the broader context here.
Boeing has been extraordinary lucky up till now. You know,
three hundred and three hundred and forty six people passenger
and crew died on seven thirty seven Max crashes in
twenty eighteen and twenty nineteen, four and a half months
apart unless identical crashes, and after the first one hundred
(08:31):
and eighty nine died on a liner accident, they knew
that there was something wrong. Everybody in Boeing knew that
this was going to happen again. It was just a
matter of when not if they did not. They should
have obviously grounded the plane after the first one hundred
and eighty nine passengers and crew died, That is obvious.
(08:55):
They did not do that. Instead of doing that, they
authorized twenty billion dollars in additional share buybacks and introduced
a program to eliminate quality control. Essentially, so when they
talk about the commission of a felony, they're talking about
that the murder of those one hundred and fifty seven
additional passengers. And this is a felony that required a
(09:18):
lot of, you know, a pretty vast conspiracy to actually
get away with because Boeing was under criminal investigation after
the first mcast crash in twenty eighteen. The criminal investigation
widn't understandably, after the second crash, it WI didn't to
include the seven eight seven factory. It WI didn't to
include an investigation that involved in you know, extensive interviews
(09:43):
of John Barnett, and then didn't narrow. Then sometime in
twenty twenty, the prosecutors that were handling the case against
Boeing got changed and the case got transferred to Texas
from New York Fraud Department, and Boeing ended up on
(10:04):
January sixth, twenty twenty one. Understandably, this knit never made
any headlines. But on January sixth, twenty twenty one, Boeing
stein what is in as a deferred prosecution agreement, and
the Justice Department essentially agreed to not prosecute Boeing because,
as it said, you know, the problems that they found
(10:25):
in the company were not systemic and they involved very
few people. So while Boeing got away with it, you know,
with this this real I mean, you can't even call
it a slap on the wrist. It's it's like a
risk massage.
Speaker 1 (10:38):
Yeah, I think you compared that, Yeah, I think you
compared that to in one of your articles as like
similar to the sweetheart deal that Jeffrey Epstein got in
two thousand and seven. So I'm wondering, how how is
Boeing able to secure such a deal from the DOJ.
Speaker 4 (10:51):
Well, it's it's not simply similar. It involves a lot
of the same people. It involves, you know, very senior
partners at the mega law firm kirk Ellis. Crucially, Boeing's
chief criminal defense attorney in this case was the Deputy
Attorney General under I believe it was mckayzy during the
Bish administration who is the highest known official to sign
(11:14):
off on Jeffrey Epstein's two thousand and seven non prosecution agreement.
Both of those agreements were very similar in that they
required lies, right, you know that the government actually lies,
and it's the third prosecution agreement on Boeing saying that
you know, there were no systemic problems everything that we found.
(11:35):
You know, this is this is a solidly ethical company.
Nothing happened. This is just provably false. And similarly with Epstein,
you know, the I forget what the exact phrasing was,
but that agreement actually indemnified all of his conspirators, even
those who were not even named. Both agreements drafted by
senior partners at Kirkland and Ellis and put together by
(11:57):
a lot of there's a lot of cross pollination in
those two agreements. In fact, the Merrick Garlands DOJ made
the case that they aren't actually victims. The four people
who died on Ethiopia three oh one, they were not
actually the victims of the crime. The only victim of
Boeing's crime is the FAA.
Speaker 1 (12:20):
Yeah. Yeah, it's a lot of disturbing details coming out
right now. But before we wrap, I just I wanted
to ask or I wanted to talk about Boeing's future
for a minute, because I think it's important that maybe
it's in America's best interest to have a competent commercial
airline manufacturer. And we did see some leadership reshuffle after
the Max crashes you were talking about in twenty eighteen
twenty nineteen, and now we're also seeing another leadership reshuffle
(12:44):
with Dave Calhoun. He's stepping down along with some other
executives at the end of the year with some pretty
robust exit packages. And then it all depends on it's
like tied to the company's stock price in the coming years.
So my question is can Boeing actually course correct you
if stock performance is still the number one incentive that's
(13:04):
driving executive compensation.
Speaker 4 (13:06):
I I don't really understand the stock I you know,
I would say no, I would say that gowing that
the stock price, there needs to be some sort of
extreme management overhaul. When they did a point, I mean,
it was very obvious. Calhoun was like it was like
when Tim Geitner was nominated for Treasury Secretary. Pretty much
(13:30):
everyone who knew who Tim Geitner was was like, oh God,
this is nothing's gonna happen. No one's gonna get in
trouble city for everybody is just going to get away
with it. And that's what happened. And David Calhoun is
a similar figure. He was the lead, you know, director
of the board. He was the biggest. I mean he's
a guy who worked at ge and Blackstone. He doesn't
(13:51):
actually show up to the office ever. He changed where
the office was. He you know, uses the perch to
fly his plane around. I mean it's completely worthless piece
of shit. You know, I say that without knowing it.
But the latest trinity. Thing to say about Boeing is
that what they really need is Larry Culp, the current
CEO of GE. A sort of an irony because Boeing's
(14:14):
three out of their last four CEOs have come from
GE has been protegees of Jack Welch, and they've absolutely
fucked the you know, Boeing just the same way that
Jack Welch ultimately fucked GE by completely financializing it and
refusing to grapple with the fact that building something that
involves four million parts is not the same thing as
(14:37):
you know, like manufacturing light bulbs or post it notes,
which is what you know Narnie used to do. So
I think that there is a real effort within the
sort of you know, dog bos set to say hey, no,
you know that actually the market can take care of this,
and if they just hire the right guy, the right MBA,
(14:57):
this guy Larry Culp, who maybe isn't as much a sociopath,
who believe in building companies and putting them on the
road to growth and who believe in quality. Because it
has been such a you know, total it's very clear
to like everyone in aviation now that Boeing actually can't
build a plane that they have lost the ability to
(15:19):
competently build an airplane, and that is like an existential
problem and it's not reflected in the stock price. I
think a lot of that stuff is, you know, the
product of algorithms and and you know this sort of
conspiracy of algorithms and fraud. Yeah.
Speaker 1 (15:38):
As a as an MBA myself, I can confirm a
lot of sociopathic behavior that I see and they don't know.
They don't think that's it's that way, but it is
from outside looking in, it definitely is. Anyways, this is
obviously developing stories, so I hope to have you back
on really quick anywhere you want to point the audience too,
(16:00):
if they want to find or if you want them
to find more of your work.
Speaker 4 (16:03):
If you look at prospects dot org again and search
for Boeing, I think you'll find a lot of my stories.
I also write a lot about healthcare and you know.
Speaker 5 (16:13):
All kinds of things.
Speaker 4 (16:14):
So anything that involves the intersection of organized crime and finance,
I like to sniffer out on those cases.
Speaker 1 (16:23):
Awesome, Well, everybody go follow mo. Thank you so much
for coming on the show today.
Speaker 5 (16:29):
Awesome, Thank you so much for having me.
Speaker 1 (16:31):
That is it for me this week. If you're looking
for more documentary style deep dives on various topics related
to business, politics and society, you can follow me on
my YouTube channel fifty one forty nine with James Lee.
The link will be in the description below. As always,
keep on tuning into breaking points and thank you for
your time today.
Speaker 6 (16:58):
Hi, I'm author of monopoly focused newsletter Big and an
anti trust policy analyst. In this Big breakdown, I'm going
to ask the question, is Live Nation Ticketmaster, the company
that controls most of the live entertainment industry, in fact
a criminal conspiracy. You might think that's a bold question,
and it is, But some explosive new documents just came
(17:20):
to light that suggests that, well, it's a question worth asking.
Speaker 3 (17:24):
Let's dive in.
Speaker 6 (17:26):
In twenty ten, the live entertainment industry was in shock
when Live Nation, the nation's leading concert promoter, bought Ticketmaster,
which basically had a monopolist a monopoly over ticketing software
and was a major player in artist management. It was
a very controversial deal, and Ticketmaster had already bought out
most of its other competitors in ticketing software and really
upset Pearl Jam in the nineteen nineties was well known
(17:49):
market power problem, but the government's Anti Trust Division under
Obama allowed the deal to go forward anyway. In fact,
seems like they were sort of proud of doing that.
Let's take a look at this public picture that was
put on the DJ's website, So that publicly released photo
shows the head of the Anti Trust Division, Christine Varney,
her number two William Cavanaugh, and their advisor Gene Kimmelman
(18:10):
announcing that they were allowing that merger and talking to
reporters about it.
Speaker 1 (18:14):
Now.
Speaker 6 (18:14):
The Biden Anti Trust Division is very different than the
Obama Anti Trust Division, and they have been investigating Live
Nation Ticketmaster, the firm that the Obama administration allowed to form.
They've been investigating it for years. And when firmsby are
being investigated, they tend to lawyer up, and so that's
what Live Nation did, hiring an old anti trust lawyer
named Dan Wall to represent them against potential monopolization charges
(18:38):
that could be coming from the Anti Trust Division. Wall
defended Live Nation publicly as part of a PR campaign
earlier last month. In a blog post, he wrote that
you might think that Live Nation charges a lot for tickets,
but that's really just supply and demand for popular artists.
The corporation itself charges low prices, not high ones. He
(19:02):
even put up a comparison of commissions charged by online
marketplaces from Twitch to Airbnb to Uber to show how
little Live Nation charges.
Speaker 3 (19:12):
Let's take a look.
Speaker 6 (19:13):
You see Live Nation charges less than Twitch, stub Hub, Uber, Airbnb, etc.
Speaker 3 (19:17):
Etc.
Speaker 6 (19:18):
Concert promotion, Wall wrote, is not a highly profitable business,
even for a Live Nation end quote. So look at
that commission. It's a measly seven percent for Live Nation ticketmaster.
No sure, Live Nation charges consumers a lot of money
and doesn't pay much to artists. And this is Wall's argument,
But they don't, he wrote, set the ticket price and
even worse for Live Nation shareholders.
Speaker 3 (19:38):
At least, it's just not a very good business.
Speaker 6 (19:41):
Wall concluded, quote The narrative that ticketmaster fees are responsible
for high ticket prices makes no sense. According to Wall,
the middleman giant affects at most two percent of the
price of a ticket for its trouble. Still, all of
that that argument from Dan Wall from Live Nation ticketmaster
(20:01):
feels weird. It sounds like it's not true, considering that
Live Nation CEO Michael Rapino made one hundred and thirty
nine million dollars in twenty twenty two. That's a lot
of money for someone in just such a terrible business.
Speaker 3 (20:14):
Well, the reason it sounds.
Speaker 6 (20:16):
Like it's not true is because, well it's not true,
or at least it's not true, according to new documents
released by Congressman Bill Pascrell from litigation in twenty nineteen,
based on Live Nation's own financial data. These documents are
from a court case involving a concert at the New
Jersey State Fair in twenty eleven. Now, I just want
(20:37):
to tell you where these documents came from, because it's
kind of funny. We often think about Monopolis as sort
of dominant and powerful and all knowing, and that litigation
has been going on for thirteen years. At a certain point,
the plaintiff's hired an expert. His name is Richard Barnett.
He's one of the top scholars in the business, and
he looked at Live Nation's confidential records and he wrote
about how the corporation actually works in the blinktiffs then
(21:00):
submitted that report to the court, and the judge unfortunately
ordered it sealed so that no one could read it, saying, oh,
it's got confidential information or whatnot, and that should have
been that except and here's where the stupidity of a
monopolist comes in. Live Nation or someone's on Live Nation's
legal team or Dan Wall's team or someone like that,
they screwed up and they accidentally uploaded the report to
(21:23):
a public court site pacer where Pascrell got his hands on.
Speaker 3 (21:27):
He just downloaded. Then he sent it out at.
Speaker 6 (21:29):
A press release and that's how we have the documents. Okay,
so what's the case all about? That shows how Live
Nation really works. Well, it starts with a concert. In
twenty eleven, the head of the New Jersey State Fairs,
names Al Dorso, hired a company called Juice Entertainment run
by two experienced concert promoters to put on a concert.
Now Live Nation. They told Live Nation, do you want
(21:51):
to do this? Live Nation wasn't interested. But as soon
as I got win that Jeuwice Entertainment was doing it
and started to book acts, Live Nation demanded to co
produce the show and end Doorso, who was running the
state Fair, was just like, hey, you guys, work it out,
and he later put it.
Speaker 3 (22:07):
You know, Live Nation.
Speaker 6 (22:08):
They were the eight hundred pound gorilla I said, go
see if you can work out a deal.
Speaker 3 (22:13):
That's what he was saying to Juice.
Speaker 6 (22:15):
Now Juice and Live Nation couldn't work out a deal,
and then Live Nation managed to get Juice fired. How well,
the smaller firm sued Live Nation, claiming the giant coerce
performers into not signing with Jews to appear at the
fair and threaten to withhold its ticketing services to the
venue the state owned Metalands Sports Complex if it were
not allowed to be a partner.
Speaker 3 (22:35):
That's from public reporting.
Speaker 6 (22:36):
In other words, Live Nation used dominance in other lines
of business artists, promotion, and ticketing software to thwart arrival,
which exactly why the Obama staffers like Gene Kimmelman should
have blocked the merger in the first place. But this
situation leaves a question why didn't Jews consent to let
Live Nation co produce the event? I mean, half the
profit is still better than no profit, right. Well, the
(22:56):
reason is, according to Jews, that Live Nation offered a
deal that would have saddled the firman and artists with
the costs, while Live Nation itself took the profits. In
this purported arrangement, Live Nation and juice would have split
the cost of putting on the event, like renting the venue,
the sound stage, and so forth. They would have also
shared profits from ticket sales with artists and with each other.
(23:16):
And that sounds good so far. The problem is what
came next in the accounting. Here's the expert report. Live
Nation negotiated third party expenses like rental costs with the
venues directly with vendors in exchange for exclusive financial gains
not disclosed to their artists or their agents, managers or
independent co promoters in the form of rebates. So, in
(23:37):
other words, Live Nation had secret side deals with vendors
to inflate costs by overpaying those vendors and venues, which
meant that any profit from the event would evaporate.
Speaker 3 (23:48):
It would look like a loss.
Speaker 6 (23:49):
Co promoters and artists who share in profits would lose out,
but and would be told that the show just wasn't profitable.
But the thing is those vendors those venues who had
gotten extra money by being paid inflated costs, would in
turn remit that money back to Live Nation in the
form of secret rebates. In other words, JEUS would pay
the inflated costs that would get furtively funneled back to
(24:12):
Live Nation along with all the profits from the show. Now,
Live Nation didn't disclose any of this revenue diversion with
the artists to whom it had a legal obligation to
with whom it had contracts, which is why Jus's lawyer
said that the corporation quote essentially defrauds everyone involved. Now,
these kinds of secret kickbacks ensured what Jesus's lawyer called
(24:33):
the quote financial ruin end quote of co promoters. Now,
of course Live Nation claimed it was losing money or
not making very much money on any particular event, and
it wasn't. But that's because the profit was coming in
through rebates, which, according to this expert, Barnett went onto
a line in the accounting statement called quote contribution margin
(24:53):
end quote. So Jus's experts found so interestingly, Barnett even
found that Live Nation kept two sets of books, so
in one case they posted an entry of ninety thousand
dollars rent for settlement, but only seventy five thousand dollars
internally for the same item.
Speaker 3 (25:09):
They routinely put in profit and loss.
Speaker 6 (25:11):
Statements large losses while admitting that events actually made money.
So that's just one event, all right, as one a
state fair in New Jersey. How much was this contribution
margin across all of Live Nation. I don't precisely know,
and you can throw other things into that accounting line,
but there are hints of amounts. So in the third
(25:33):
quarter of twenty twenty one, which is the last time
they used the term contribution margin that I can find,
it was seven hundred and forty seven million dollars, probably
in the billions today. And that's where CEO Michael Rappino's
nine figure payday is probably coming from. Live Nation is
generating a great deal of revenue which somehow shows low margins.
(25:53):
Lots of events where they're not making money, somehow the cash.
Speaker 3 (25:56):
Is coming in.
Speaker 6 (25:56):
Now, that's just a price hike, right, It's a way
of distracting more revenue, but it's also hidden. And hiding
the price hikes is important because monopolization, which is about
controlling a market and then extracting by your pricing power,
is harder to prove if you show low margins, if
you show that you're not charging very much. Their anti
(26:18):
trust lawyer Dan Wall can just write, poor little Live Nation,
our business is terrible. Yeah, and we all know that
you build by the hour, Dan on your lovely silk sheets.
Now let's take a step back and recognize what we're
really looking at.
Speaker 3 (26:32):
It's not just an extractive scheme. This is about power.
Speaker 6 (26:38):
Power over our culture, power over an entire industry. Basically,
Live Nation can present venues or other people in the business,
anyone in the business pretty much with a choice. If
you cooperate quietly, you'll get extra hidden revenue, and that
means cooperating with knowing dishonesty in the business. If not well,
(27:01):
Live Nation will maybe work with your rival, or may
just buy into the market to compete with you directly.
May not let artists come to your shows at any
point too. I mean, it's not just the blunt instrument.
At any point, Live Nation can dial up or down
rebates to reward or punish. And that's increasingly true as
(27:21):
Live Nation buys more and more corporations in and around
the live event space, with each one presenting additional options
for fees and rebates and what is essentially financial engineering. Okay,
is this report true? I mean, why, like you know,
Live Nation would say, oh, they got it totally wrong.
They didn't disprove it because I don't think they can.
(27:44):
But you know, the question is reasonable. Is the report true?
Speaker 3 (27:49):
We don't know.
Speaker 6 (27:50):
It's the expert is well respected and he looked at
Live Nation's financial data, and it is easy to believe
the worst about Live Nation Ticketmaster. They have a really
bad reputation in the industry and then among consumers. But
the reason I think it's true, and I'm not sure,
but the reason I buy it is because this particular
story is consistent with the behavior of a lot of firms,
(28:14):
many dominant middleman firms in our economy, from pharmacy benefit
managers to Amazon, and their relationship with third party sellers,
how they mediate between third party sellers and consumers, to
big banks who securitized mortgages in the financial crisis, to
the advertising technology industry and so on and so forth.
Now they don't, most of them don't use two sets
of books. That's kind of like, you know, that's a
(28:35):
little bit, you know above the I'm not saying everyone's
a criminal conspiracy. Two sets of books kind of a
red flag, But in general, it's a business model. Middlemen
who have market power, they use fees and kickbacks, often
hidden through a complex maze of subsidiaries or overlapping lines
of business to extract in ways that are really hard
(28:58):
to see. It's in a face, it's immoral, and more importantly,
it creates a climate of fear. The problem is it's
also just the way that we do business today. Fortunately,
Live Nation is under investigation and there are a bunch
of companies that are under investigation. But this lesson if
this is true, and I think it is. But if
(29:20):
it's true, this is why Live Nation needs to be
broken up, and more broadly, why we need to get
rid of these this way of doing business, these secret
kickbacks and rebates throughout the whole economy. Thanks for watching
this big breakdown on the Breaking Points channel. If you'd
like to know more about how big business and our
economy really works, go to the link in the description
(29:41):
below and sign up for my market power focused newsletter.
Speaker 3 (29:44):
Big Thanks and have a good one.
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