1 00:00:00,760 --> 00:00:03,680 Speaker 1: Hey, guys, ready or not, twenty twenty four is here, 2 00:00:03,840 --> 00:00:06,320 Speaker 1: and we here at Breaking Points, are already thinking of 3 00:00:06,360 --> 00:00:08,600 Speaker 1: ways we can up our game for this critical election. 4 00:00:08,800 --> 00:00:11,719 Speaker 2: We rely on our premium subs to expand coverage, upgrade 5 00:00:11,720 --> 00:00:15,720 Speaker 2: the studio ad staff give you, guys, the best independent. 6 00:00:15,120 --> 00:00:16,239 Speaker 3: Coverage that is possible. 7 00:00:16,280 --> 00:00:18,279 Speaker 2: If you like what we're all about, it just means 8 00:00:18,320 --> 00:00:20,080 Speaker 2: the absolute world to have your support. 9 00:00:20,160 --> 00:00:21,880 Speaker 3: But enough with that, let's get to the show. 10 00:00:22,360 --> 00:00:26,520 Speaker 1: Would Boeing murder a whistleblower? My name is James Lee, 11 00:00:26,560 --> 00:00:29,360 Speaker 1: and you're watching Beyond the Headlines on Breaking. 12 00:00:29,000 --> 00:00:37,360 Speaker 4: Points this morning. 13 00:00:37,400 --> 00:00:40,680 Speaker 1: Police in Charleston, South Carolina tel NBC News they are 14 00:00:40,800 --> 00:00:44,720 Speaker 1: aware of the death of a former Boeing employee turned whistleblower, 15 00:00:45,080 --> 00:00:48,760 Speaker 1: John Mitchell Barnett, a notable whistleblower known for his substantial 16 00:00:48,800 --> 00:00:52,879 Speaker 1: safety and quality reports to the Federal Aviation Administration concerning 17 00:00:52,920 --> 00:00:56,440 Speaker 1: Boeing's production of the seven eighty seven Dreamliner, who also 18 00:00:56,480 --> 00:01:00,240 Speaker 1: appeared in the twenty twenty two Netflix documentary Downfall the 19 00:01:00,320 --> 00:01:04,360 Speaker 1: case against Boeing, tragically passed away on March ninth, twenty 20 00:01:04,440 --> 00:01:08,080 Speaker 1: twenty four. The mainstream media have mostly reported his death 21 00:01:08,120 --> 00:01:11,720 Speaker 1: as an apparent suicide. Barnett was found dead in his 22 00:01:11,720 --> 00:01:13,800 Speaker 1: car in the parking lot of his hotel on the 23 00:01:13,800 --> 00:01:17,160 Speaker 1: final day of depositions in his whistleblower case against Boeing. 24 00:01:18,000 --> 00:01:21,319 Speaker 1: The curious timing of his death have sparked some suspicions 25 00:01:21,400 --> 00:01:25,679 Speaker 1: of foul play, and adding to that mystery, reports also 26 00:01:25,760 --> 00:01:28,840 Speaker 1: indicate that he had previously cautioned a family friend not 27 00:01:28,880 --> 00:01:33,080 Speaker 1: to accept any official narratives about his death as a suicide. 28 00:01:33,240 --> 00:01:36,080 Speaker 3: He wasn't concerned about, thank you, because I asked him. 29 00:01:36,120 --> 00:01:37,400 Speaker 3: I said, aren't you scared? 30 00:01:37,920 --> 00:01:41,119 Speaker 2: And he said in his boy and hit the. 31 00:01:41,040 --> 00:01:45,959 Speaker 3: Way he which are I ain't scared? He said, but 32 00:01:45,959 --> 00:01:49,080 Speaker 3: if anything happens to me, it's not suicide. 33 00:01:50,520 --> 00:01:54,480 Speaker 1: Joining us today is mode tactic. She is the investigations 34 00:01:54,600 --> 00:01:57,960 Speaker 1: editor at The American Prospect who has done some fantastic 35 00:01:58,040 --> 00:02:00,520 Speaker 1: reporting on Boeing. Thank you for being here. 36 00:02:00,640 --> 00:02:02,280 Speaker 5: Thanks for having me. I really appreciate it. 37 00:02:02,320 --> 00:02:04,040 Speaker 1: All right, we're not going to bury the lead today. 38 00:02:04,520 --> 00:02:09,200 Speaker 1: Did Boeing put out a hit on whistleblower John Barnett? 39 00:02:09,520 --> 00:02:12,440 Speaker 1: Obviously everything is still under investigation, but I know in 40 00:02:12,480 --> 00:02:14,560 Speaker 1: your recent article you mentioned talking to a few of 41 00:02:14,600 --> 00:02:18,080 Speaker 1: his old colleagues. Also, a former Boeing executive. What are 42 00:02:18,120 --> 00:02:21,400 Speaker 1: their thoughts also at this point, what do we know 43 00:02:21,639 --> 00:02:22,160 Speaker 1: for sure? 44 00:02:22,840 --> 00:02:26,800 Speaker 4: Well, what we know for sure is that John Barnett 45 00:02:26,880 --> 00:02:31,400 Speaker 4: was found dead in his Dodge Ram in the parking 46 00:02:31,400 --> 00:02:34,959 Speaker 4: lot of a hotel where he was staying in Charleston, 47 00:02:35,040 --> 00:02:39,840 Speaker 4: South Carolina, to give a deposition that had lasted. 48 00:02:40,919 --> 00:02:42,120 Speaker 5: It was a three day deposition. 49 00:02:42,280 --> 00:02:45,520 Speaker 4: He was on the third day and he was founded 50 00:02:45,600 --> 00:02:49,680 Speaker 4: in his car from an apparently self inflicted gunshot wound. 51 00:02:49,919 --> 00:02:54,800 Speaker 4: He was holding a silver pistol. My sense is that 52 00:02:54,800 --> 00:02:56,919 Speaker 4: the pistol did belong to him, but that that hasn't 53 00:02:56,960 --> 00:03:01,520 Speaker 4: been confirmed one way or the other. And there was 54 00:03:01,520 --> 00:03:05,880 Speaker 4: something that was in the driver's seat that looked like 55 00:03:06,280 --> 00:03:09,880 Speaker 4: something like a note. Again, the details of that have 56 00:03:10,000 --> 00:03:13,840 Speaker 4: not really released yet, you know. So my first impression 57 00:03:14,160 --> 00:03:17,280 Speaker 4: was that, oh, this, you know, this guy must have 58 00:03:17,480 --> 00:03:19,840 Speaker 4: killed himself, right, I mean it kind of doesn't you 59 00:03:19,840 --> 00:03:23,359 Speaker 4: know it? Really Like, I'm always open to the idea that, 60 00:03:23,400 --> 00:03:26,680 Speaker 4: you know, you know, foul play might be there. 61 00:03:27,480 --> 00:03:31,440 Speaker 5: I started to change my mind when I think. 62 00:03:31,280 --> 00:03:33,760 Speaker 4: A lot of a lot of workers for former boat 63 00:03:33,840 --> 00:03:38,600 Speaker 4: Boeing workers in both the factories and in the executive offices, 64 00:03:39,360 --> 00:03:42,240 Speaker 4: were completely open to the notion that Boeing might have 65 00:03:42,440 --> 00:03:46,480 Speaker 4: done it. I spoke to uh one of his former 66 00:03:46,520 --> 00:03:50,120 Speaker 4: co workers in particular, who was very terrified. This person 67 00:03:50,320 --> 00:03:52,560 Speaker 4: did not want to be identified, didn't want you know, 68 00:03:52,640 --> 00:03:55,080 Speaker 4: anything that they told me to be you know, to 69 00:03:55,120 --> 00:03:59,520 Speaker 4: make them identifiable. But this person told me that in 70 00:03:59,560 --> 00:04:01,720 Speaker 4: this person and had you know, blow in the whistle 71 00:04:01,960 --> 00:04:04,560 Speaker 4: at this same Boeing factory and dealt with a lot 72 00:04:04,560 --> 00:04:07,560 Speaker 4: of fallout as a result of that. And this person 73 00:04:08,480 --> 00:04:12,360 Speaker 4: told me straight up, if I die, you know, please 74 00:04:12,560 --> 00:04:16,640 Speaker 4: like I'm There's no way I would ever commit suicide, 75 00:04:16,800 --> 00:04:19,960 Speaker 4: like even if it is a car accident, like, please 76 00:04:20,120 --> 00:04:22,880 Speaker 4: like get it investigated. I mean, that was just not 77 00:04:22,960 --> 00:04:25,719 Speaker 4: what I expected. I didn't I did not expect anybody 78 00:04:25,760 --> 00:04:28,320 Speaker 4: who worked at Boeing to think that Boeing would do this. 79 00:04:29,120 --> 00:04:33,479 Speaker 4: There's incredibly bad morale within that company. Everybody who cared 80 00:04:33,480 --> 00:04:38,000 Speaker 4: about the company for decades, sometimes a half century, you know, 81 00:04:38,200 --> 00:04:40,919 Speaker 4: the people who have you know, I've written about Boeing 82 00:04:40,920 --> 00:04:43,680 Speaker 4: for about five years on and off, and most of 83 00:04:43,600 --> 00:04:47,039 Speaker 4: my sources you know, worked there for at least thirty years. 84 00:04:47,120 --> 00:04:49,000 Speaker 5: They it was very close to their heart. 85 00:04:49,000 --> 00:04:50,880 Speaker 4: And that's why, you know, when you hear when you 86 00:04:50,920 --> 00:04:53,640 Speaker 4: talk to the old Boeing heads, they always bring up 87 00:04:53,640 --> 00:04:56,480 Speaker 4: the McDonald Douglas merger. You know, this is twenty six 88 00:04:56,560 --> 00:04:59,520 Speaker 4: years ago, but it feels like yesterday to a lot 89 00:04:59,520 --> 00:05:03,360 Speaker 4: of these because that is when everything changed. And learning 90 00:05:03,400 --> 00:05:06,520 Speaker 4: more about John Barnett, he was at this point in 91 00:05:06,600 --> 00:05:09,640 Speaker 4: his in his case where the home stretch was in sight. 92 00:05:09,760 --> 00:05:12,359 Speaker 4: He was really excited. He was thinking about writing a book. 93 00:05:12,480 --> 00:05:15,280 Speaker 4: He was thinking about trying to, you know, do some 94 00:05:15,320 --> 00:05:18,000 Speaker 4: sort of a podcast. He was thinking about, you know, 95 00:05:18,279 --> 00:05:22,240 Speaker 4: finally enjoying his retirement for once. He was slated to 96 00:05:22,800 --> 00:05:25,440 Speaker 4: likely you know, receive a fair bit of money because 97 00:05:25,440 --> 00:05:27,520 Speaker 4: he'd been kind of pushed out of the company early. 98 00:05:27,800 --> 00:05:31,440 Speaker 4: He had no real motive to kill himself, especially on 99 00:05:31,560 --> 00:05:36,960 Speaker 4: day three of a three day deposition. On the other's hand. 100 00:05:37,000 --> 00:05:39,640 Speaker 4: Of course, again, they did a very good job. Anyone 101 00:05:39,680 --> 00:05:44,160 Speaker 4: who's seen the Octopus murders, you know, if somebody assassinated him, 102 00:05:44,279 --> 00:05:46,880 Speaker 4: they weren't sloppy about it, you know, they they really 103 00:05:46,920 --> 00:05:49,680 Speaker 4: did a very good job at making it look like 104 00:05:50,080 --> 00:05:52,880 Speaker 4: a potential suicide. Of course, you know, there's a lot 105 00:05:52,920 --> 00:05:54,480 Speaker 4: that we don't know. We don't know what that note 106 00:05:54,480 --> 00:05:57,520 Speaker 4: looks like, that's extremely important evidence. We don't know what 107 00:05:57,560 --> 00:05:59,640 Speaker 4: the you know, what the wound looks like. All of 108 00:05:59,680 --> 00:06:01,200 Speaker 4: that has yet to come out. 109 00:06:01,400 --> 00:06:03,159 Speaker 1: Yeah, do we have a I'm wondering if we have 110 00:06:03,440 --> 00:06:07,240 Speaker 1: a timeline for the investigation. So you said it was 111 00:06:07,279 --> 00:06:09,760 Speaker 1: the Charleston Police Department that's involved. Is it just them 112 00:06:09,839 --> 00:06:13,400 Speaker 1: or they're federal agencies getting in on the action. 113 00:06:13,640 --> 00:06:16,480 Speaker 5: No federal agencies as of yet. 114 00:06:16,720 --> 00:06:20,680 Speaker 4: I you know, again, the law enforcement has has been, 115 00:06:20,800 --> 00:06:23,480 Speaker 4: you know, repeatedly said hey, it's still under investigation, and 116 00:06:23,800 --> 00:06:27,719 Speaker 4: everybody who knows anything, like his family and his lawyer, 117 00:06:27,720 --> 00:06:30,240 Speaker 4: they've been pretty tight lipped because they don't want to 118 00:06:30,279 --> 00:06:33,240 Speaker 4: antagonize the thing that I you know, that is a 119 00:06:33,240 --> 00:06:35,880 Speaker 4: little bit bit troubling. I spoke with I'm a medical 120 00:06:35,880 --> 00:06:39,280 Speaker 4: examiner in Jacksonville. 121 00:06:38,560 --> 00:06:43,400 Speaker 5: And he said, you know, like in suicide. 122 00:06:42,839 --> 00:06:47,279 Speaker 4: And one thing about suspected suicides is that generally the 123 00:06:48,000 --> 00:06:51,240 Speaker 4: in a lot of you know, bigger areas these days, 124 00:06:51,240 --> 00:06:54,920 Speaker 4: they don't actually have medical examiners doing the autopsies. Those 125 00:06:54,960 --> 00:06:59,560 Speaker 4: autopsies are oftentimes performed by corner assistants. And I spoke 126 00:06:59,640 --> 00:07:03,840 Speaker 4: to some a criminal profile or from you know, who 127 00:07:03,920 --> 00:07:05,880 Speaker 4: haven't been with the FBI for a long time worked 128 00:07:05,920 --> 00:07:10,280 Speaker 4: on the UNI bomber case, and this guy, Jim Fitzgerald, 129 00:07:10,560 --> 00:07:11,320 Speaker 4: told me that. 130 00:07:11,200 --> 00:07:13,680 Speaker 5: It seemed like it was the type of. 131 00:07:15,080 --> 00:07:17,640 Speaker 4: The type of thing that, you know, if you were 132 00:07:17,960 --> 00:07:21,200 Speaker 4: going to look at it as a potential assassination. The 133 00:07:21,280 --> 00:07:24,760 Speaker 4: whole aspect, you know, that the whole saga made him 134 00:07:24,800 --> 00:07:26,600 Speaker 4: think that it was like a warning sign. That it 135 00:07:26,640 --> 00:07:30,840 Speaker 4: wasn't necessarily that they were trying to prevent him from testifying, 136 00:07:30,840 --> 00:07:33,600 Speaker 4: since he had already given two days of depositions, but 137 00:07:33,640 --> 00:07:36,720 Speaker 4: that they were trying to send out a warning to 138 00:07:36,760 --> 00:07:40,080 Speaker 4: anybody else who might think about, you know, potentially blowing 139 00:07:40,040 --> 00:07:41,000 Speaker 4: and the whistle themselves. 140 00:07:41,120 --> 00:07:44,080 Speaker 1: Yeah, I wanted to ask you about There's one interesting 141 00:07:44,280 --> 00:07:47,920 Speaker 1: quote that I read in your article. I believe it 142 00:07:47,960 --> 00:07:50,880 Speaker 1: was an anonymous quote from a former Boeing executive and 143 00:07:50,920 --> 00:07:53,560 Speaker 1: you wrote or he said that it's a top secret 144 00:07:53,560 --> 00:07:57,000 Speaker 1: military contractor remember there are spies everywhere. And more importantly, 145 00:07:57,040 --> 00:07:59,480 Speaker 1: there is a principle in American law that there's no 146 00:07:59,520 --> 00:08:01,800 Speaker 1: such thing as an accidental death during the commission of 147 00:08:01,840 --> 00:08:04,480 Speaker 1: a felony. I was wondering if you could expand on that, 148 00:08:04,480 --> 00:08:05,480 Speaker 1: what did he mean by this? 149 00:08:06,560 --> 00:08:10,840 Speaker 4: So here's the thing. And this is the broader context here. 150 00:08:11,160 --> 00:08:15,840 Speaker 4: Boeing has been extraordinary lucky up till now. You know, 151 00:08:16,160 --> 00:08:19,960 Speaker 4: three hundred and three hundred and forty six people passenger 152 00:08:20,000 --> 00:08:23,120 Speaker 4: and crew died on seven thirty seven Max crashes in 153 00:08:23,120 --> 00:08:25,840 Speaker 4: twenty eighteen and twenty nineteen, four and a half months 154 00:08:25,840 --> 00:08:31,559 Speaker 4: apart unless identical crashes, and after the first one hundred 155 00:08:31,560 --> 00:08:34,800 Speaker 4: and eighty nine died on a liner accident, they knew 156 00:08:35,280 --> 00:08:38,680 Speaker 4: that there was something wrong. Everybody in Boeing knew that 157 00:08:38,880 --> 00:08:42,600 Speaker 4: this was going to happen again. It was just a 158 00:08:42,640 --> 00:08:46,960 Speaker 4: matter of when not if they did not. They should 159 00:08:47,000 --> 00:08:50,680 Speaker 4: have obviously grounded the plane after the first one hundred 160 00:08:50,720 --> 00:08:55,120 Speaker 4: and eighty nine passengers and crew died, That is obvious. 161 00:08:55,240 --> 00:08:57,480 Speaker 4: They did not do that. Instead of doing that, they 162 00:08:57,520 --> 00:09:03,360 Speaker 4: authorized twenty billion dollars in additional share buybacks and introduced 163 00:09:03,480 --> 00:09:08,520 Speaker 4: a program to eliminate quality control. Essentially, so when they 164 00:09:08,520 --> 00:09:11,520 Speaker 4: talk about the commission of a felony, they're talking about 165 00:09:11,520 --> 00:09:14,360 Speaker 4: that the murder of those one hundred and fifty seven 166 00:09:14,400 --> 00:09:18,760 Speaker 4: additional passengers. And this is a felony that required a 167 00:09:18,800 --> 00:09:23,520 Speaker 4: lot of, you know, a pretty vast conspiracy to actually 168 00:09:23,760 --> 00:09:27,800 Speaker 4: get away with because Boeing was under criminal investigation after 169 00:09:27,880 --> 00:09:31,679 Speaker 4: the first mcast crash in twenty eighteen. The criminal investigation 170 00:09:31,800 --> 00:09:35,120 Speaker 4: widn't understandably, after the second crash, it WI didn't to 171 00:09:35,280 --> 00:09:38,720 Speaker 4: include the seven eight seven factory. It WI didn't to 172 00:09:38,800 --> 00:09:43,600 Speaker 4: include an investigation that involved in you know, extensive interviews 173 00:09:43,600 --> 00:09:50,160 Speaker 4: of John Barnett, and then didn't narrow. Then sometime in 174 00:09:50,240 --> 00:09:55,000 Speaker 4: twenty twenty, the prosecutors that were handling the case against 175 00:09:55,000 --> 00:09:59,600 Speaker 4: Boeing got changed and the case got transferred to Texas 176 00:09:59,640 --> 00:10:04,000 Speaker 4: from New York Fraud Department, and Boeing ended up on 177 00:10:04,200 --> 00:10:10,520 Speaker 4: January sixth, twenty twenty one. Understandably, this knit never made 178 00:10:10,559 --> 00:10:13,160 Speaker 4: any headlines. But on January sixth, twenty twenty one, Boeing 179 00:10:13,200 --> 00:10:17,040 Speaker 4: stein what is in as a deferred prosecution agreement, and 180 00:10:17,280 --> 00:10:22,160 Speaker 4: the Justice Department essentially agreed to not prosecute Boeing because, 181 00:10:22,600 --> 00:10:25,840 Speaker 4: as it said, you know, the problems that they found 182 00:10:25,920 --> 00:10:28,640 Speaker 4: in the company were not systemic and they involved very 183 00:10:28,640 --> 00:10:32,360 Speaker 4: few people. So while Boeing got away with it, you know, 184 00:10:32,400 --> 00:10:34,400 Speaker 4: with this this real I mean, you can't even call 185 00:10:34,440 --> 00:10:36,680 Speaker 4: it a slap on the wrist. It's it's like a 186 00:10:36,760 --> 00:10:37,600 Speaker 4: risk massage. 187 00:10:38,040 --> 00:10:41,000 Speaker 1: Yeah, I think you compared that, Yeah, I think you 188 00:10:41,120 --> 00:10:43,720 Speaker 1: compared that to in one of your articles as like 189 00:10:43,760 --> 00:10:46,080 Speaker 1: similar to the sweetheart deal that Jeffrey Epstein got in 190 00:10:46,080 --> 00:10:48,959 Speaker 1: two thousand and seven. So I'm wondering, how how is 191 00:10:49,000 --> 00:10:51,280 Speaker 1: Boeing able to secure such a deal from the DOJ. 192 00:10:51,600 --> 00:10:54,240 Speaker 4: Well, it's it's not simply similar. It involves a lot 193 00:10:54,240 --> 00:10:57,559 Speaker 4: of the same people. It involves, you know, very senior 194 00:10:57,600 --> 00:11:02,160 Speaker 4: partners at the mega law firm kirk Ellis. Crucially, Boeing's 195 00:11:02,400 --> 00:11:06,439 Speaker 4: chief criminal defense attorney in this case was the Deputy 196 00:11:06,920 --> 00:11:10,679 Speaker 4: Attorney General under I believe it was mckayzy during the 197 00:11:10,679 --> 00:11:14,800 Speaker 4: Bish administration who is the highest known official to sign 198 00:11:14,960 --> 00:11:19,440 Speaker 4: off on Jeffrey Epstein's two thousand and seven non prosecution agreement. 199 00:11:19,960 --> 00:11:23,719 Speaker 4: Both of those agreements were very similar in that they 200 00:11:23,920 --> 00:11:28,520 Speaker 4: required lies, right, you know that the government actually lies, 201 00:11:28,520 --> 00:11:31,560 Speaker 4: and it's the third prosecution agreement on Boeing saying that 202 00:11:31,600 --> 00:11:35,319 Speaker 4: you know, there were no systemic problems everything that we found. 203 00:11:35,400 --> 00:11:38,120 Speaker 4: You know, this is this is a solidly ethical company. 204 00:11:38,360 --> 00:11:42,359 Speaker 4: Nothing happened. This is just provably false. And similarly with Epstein, 205 00:11:42,640 --> 00:11:45,840 Speaker 4: you know, the I forget what the exact phrasing was, 206 00:11:46,200 --> 00:11:51,240 Speaker 4: but that agreement actually indemnified all of his conspirators, even 207 00:11:51,280 --> 00:11:54,120 Speaker 4: those who were not even named. Both agreements drafted by 208 00:11:54,160 --> 00:11:57,679 Speaker 4: senior partners at Kirkland and Ellis and put together by 209 00:11:57,720 --> 00:12:00,200 Speaker 4: a lot of there's a lot of cross pollination in 210 00:12:00,240 --> 00:12:04,839 Speaker 4: those two agreements. In fact, the Merrick Garlands DOJ made 211 00:12:04,880 --> 00:12:09,560 Speaker 4: the case that they aren't actually victims. The four people 212 00:12:09,600 --> 00:12:14,160 Speaker 4: who died on Ethiopia three oh one, they were not 213 00:12:14,440 --> 00:12:17,400 Speaker 4: actually the victims of the crime. The only victim of 214 00:12:17,600 --> 00:12:19,720 Speaker 4: Boeing's crime is the FAA. 215 00:12:20,240 --> 00:12:22,720 Speaker 1: Yeah. Yeah, it's a lot of disturbing details coming out 216 00:12:22,800 --> 00:12:25,400 Speaker 1: right now. But before we wrap, I just I wanted 217 00:12:25,400 --> 00:12:27,560 Speaker 1: to ask or I wanted to talk about Boeing's future 218 00:12:27,559 --> 00:12:30,000 Speaker 1: for a minute, because I think it's important that maybe 219 00:12:30,040 --> 00:12:33,640 Speaker 1: it's in America's best interest to have a competent commercial 220 00:12:33,679 --> 00:12:37,199 Speaker 1: airline manufacturer. And we did see some leadership reshuffle after 221 00:12:37,240 --> 00:12:39,520 Speaker 1: the Max crashes you were talking about in twenty eighteen 222 00:12:39,559 --> 00:12:44,000 Speaker 1: twenty nineteen, and now we're also seeing another leadership reshuffle 223 00:12:44,040 --> 00:12:47,160 Speaker 1: with Dave Calhoun. He's stepping down along with some other 224 00:12:47,200 --> 00:12:49,880 Speaker 1: executives at the end of the year with some pretty 225 00:12:50,200 --> 00:12:54,160 Speaker 1: robust exit packages. And then it all depends on it's 226 00:12:54,160 --> 00:12:56,560 Speaker 1: like tied to the company's stock price in the coming years. 227 00:12:56,600 --> 00:12:59,760 Speaker 1: So my question is can Boeing actually course correct you 228 00:13:00,080 --> 00:13:04,040 Speaker 1: if stock performance is still the number one incentive that's 229 00:13:04,160 --> 00:13:05,560 Speaker 1: driving executive compensation. 230 00:13:06,200 --> 00:13:10,200 Speaker 4: I I don't really understand the stock I you know, 231 00:13:10,320 --> 00:13:13,240 Speaker 4: I would say no, I would say that gowing that 232 00:13:13,840 --> 00:13:17,760 Speaker 4: the stock price, there needs to be some sort of 233 00:13:18,240 --> 00:13:21,319 Speaker 4: extreme management overhaul. When they did a point, I mean, 234 00:13:21,720 --> 00:13:26,160 Speaker 4: it was very obvious. Calhoun was like it was like 235 00:13:26,200 --> 00:13:30,640 Speaker 4: when Tim Geitner was nominated for Treasury Secretary. Pretty much 236 00:13:30,640 --> 00:13:34,280 Speaker 4: everyone who knew who Tim Geitner was was like, oh God, 237 00:13:35,600 --> 00:13:38,000 Speaker 4: this is nothing's gonna happen. No one's gonna get in 238 00:13:38,080 --> 00:13:40,080 Speaker 4: trouble city for everybody is just going to get away 239 00:13:40,120 --> 00:13:43,400 Speaker 4: with it. And that's what happened. And David Calhoun is 240 00:13:43,400 --> 00:13:46,360 Speaker 4: a similar figure. He was the lead, you know, director 241 00:13:46,559 --> 00:13:49,240 Speaker 4: of the board. He was the biggest. I mean he's 242 00:13:49,280 --> 00:13:51,880 Speaker 4: a guy who worked at ge and Blackstone. He doesn't 243 00:13:51,920 --> 00:13:55,040 Speaker 4: actually show up to the office ever. He changed where 244 00:13:55,080 --> 00:13:58,160 Speaker 4: the office was. He you know, uses the perch to 245 00:13:58,240 --> 00:14:01,120 Speaker 4: fly his plane around. I mean it's completely worthless piece 246 00:14:01,120 --> 00:14:03,640 Speaker 4: of shit. You know, I say that without knowing it. 247 00:14:03,679 --> 00:14:06,760 Speaker 4: But the latest trinity. Thing to say about Boeing is 248 00:14:06,760 --> 00:14:09,960 Speaker 4: that what they really need is Larry Culp, the current 249 00:14:10,040 --> 00:14:13,680 Speaker 4: CEO of GE. A sort of an irony because Boeing's 250 00:14:14,880 --> 00:14:17,440 Speaker 4: three out of their last four CEOs have come from 251 00:14:17,520 --> 00:14:21,080 Speaker 4: GE has been protegees of Jack Welch, and they've absolutely 252 00:14:21,440 --> 00:14:24,080 Speaker 4: fucked the you know, Boeing just the same way that 253 00:14:24,160 --> 00:14:28,560 Speaker 4: Jack Welch ultimately fucked GE by completely financializing it and 254 00:14:29,000 --> 00:14:32,480 Speaker 4: refusing to grapple with the fact that building something that 255 00:14:32,520 --> 00:14:37,280 Speaker 4: involves four million parts is not the same thing as 256 00:14:37,360 --> 00:14:41,440 Speaker 4: you know, like manufacturing light bulbs or post it notes, 257 00:14:41,480 --> 00:14:43,800 Speaker 4: which is what you know Narnie used to do. So 258 00:14:44,640 --> 00:14:47,800 Speaker 4: I think that there is a real effort within the 259 00:14:47,840 --> 00:14:51,240 Speaker 4: sort of you know, dog bos set to say hey, no, 260 00:14:51,480 --> 00:14:53,760 Speaker 4: you know that actually the market can take care of this, 261 00:14:54,320 --> 00:14:57,560 Speaker 4: and if they just hire the right guy, the right MBA, 262 00:14:57,840 --> 00:15:00,760 Speaker 4: this guy Larry Culp, who maybe isn't as much a sociopath, 263 00:15:00,960 --> 00:15:04,360 Speaker 4: who believe in building companies and putting them on the 264 00:15:05,080 --> 00:15:08,480 Speaker 4: road to growth and who believe in quality. Because it 265 00:15:08,840 --> 00:15:12,160 Speaker 4: has been such a you know, total it's very clear 266 00:15:12,320 --> 00:15:15,680 Speaker 4: to like everyone in aviation now that Boeing actually can't 267 00:15:15,720 --> 00:15:19,080 Speaker 4: build a plane that they have lost the ability to 268 00:15:19,360 --> 00:15:23,800 Speaker 4: competently build an airplane, and that is like an existential 269 00:15:23,840 --> 00:15:27,600 Speaker 4: problem and it's not reflected in the stock price. I 270 00:15:27,600 --> 00:15:30,920 Speaker 4: think a lot of that stuff is, you know, the 271 00:15:31,000 --> 00:15:35,400 Speaker 4: product of algorithms and and you know this sort of 272 00:15:35,440 --> 00:15:38,400 Speaker 4: conspiracy of algorithms and fraud. Yeah. 273 00:15:38,440 --> 00:15:41,280 Speaker 1: As a as an MBA myself, I can confirm a 274 00:15:41,280 --> 00:15:46,480 Speaker 1: lot of sociopathic behavior that I see and they don't know. 275 00:15:46,600 --> 00:15:49,640 Speaker 1: They don't think that's it's that way, but it is 276 00:15:49,920 --> 00:15:54,600 Speaker 1: from outside looking in, it definitely is. Anyways, this is 277 00:15:54,600 --> 00:15:57,040 Speaker 1: obviously developing stories, so I hope to have you back 278 00:15:57,080 --> 00:16:00,200 Speaker 1: on really quick anywhere you want to point the audience too, 279 00:16:00,240 --> 00:16:02,440 Speaker 1: if they want to find or if you want them 280 00:16:02,440 --> 00:16:03,440 Speaker 1: to find more of your work. 281 00:16:03,720 --> 00:16:07,040 Speaker 4: If you look at prospects dot org again and search 282 00:16:07,120 --> 00:16:09,240 Speaker 4: for Boeing, I think you'll find a lot of my stories. 283 00:16:09,320 --> 00:16:13,600 Speaker 4: I also write a lot about healthcare and you know. 284 00:16:13,640 --> 00:16:14,480 Speaker 5: All kinds of things. 285 00:16:14,480 --> 00:16:20,119 Speaker 4: So anything that involves the intersection of organized crime and finance, 286 00:16:21,840 --> 00:16:23,520 Speaker 4: I like to sniffer out on those cases. 287 00:16:23,920 --> 00:16:27,120 Speaker 1: Awesome, Well, everybody go follow mo. Thank you so much 288 00:16:27,200 --> 00:16:28,520 Speaker 1: for coming on the show today. 289 00:16:29,480 --> 00:16:30,960 Speaker 5: Awesome, Thank you so much for having me. 290 00:16:31,600 --> 00:16:33,560 Speaker 1: That is it for me this week. If you're looking 291 00:16:33,560 --> 00:16:37,480 Speaker 1: for more documentary style deep dives on various topics related 292 00:16:37,520 --> 00:16:40,360 Speaker 1: to business, politics and society, you can follow me on 293 00:16:40,400 --> 00:16:43,120 Speaker 1: my YouTube channel fifty one forty nine with James Lee. 294 00:16:43,320 --> 00:16:46,000 Speaker 1: The link will be in the description below. As always, 295 00:16:46,120 --> 00:16:48,320 Speaker 1: keep on tuning into breaking points and thank you for 296 00:16:48,360 --> 00:16:57,680 Speaker 1: your time today. 297 00:16:58,760 --> 00:17:02,680 Speaker 6: Hi, I'm author of monopoly focused newsletter Big and an 298 00:17:02,680 --> 00:17:05,800 Speaker 6: anti trust policy analyst. In this Big breakdown, I'm going 299 00:17:05,880 --> 00:17:09,040 Speaker 6: to ask the question, is Live Nation Ticketmaster, the company 300 00:17:09,040 --> 00:17:12,439 Speaker 6: that controls most of the live entertainment industry, in fact 301 00:17:12,960 --> 00:17:16,560 Speaker 6: a criminal conspiracy. You might think that's a bold question, 302 00:17:16,960 --> 00:17:20,320 Speaker 6: and it is, But some explosive new documents just came 303 00:17:20,359 --> 00:17:23,840 Speaker 6: to light that suggests that, well, it's a question worth asking. 304 00:17:24,280 --> 00:17:26,199 Speaker 3: Let's dive in. 305 00:17:26,200 --> 00:17:29,000 Speaker 6: In twenty ten, the live entertainment industry was in shock 306 00:17:29,160 --> 00:17:33,119 Speaker 6: when Live Nation, the nation's leading concert promoter, bought Ticketmaster, 307 00:17:33,359 --> 00:17:36,680 Speaker 6: which basically had a monopolist a monopoly over ticketing software 308 00:17:36,720 --> 00:17:39,520 Speaker 6: and was a major player in artist management. It was 309 00:17:39,520 --> 00:17:42,960 Speaker 6: a very controversial deal, and Ticketmaster had already bought out 310 00:17:43,080 --> 00:17:45,680 Speaker 6: most of its other competitors in ticketing software and really 311 00:17:45,720 --> 00:17:48,280 Speaker 6: upset Pearl Jam in the nineteen nineties was well known 312 00:17:49,119 --> 00:17:52,960 Speaker 6: market power problem, but the government's Anti Trust Division under 313 00:17:52,960 --> 00:17:56,119 Speaker 6: Obama allowed the deal to go forward anyway. In fact, 314 00:17:56,440 --> 00:17:58,600 Speaker 6: seems like they were sort of proud of doing that. 315 00:17:59,119 --> 00:18:01,199 Speaker 6: Let's take a look at this public picture that was 316 00:18:01,240 --> 00:18:04,000 Speaker 6: put on the DJ's website, So that publicly released photo 317 00:18:04,080 --> 00:18:06,600 Speaker 6: shows the head of the Anti Trust Division, Christine Varney, 318 00:18:06,600 --> 00:18:10,320 Speaker 6: her number two William Cavanaugh, and their advisor Gene Kimmelman 319 00:18:10,640 --> 00:18:13,560 Speaker 6: announcing that they were allowing that merger and talking to 320 00:18:13,600 --> 00:18:14,359 Speaker 6: reporters about it. 321 00:18:14,480 --> 00:18:14,640 Speaker 1: Now. 322 00:18:14,720 --> 00:18:17,080 Speaker 6: The Biden Anti Trust Division is very different than the 323 00:18:17,080 --> 00:18:20,600 Speaker 6: Obama Anti Trust Division, and they have been investigating Live 324 00:18:20,680 --> 00:18:24,720 Speaker 6: Nation Ticketmaster, the firm that the Obama administration allowed to form. 325 00:18:24,840 --> 00:18:28,239 Speaker 6: They've been investigating it for years. And when firmsby are 326 00:18:28,240 --> 00:18:31,840 Speaker 6: being investigated, they tend to lawyer up, and so that's 327 00:18:31,880 --> 00:18:34,440 Speaker 6: what Live Nation did, hiring an old anti trust lawyer 328 00:18:34,560 --> 00:18:38,840 Speaker 6: named Dan Wall to represent them against potential monopolization charges 329 00:18:38,880 --> 00:18:43,240 Speaker 6: that could be coming from the Anti Trust Division. Wall 330 00:18:43,320 --> 00:18:46,800 Speaker 6: defended Live Nation publicly as part of a PR campaign 331 00:18:47,080 --> 00:18:51,159 Speaker 6: earlier last month. In a blog post, he wrote that 332 00:18:51,320 --> 00:18:54,520 Speaker 6: you might think that Live Nation charges a lot for tickets, 333 00:18:55,000 --> 00:18:58,280 Speaker 6: but that's really just supply and demand for popular artists. 334 00:18:58,320 --> 00:19:02,760 Speaker 6: The corporation itself charges low prices, not high ones. He 335 00:19:02,840 --> 00:19:06,520 Speaker 6: even put up a comparison of commissions charged by online 336 00:19:06,560 --> 00:19:11,000 Speaker 6: marketplaces from Twitch to Airbnb to Uber to show how 337 00:19:11,000 --> 00:19:12,480 Speaker 6: little Live Nation charges. 338 00:19:12,640 --> 00:19:13,440 Speaker 3: Let's take a look. 339 00:19:13,560 --> 00:19:17,360 Speaker 6: You see Live Nation charges less than Twitch, stub Hub, Uber, Airbnb, etc. 340 00:19:17,560 --> 00:19:17,720 Speaker 3: Etc. 341 00:19:18,119 --> 00:19:21,960 Speaker 6: Concert promotion, Wall wrote, is not a highly profitable business, 342 00:19:22,080 --> 00:19:24,840 Speaker 6: even for a Live Nation end quote. So look at 343 00:19:24,840 --> 00:19:28,159 Speaker 6: that commission. It's a measly seven percent for Live Nation ticketmaster. 344 00:19:28,320 --> 00:19:31,439 Speaker 6: No sure, Live Nation charges consumers a lot of money 345 00:19:31,480 --> 00:19:34,320 Speaker 6: and doesn't pay much to artists. And this is Wall's argument, 346 00:19:34,400 --> 00:19:36,520 Speaker 6: But they don't, he wrote, set the ticket price and 347 00:19:36,600 --> 00:19:38,560 Speaker 6: even worse for Live Nation shareholders. 348 00:19:38,600 --> 00:19:41,240 Speaker 3: At least, it's just not a very good business. 349 00:19:41,520 --> 00:19:45,600 Speaker 6: Wall concluded, quote The narrative that ticketmaster fees are responsible 350 00:19:45,640 --> 00:19:50,200 Speaker 6: for high ticket prices makes no sense. According to Wall, 351 00:19:50,240 --> 00:19:53,560 Speaker 6: the middleman giant affects at most two percent of the 352 00:19:53,600 --> 00:19:58,239 Speaker 6: price of a ticket for its trouble. Still, all of 353 00:19:58,280 --> 00:20:01,600 Speaker 6: that that argument from Dan Wall from Live Nation ticketmaster 354 00:20:01,800 --> 00:20:04,439 Speaker 6: feels weird. It sounds like it's not true, considering that 355 00:20:04,480 --> 00:20:07,800 Speaker 6: Live Nation CEO Michael Rapino made one hundred and thirty 356 00:20:07,880 --> 00:20:11,160 Speaker 6: nine million dollars in twenty twenty two. That's a lot 357 00:20:11,200 --> 00:20:14,360 Speaker 6: of money for someone in just such a terrible business. 358 00:20:14,480 --> 00:20:16,840 Speaker 3: Well, the reason it sounds. 359 00:20:16,520 --> 00:20:19,879 Speaker 6: Like it's not true is because, well it's not true, 360 00:20:20,320 --> 00:20:22,880 Speaker 6: or at least it's not true, according to new documents 361 00:20:22,920 --> 00:20:27,000 Speaker 6: released by Congressman Bill Pascrell from litigation in twenty nineteen, 362 00:20:27,400 --> 00:20:31,359 Speaker 6: based on Live Nation's own financial data. These documents are 363 00:20:31,400 --> 00:20:34,479 Speaker 6: from a court case involving a concert at the New 364 00:20:34,560 --> 00:20:37,360 Speaker 6: Jersey State Fair in twenty eleven. Now, I just want 365 00:20:37,400 --> 00:20:39,400 Speaker 6: to tell you where these documents came from, because it's 366 00:20:39,440 --> 00:20:42,359 Speaker 6: kind of funny. We often think about Monopolis as sort 367 00:20:42,359 --> 00:20:45,959 Speaker 6: of dominant and powerful and all knowing, and that litigation 368 00:20:46,000 --> 00:20:49,240 Speaker 6: has been going on for thirteen years. At a certain point, 369 00:20:49,240 --> 00:20:51,800 Speaker 6: the plaintiff's hired an expert. His name is Richard Barnett. 370 00:20:51,840 --> 00:20:54,040 Speaker 6: He's one of the top scholars in the business, and 371 00:20:54,320 --> 00:20:57,040 Speaker 6: he looked at Live Nation's confidential records and he wrote 372 00:20:57,359 --> 00:21:00,600 Speaker 6: about how the corporation actually works in the blinktiffs then 373 00:21:00,600 --> 00:21:04,480 Speaker 6: submitted that report to the court, and the judge unfortunately 374 00:21:04,600 --> 00:21:07,320 Speaker 6: ordered it sealed so that no one could read it, saying, oh, 375 00:21:07,440 --> 00:21:10,439 Speaker 6: it's got confidential information or whatnot, and that should have 376 00:21:10,480 --> 00:21:13,560 Speaker 6: been that except and here's where the stupidity of a 377 00:21:13,600 --> 00:21:17,000 Speaker 6: monopolist comes in. Live Nation or someone's on Live Nation's 378 00:21:17,080 --> 00:21:19,399 Speaker 6: legal team or Dan Wall's team or someone like that, 379 00:21:19,440 --> 00:21:22,960 Speaker 6: they screwed up and they accidentally uploaded the report to 380 00:21:23,080 --> 00:21:27,280 Speaker 6: a public court site pacer where Pascrell got his hands on. 381 00:21:27,359 --> 00:21:29,880 Speaker 3: He just downloaded. Then he sent it out at. 382 00:21:29,760 --> 00:21:32,160 Speaker 6: A press release and that's how we have the documents. Okay, 383 00:21:32,240 --> 00:21:35,320 Speaker 6: so what's the case all about? That shows how Live 384 00:21:35,400 --> 00:21:39,199 Speaker 6: Nation really works. Well, it starts with a concert. In 385 00:21:39,280 --> 00:21:41,680 Speaker 6: twenty eleven, the head of the New Jersey State Fairs, 386 00:21:41,800 --> 00:21:45,360 Speaker 6: names Al Dorso, hired a company called Juice Entertainment run 387 00:21:45,400 --> 00:21:48,359 Speaker 6: by two experienced concert promoters to put on a concert. 388 00:21:48,920 --> 00:21:51,280 Speaker 6: Now Live Nation. They told Live Nation, do you want 389 00:21:51,280 --> 00:21:52,840 Speaker 6: to do this? Live Nation wasn't interested. But as soon 390 00:21:52,840 --> 00:21:55,159 Speaker 6: as I got win that Jeuwice Entertainment was doing it 391 00:21:55,240 --> 00:21:58,200 Speaker 6: and started to book acts, Live Nation demanded to co 392 00:21:58,280 --> 00:22:02,040 Speaker 6: produce the show and end Doorso, who was running the 393 00:22:02,840 --> 00:22:05,399 Speaker 6: state Fair, was just like, hey, you guys, work it out, 394 00:22:05,440 --> 00:22:06,439 Speaker 6: and he later put it. 395 00:22:07,160 --> 00:22:08,720 Speaker 3: You know, Live Nation. 396 00:22:08,880 --> 00:22:11,320 Speaker 6: They were the eight hundred pound gorilla I said, go 397 00:22:11,359 --> 00:22:13,080 Speaker 6: see if you can work out a deal. 398 00:22:13,600 --> 00:22:15,040 Speaker 3: That's what he was saying to Juice. 399 00:22:15,240 --> 00:22:18,320 Speaker 6: Now Juice and Live Nation couldn't work out a deal, 400 00:22:18,400 --> 00:22:22,320 Speaker 6: and then Live Nation managed to get Juice fired. How well, 401 00:22:22,560 --> 00:22:25,720 Speaker 6: the smaller firm sued Live Nation, claiming the giant coerce 402 00:22:25,800 --> 00:22:28,119 Speaker 6: performers into not signing with Jews to appear at the 403 00:22:28,160 --> 00:22:30,520 Speaker 6: fair and threaten to withhold its ticketing services to the 404 00:22:30,560 --> 00:22:33,560 Speaker 6: venue the state owned Metalands Sports Complex if it were 405 00:22:33,600 --> 00:22:35,040 Speaker 6: not allowed to be a partner. 406 00:22:35,080 --> 00:22:36,080 Speaker 3: That's from public reporting. 407 00:22:36,200 --> 00:22:38,760 Speaker 6: In other words, Live Nation used dominance in other lines 408 00:22:38,800 --> 00:22:41,679 Speaker 6: of business artists, promotion, and ticketing software to thwart arrival, 409 00:22:41,720 --> 00:22:45,200 Speaker 6: which exactly why the Obama staffers like Gene Kimmelman should 410 00:22:45,200 --> 00:22:47,280 Speaker 6: have blocked the merger in the first place. But this 411 00:22:47,320 --> 00:22:51,280 Speaker 6: situation leaves a question why didn't Jews consent to let 412 00:22:51,320 --> 00:22:53,760 Speaker 6: Live Nation co produce the event? I mean, half the 413 00:22:53,800 --> 00:22:56,600 Speaker 6: profit is still better than no profit, right. Well, the 414 00:22:56,680 --> 00:22:59,720 Speaker 6: reason is, according to Jews, that Live Nation offered a 415 00:22:59,720 --> 00:23:02,600 Speaker 6: deal that would have saddled the firman and artists with 416 00:23:02,640 --> 00:23:05,760 Speaker 6: the costs, while Live Nation itself took the profits. In 417 00:23:05,760 --> 00:23:08,760 Speaker 6: this purported arrangement, Live Nation and juice would have split 418 00:23:08,840 --> 00:23:11,119 Speaker 6: the cost of putting on the event, like renting the venue, 419 00:23:11,119 --> 00:23:13,560 Speaker 6: the sound stage, and so forth. They would have also 420 00:23:13,600 --> 00:23:16,720 Speaker 6: shared profits from ticket sales with artists and with each other. 421 00:23:16,760 --> 00:23:19,360 Speaker 6: And that sounds good so far. The problem is what 422 00:23:19,440 --> 00:23:23,360 Speaker 6: came next in the accounting. Here's the expert report. Live 423 00:23:23,480 --> 00:23:26,720 Speaker 6: Nation negotiated third party expenses like rental costs with the 424 00:23:26,760 --> 00:23:30,199 Speaker 6: venues directly with vendors in exchange for exclusive financial gains 425 00:23:30,520 --> 00:23:33,439 Speaker 6: not disclosed to their artists or their agents, managers or 426 00:23:33,480 --> 00:23:37,439 Speaker 6: independent co promoters in the form of rebates. So, in 427 00:23:37,480 --> 00:23:41,720 Speaker 6: other words, Live Nation had secret side deals with vendors 428 00:23:42,160 --> 00:23:46,200 Speaker 6: to inflate costs by overpaying those vendors and venues, which 429 00:23:46,280 --> 00:23:48,440 Speaker 6: meant that any profit from the event would evaporate. 430 00:23:48,440 --> 00:23:49,560 Speaker 3: It would look like a loss. 431 00:23:49,960 --> 00:23:53,400 Speaker 6: Co promoters and artists who share in profits would lose out, 432 00:23:53,720 --> 00:23:56,600 Speaker 6: but and would be told that the show just wasn't profitable. 433 00:23:57,200 --> 00:23:59,560 Speaker 6: But the thing is those vendors those venues who had 434 00:23:59,560 --> 00:24:02,720 Speaker 6: gotten extra money by being paid inflated costs, would in 435 00:24:02,760 --> 00:24:06,280 Speaker 6: turn remit that money back to Live Nation in the 436 00:24:06,280 --> 00:24:09,480 Speaker 6: form of secret rebates. In other words, JEUS would pay 437 00:24:09,520 --> 00:24:12,240 Speaker 6: the inflated costs that would get furtively funneled back to 438 00:24:12,320 --> 00:24:15,520 Speaker 6: Live Nation along with all the profits from the show. Now, 439 00:24:15,640 --> 00:24:18,720 Speaker 6: Live Nation didn't disclose any of this revenue diversion with 440 00:24:18,800 --> 00:24:21,520 Speaker 6: the artists to whom it had a legal obligation to 441 00:24:22,200 --> 00:24:24,639 Speaker 6: with whom it had contracts, which is why Jus's lawyer 442 00:24:24,680 --> 00:24:29,400 Speaker 6: said that the corporation quote essentially defrauds everyone involved. Now, 443 00:24:29,400 --> 00:24:33,200 Speaker 6: these kinds of secret kickbacks ensured what Jesus's lawyer called 444 00:24:33,240 --> 00:24:37,000 Speaker 6: the quote financial ruin end quote of co promoters. Now, 445 00:24:37,040 --> 00:24:39,399 Speaker 6: of course Live Nation claimed it was losing money or 446 00:24:39,440 --> 00:24:42,480 Speaker 6: not making very much money on any particular event, and 447 00:24:42,560 --> 00:24:45,600 Speaker 6: it wasn't. But that's because the profit was coming in 448 00:24:45,640 --> 00:24:49,399 Speaker 6: through rebates, which, according to this expert, Barnett went onto 449 00:24:49,400 --> 00:24:53,080 Speaker 6: a line in the accounting statement called quote contribution margin 450 00:24:53,640 --> 00:24:58,400 Speaker 6: end quote. So Jus's experts found so interestingly, Barnett even 451 00:24:58,400 --> 00:25:01,520 Speaker 6: found that Live Nation kept two sets of books, so 452 00:25:01,720 --> 00:25:04,280 Speaker 6: in one case they posted an entry of ninety thousand 453 00:25:04,359 --> 00:25:07,680 Speaker 6: dollars rent for settlement, but only seventy five thousand dollars 454 00:25:07,720 --> 00:25:09,080 Speaker 6: internally for the same item. 455 00:25:09,280 --> 00:25:11,600 Speaker 3: They routinely put in profit and loss. 456 00:25:11,400 --> 00:25:16,679 Speaker 6: Statements large losses while admitting that events actually made money. 457 00:25:16,920 --> 00:25:19,879 Speaker 6: So that's just one event, all right, as one a 458 00:25:19,880 --> 00:25:22,520 Speaker 6: state fair in New Jersey. How much was this contribution 459 00:25:22,760 --> 00:25:26,399 Speaker 6: margin across all of Live Nation. I don't precisely know, 460 00:25:26,520 --> 00:25:29,840 Speaker 6: and you can throw other things into that accounting line, 461 00:25:29,960 --> 00:25:33,359 Speaker 6: but there are hints of amounts. So in the third 462 00:25:33,400 --> 00:25:35,520 Speaker 6: quarter of twenty twenty one, which is the last time 463 00:25:35,560 --> 00:25:37,840 Speaker 6: they used the term contribution margin that I can find, 464 00:25:38,080 --> 00:25:42,640 Speaker 6: it was seven hundred and forty seven million dollars, probably 465 00:25:42,640 --> 00:25:46,240 Speaker 6: in the billions today. And that's where CEO Michael Rappino's 466 00:25:46,359 --> 00:25:49,679 Speaker 6: nine figure payday is probably coming from. Live Nation is 467 00:25:49,720 --> 00:25:53,400 Speaker 6: generating a great deal of revenue which somehow shows low margins. 468 00:25:53,440 --> 00:25:56,240 Speaker 6: Lots of events where they're not making money, somehow the cash. 469 00:25:56,040 --> 00:25:56,520 Speaker 3: Is coming in. 470 00:25:56,880 --> 00:25:59,680 Speaker 6: Now, that's just a price hike, right, It's a way 471 00:25:59,720 --> 00:26:03,879 Speaker 6: of distracting more revenue, but it's also hidden. And hiding 472 00:26:03,920 --> 00:26:08,600 Speaker 6: the price hikes is important because monopolization, which is about 473 00:26:08,600 --> 00:26:12,600 Speaker 6: controlling a market and then extracting by your pricing power, 474 00:26:12,840 --> 00:26:15,439 Speaker 6: is harder to prove if you show low margins, if 475 00:26:15,480 --> 00:26:18,480 Speaker 6: you show that you're not charging very much. Their anti 476 00:26:18,520 --> 00:26:21,280 Speaker 6: trust lawyer Dan Wall can just write, poor little Live Nation, 477 00:26:21,600 --> 00:26:24,320 Speaker 6: our business is terrible. Yeah, and we all know that 478 00:26:24,400 --> 00:26:27,600 Speaker 6: you build by the hour, Dan on your lovely silk sheets. 479 00:26:28,800 --> 00:26:31,720 Speaker 6: Now let's take a step back and recognize what we're 480 00:26:31,760 --> 00:26:32,600 Speaker 6: really looking at. 481 00:26:32,960 --> 00:26:37,800 Speaker 3: It's not just an extractive scheme. This is about power. 482 00:26:38,800 --> 00:26:43,800 Speaker 6: Power over our culture, power over an entire industry. Basically, 483 00:26:43,840 --> 00:26:47,520 Speaker 6: Live Nation can present venues or other people in the business, 484 00:26:47,560 --> 00:26:50,080 Speaker 6: anyone in the business pretty much with a choice. If 485 00:26:50,119 --> 00:26:54,000 Speaker 6: you cooperate quietly, you'll get extra hidden revenue, and that 486 00:26:54,080 --> 00:27:00,640 Speaker 6: means cooperating with knowing dishonesty in the business. If not well, 487 00:27:01,200 --> 00:27:03,600 Speaker 6: Live Nation will maybe work with your rival, or may 488 00:27:03,720 --> 00:27:06,600 Speaker 6: just buy into the market to compete with you directly. 489 00:27:06,840 --> 00:27:10,320 Speaker 6: May not let artists come to your shows at any 490 00:27:10,400 --> 00:27:13,480 Speaker 6: point too. I mean, it's not just the blunt instrument. 491 00:27:14,160 --> 00:27:16,640 Speaker 6: At any point, Live Nation can dial up or down 492 00:27:16,680 --> 00:27:21,520 Speaker 6: rebates to reward or punish. And that's increasingly true as 493 00:27:21,560 --> 00:27:24,960 Speaker 6: Live Nation buys more and more corporations in and around 494 00:27:24,960 --> 00:27:28,960 Speaker 6: the live event space, with each one presenting additional options 495 00:27:29,000 --> 00:27:34,720 Speaker 6: for fees and rebates and what is essentially financial engineering. Okay, 496 00:27:34,960 --> 00:27:38,800 Speaker 6: is this report true? I mean, why, like you know, 497 00:27:39,160 --> 00:27:41,360 Speaker 6: Live Nation would say, oh, they got it totally wrong. 498 00:27:41,400 --> 00:27:44,560 Speaker 6: They didn't disprove it because I don't think they can. 499 00:27:44,960 --> 00:27:48,760 Speaker 6: But you know, the question is reasonable. Is the report true? 500 00:27:49,080 --> 00:27:49,640 Speaker 3: We don't know. 501 00:27:50,920 --> 00:27:52,960 Speaker 6: It's the expert is well respected and he looked at 502 00:27:53,040 --> 00:27:58,000 Speaker 6: Live Nation's financial data, and it is easy to believe 503 00:27:58,040 --> 00:28:00,800 Speaker 6: the worst about Live Nation Ticketmaster. They have a really 504 00:28:01,240 --> 00:28:04,600 Speaker 6: bad reputation in the industry and then among consumers. But 505 00:28:04,640 --> 00:28:06,960 Speaker 6: the reason I think it's true, and I'm not sure, 506 00:28:07,000 --> 00:28:09,719 Speaker 6: but the reason I buy it is because this particular 507 00:28:09,760 --> 00:28:14,000 Speaker 6: story is consistent with the behavior of a lot of firms, 508 00:28:14,040 --> 00:28:17,719 Speaker 6: many dominant middleman firms in our economy, from pharmacy benefit 509 00:28:17,800 --> 00:28:21,080 Speaker 6: managers to Amazon, and their relationship with third party sellers, 510 00:28:21,080 --> 00:28:23,639 Speaker 6: how they mediate between third party sellers and consumers, to 511 00:28:23,720 --> 00:28:27,439 Speaker 6: big banks who securitized mortgages in the financial crisis, to 512 00:28:27,520 --> 00:28:30,960 Speaker 6: the advertising technology industry and so on and so forth. 513 00:28:31,000 --> 00:28:33,320 Speaker 6: Now they don't, most of them don't use two sets 514 00:28:33,359 --> 00:28:35,879 Speaker 6: of books. That's kind of like, you know, that's a 515 00:28:35,880 --> 00:28:39,360 Speaker 6: little bit, you know above the I'm not saying everyone's 516 00:28:39,400 --> 00:28:41,760 Speaker 6: a criminal conspiracy. Two sets of books kind of a 517 00:28:41,760 --> 00:28:46,280 Speaker 6: red flag, But in general, it's a business model. Middlemen 518 00:28:46,440 --> 00:28:50,760 Speaker 6: who have market power, they use fees and kickbacks, often 519 00:28:50,840 --> 00:28:55,400 Speaker 6: hidden through a complex maze of subsidiaries or overlapping lines 520 00:28:55,440 --> 00:28:58,440 Speaker 6: of business to extract in ways that are really hard 521 00:28:58,440 --> 00:29:03,000 Speaker 6: to see. It's in a face, it's immoral, and more importantly, 522 00:29:03,200 --> 00:29:07,560 Speaker 6: it creates a climate of fear. The problem is it's 523 00:29:07,600 --> 00:29:12,080 Speaker 6: also just the way that we do business today. Fortunately, 524 00:29:12,120 --> 00:29:14,640 Speaker 6: Live Nation is under investigation and there are a bunch 525 00:29:14,640 --> 00:29:18,040 Speaker 6: of companies that are under investigation. But this lesson if 526 00:29:18,040 --> 00:29:20,840 Speaker 6: this is true, and I think it is. But if 527 00:29:20,880 --> 00:29:23,280 Speaker 6: it's true, this is why Live Nation needs to be 528 00:29:23,320 --> 00:29:26,040 Speaker 6: broken up, and more broadly, why we need to get 529 00:29:26,200 --> 00:29:29,120 Speaker 6: rid of these this way of doing business, these secret 530 00:29:29,200 --> 00:29:33,280 Speaker 6: kickbacks and rebates throughout the whole economy. Thanks for watching 531 00:29:33,320 --> 00:29:36,160 Speaker 6: this big breakdown on the Breaking Points channel. If you'd 532 00:29:36,200 --> 00:29:38,600 Speaker 6: like to know more about how big business and our 533 00:29:38,640 --> 00:29:41,440 Speaker 6: economy really works, go to the link in the description 534 00:29:41,520 --> 00:29:44,560 Speaker 6: below and sign up for my market power focused newsletter. 535 00:29:44,600 --> 00:29:46,640 Speaker 3: Big Thanks and have a good one.