Thursday, August 23, 2007

Ticketmaster losing top promoter

Live Nation unlikely to extend contract

Talks between Ticketmaster and Live Nation, the world's largest concert promoter, have broken down, leaving the door open for Live Nation to develop its own ticketing biz.

The loss of Live Nation, which also owns House of Blues, would be a devastating blow to Barry Diller's Ticketmaster, the top event ticketing company in the world. Live Nation events represented 15%-20% of Ticketmaster's U.S. business in 2006, generating about $100 million in service-charge fees for Ticketmaster.

Ticketmaster's contract with Live Nation runs through the end of 2008, its House of Blues deal through 2009.

In an internal memo, Ticketmaster said it is "doubtful" the agreement will be extended. "We believe we've taken every reasonable step possible to facilitate a renewal, but they seem intent on a direction for their business that leaves us no viable way to work together," the memo reads.

Ticketmaster, which makes its money by tacking so-called convenience fees onto the price of a ducat, will now concentrate on its other 9,000 global clients. In the last 12 months, the company has launched MyTicketmaster; acquired Echomusic and Emma Entertainment; invested in iLike; partnered with Apple and the NBA; and extended its business in Spain, Turkey, Germany and China.

But live entertainment is at the heart of Ticketmaster's business. Live Nation owns, operates, books and/or has an equity interest in more than 160 venues, promoting about 26,000 events in 18 countries and selling nearly 60 million tickets last year. Los Angeles properties include the Wiltern, Avalon, and the House of Blues.

Live Nation, which would not comment on the talks, has been creeping into the ticketing biz, first by offering exclusive packages via the company's website and, beginning last week, through the introduction of widget software that allows music fans to more easily search and buy concert tickets.

In its results for the quarter ended June 30, the company posted net income of $9.9 million, or 15¢ per share. Revenue rose to $1.04 billion from $768.2 million in the same quarter last year. Company stock closed down 17¢ at $20.24 on Wednesday.

Rise in revenue was driven by higher ticket prices, an increase in the number of events in smaller venues, increased promotion activities internationally and the impact of the House of Blues acquisition in November. Live Nation is promoting all the dates on the upcoming tours by Van Halen and Maroon 5.

Ticketmaster took a hit in 2005 when Major League baseball purchased and brought ticketing for all its teams under a single entity.

Diller conglom IAC owns Ticketmaster. IAC's stock closed at $27.47 on Tuesday, fairly close to its 52-week low of $25.08.