The Wall Street Journal-20080115-Ticketmaster Buys Major Reseller- TicketsNow Acquisition Taps Secondary Market As Competition Grows
Return to: The_Wall_Street_Journal-20080115
Ticketmaster Buys Major Reseller; TicketsNow Acquisition Taps Secondary Market As Competition Grows
In a bid to fend off competition on multiple fronts, IAC/InterActiveCorp's Ticketmaster has agreed to pay about $265 million for TicketsNow Inc., the country's second-largest Web site for reselling tickets to concerts and sports events, the companies said.
The move is designed to let Ticketmaster and its clients tap the explosive growth of the so-called secondary ticket market, which is led by eBay Inc.'s StubHub site. The cash offer also comes after Ticketmaster's largest client, concert promoter Live Nation Inc., said it plans to stop doing business with Ticketmaster at the end of this year and to start a competing ticketing service.
While Ticketmaster sells the vast majority of the tickets resold by online marketplaces such as StubHub, TicketsNow and Razorgator, the ticketing company and its client venues generally see little or no income from those secondary sales.
Ticketmaster President and Chief Executive Sean Moriarty said the company plans to share revenue from its new division with clients that own venues or promote events, although he said details on how the money would be distributed aren't final. He said the move highlights a shift in the way ticket resellers are perceived, both by the public and by concert-industry participants. Where resellers once were viewed as shady scalpers, now, thanks largely to the Internet, they are becoming more respectable.
"Clients who five years ago were not willing to allow a ticket to be resold now want a piece of it," Mr. Moriarty said. The size of the secondary ticket market is hard to judge, but estimates range from $2.5 billion to $5 billion a year in the U.S.
Tim Leiweke, president of Anschutz Co.'s AEG unit, the No. 2 concert promoter in the country in revenue after Live Nation, said he welcomed the deal as a way for venues and performers to participate in a market they previously couldn't access. "We get to go back to the artist and say, 'Now, we can capture that revenue for you, instead of StubHub,'" Mr. Leiweke said. "That's a big deal for us."
A secondary-market effort by Ticketmaster called TicketExchange has gained only modest acceptance among consumers. "It's a good system but not a great brand," Mr. Leiweke said. The TicketsNow acquisition stands to put Ticketmaster into the secondary market in a significant way. TicketsNow is primarily used by professional ticket brokers to sell tickets to customers; the Web site charges buyers 15% of the sale prices, and it charges variable fees to sellers depending on their sales volume and other factors.
The acquisition raises potentially thorny questions for Ticketmaster, which has previously sued brokers who use automated programs called "bots" to scoop up tickets faster than regular fans can, and then resell them for big profits on sites such as TicketsNow. TicketsNow Chief Executive Cheryl Rosner said her site currently doesn't make any effort to keep tabs on how its 800 registered sellers acquire the tickets they sell. Mr. Moriarty said Ticketmaster would attempt to root out people who used technology unfairly, although he declined to give specifics. TicketsNow sold $202 million of tickets in 2006, Ms. Rosner said.
The deal comes as IAC prepares to spin off Ticketmaster and three other major businesses this year, including its slow-growing HSN home- shopping network. IAC Chief Executive Barry Diller announced the breakup in November, acknowledging that the company's efforts to unite its more than 60 Internet brands haven't worked.
Ticketmaster, which has been a public company before, is well- positioned to survive on its own, analysts say, although it is possible IAC could sell the site before the spinoff. Mr. Diller has said he may stay loosely involved in Ticketmaster after the breakup but intends to focus on the businesses that remain at IAC, including flagship search brand Ask.com.
---
Jessica E. Vascellaro contributed to this article.
