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By Ethan Smith – The Wall Street Journal – 08/18/08 – On Thursday, Ticketmaster, a division of Barry Diller's IAC/InterActiveCorp, begins trading as a standalone company -- just as the ticketing giant faces one of its biggest challenges.
Ticketmaster's largest client, Live Nation Inc., plans to launch its own ticketing business in January, after their current 10-year contract expires. Live Nation concerts last year represented 14% of Ticketmaster's $1.2 billion in revenue, and Live Nation has made no secret of its desire to compete with Ticketmaster for other clients in the future.
Among Live Nation's productions this year was the reunion tour by the Police, which took in $360 million at the box office, according to trade magazine Billboard, making it the third-highest-grossing tour yet, behind tours by the Rolling Stones and U2.
Ticketmaster has spent more than a year preparing for the split from Live Nation, looking for ways to offset the effects of the lost revenue through acquisitions, international expansion and cost cutting.
Ticketmaster is one of four units being spun off by IAC in an attempt to jump-start the parent company's share price. Ticketmaster, of West Hollywood, Calif., last summer acquired Paciolan, which sells tickets to college sports events; in January it bought two big resale services, TicketsNow Inc. and Get Me In Ltd.
The company hopes this summer's Olympic Games will serve as a springboard to an expanded presence in China. Ticketmaster is part of a joint venture that has an exclusive contract to sell Olympics tickets, and is also a partner in Emma Ticketmaster, which stages concerts by Western acts in China.
The company hasn't offered analysts projections on earnings in China or other new markets including Germany, Turkey and Spain. Chief Financial Officer Brian Regan said in recent years, Ticketmaster's international business has grown faster than the company overall.
International revenue has grown an average 30% a year, compared with 14% a year for the company as a whole, he said.
Mr. Regan added Ticketmaster expects to find $35 million in annual cost savings starting next year, mainly through integration of the newly acquired companies.
In their first day trading on a "when-issued" basis, last Tuesday, Ticketmaster shares jumped 25% to $25 from $20. Since then they have traded thinly in the $21 to $23 range. Mr. Regan says some funds are barred from trading in "when-issued" shares, so the company doesn't regard the activity as especially significant.
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