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Ticketmaster Down 3% From Offering Price

November 20, 1996|From Times Staff and Wire Reports

Ticketmaster Group Inc. shares closed 3% below their offering price in the first day of trading as investors apparently were concerned that the ticket seller will face problems expanding into new businesses and markets.

The stock, priced at $14.50 a share to investors Monday, opened Tuesday at $15.25 but then fell as low as $13.50 in Nasdaq trading before closing at $14.125, down 37.5 cents from the offering price. More than 2.7 million shares traded.

The Los Angeles-based provider of ticketing services for sports and music events sold 7.25 million shares, or a 32% stake, to raise $105 million. Microsoft Corp. co-founder Paul Allen owns a 54% stake valued at $172.7 million.

"There are a lot of questions surrounding the offering," said Ryan Jacob, director of IPO Value Monitor, a research firm that analyzes initial public offerings. "Yes, they have a near-monopoly, but where do they go from here?"

The stock was also hurt by what Jacob said was a high offering price given the company's heavy debt and losses over the last two years. He said he doesn't expect the firm to turn a profit again until mid-1997.

Ticketmaster, which sold 53.1 million tickets in fiscal 1996, plans to use the offering proceeds to reduce debt and buy the rest of a Texas unit it doesn't already own.

The company now makes most of its money from service charges on the tickets it sells on behalf of its 3,500 clients.

Although it isn't unprecedented for a new stock to fall below its IPO price on the first day of trading, companies usually try to price their shares at a level that guarantees an initial "pop" in the price.

Analysts said investors' unwillingness to bid Ticketmaster sharply higher suggests concern that the firm won't be able to leverage its brand name abroad, especially in Europe, or to successfully launch new businesses. The company in February launched Live!, a monthly entertainment magazine and event guide. It also plans to develop Ticketmaster Travel, a travel agency.

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