Ticketmaster is set today to become a stand-alone publicly traded company, just as the dominant seller of tickets to concerts and sporting events is about to lose its biggest customer.
For five years, the West Hollywood-based company has been part of IAC/InterActiveCorp, owner of an assortment of Internet-based businesses. Under that umbrella, the subsidiary, which last year sold 141 million tickets valued at $8.3 billion, has done well.
Over the last three years, Ticketmaster's revenue has grown at an annualized rate of 18% to $1.24 billion in 2007, with profit increasing at a 34% rate to $169 million.
But under a plan unveiled last year by IAC Chief Executive Barry Diller, the New York-based parent is spinning off Ticketmaster and three other units today by distributing shares in the units to IAC stockholders.
As Ticketmaster gains independence, it has no serious national competition in its core business. But that is about to change, forcing the company to look abroad and elsewhere for growth.
In January, the company's biggest client, concert promoter Live Nation Inc., plans to sell tickets to its own events as well as to events organized by others. Live Nation accounted for 17% of Ticketmaster's 2007 revenue.
"It's a significant chunk of revenue to lose," said Joseph Bonner, an analyst with Argus Research Co. "Ticketmaster has got a little bit of a tough hill to climb."
To help make up for the loss, Ticketmaster is counting on continued growth in its international operations, which generated $426 million in revenue last year. That was up 41% from 2006 and accounted for about a third of the company's total revenue.
Ticketmaster also intends to reduce annual operating expenses by $35 million by more fully integrating some recently acquired companies and by taking steps such as consolidating call centers.
In addition, Ticketmaster is looking to boost its share of the ticket resale market, in which it competes against rivals such as EBay Inc.'s StubHub. Ticketmaster launched TicketExchange in 2002, two years after the founding of StubHub, a pioneer in letting people buy and sell tickets to each other online. This year Ticketmaster acquired two other firms in the resale niche, TicketsNow and the British-based Get Me In.
"They've really spent inordinately in order to shut us out," StubHub President Chris Tsakalakis said. "That's basically how they operate as a business."
