The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.
Ticketmaster Inc. announced Thursday that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts such as the Eagles and Journey along with divas and divos such as Christina Aguilera and Guns N' Roses.
The deal gives the ticket giant a boost in a category where it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.
"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," entertainment attorney Josh Hiller said.
Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of his stake in Front Line. Azoff will head the new company, to be called Ticketmaster Entertainment Inc.
Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.
Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them and on its ability to enter the infrastructure-heavy ticketing business.
Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflicts of interest, Hiller said, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists.
In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains a bright spot in a music industry struck by declining CD sales and the movement toward free and low-priced digital music.
"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," said attorney Aydin Caginalp, a partner at Manatt Phelps & Phillips. "This is a natural evolution and expansion of these businesses."
If the two companies want to get deeper into each other's turf, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.
Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half since it began signing its marquee artists. Its shares fell 7.9% on Thursday to $9.30. And after its announcement, Ticketmaster shares fell 5% to $10.35. They're down by about half since the company was spun off from IAC/Interactive in August.
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