Ticketmaster/TicketsNow: After the Deal

By Alfred Branch, Jr.

With the announcement earlier today that Ticketmaster was buying TicketsNow for an estimated $265 million, one thing is certain, the secondary ticket market is clearly where the action is.

Ticketmaster, which has dominated the primary ticket market for years, had watched as StubHub! and a host of other companies gobbled up portions of the secondary market, making it a more engaging marketplace for consumers who not only found easily found tickets to sold out events but also often found bargains in the process. The ticketing giant tried suing some of its rivals, such as StubHub!, and tried fighting against state legislation to legalize ticket reselling, but ultimately realized that it couldn’t stop progress.

But, the deal to buy TicketsNow is not necessarily a slam dunk. It will require federal regulatory approval, and even though it will instantly make Ticketmaster the number two secondary ticket reseller behind StubHub!, the deal will also require some finessing by the two sides to make it work.

Ticketmaster paid handsomely for TicketsNow, especially considering the company is only about half the size of StubHub! When eBay bought StubHub! early last year it paid just over $300 million, almost $30 million of which went toward debt. Ticketmaster just agreed to pay nearly the same amount for a company half the size of StubHub!

“This probably makes a lot of sense for Ticketmaster, but it was a defensive, panic move,” one financial analyst, who wished to remain anonymous, said to TicketNews. “They [Ticketmaster] were reacting to Live Nation.”

Last week, Live Nation spelled out details of an aggressive plan to enter the ticket-selling market in 2009 when its contract with Ticketmaster expires. Live Nation is Ticketmaster’s largest client, but Live Nation intends to go after several of Ticketmaster’s other clients over the next several years.

In addition, there is the thorny issue of Ticketmaster, which recently signed a contract with the National Football League to become the league’s authorized secondary ticket reseller, and the New England Patriots. Ticketmaster will own a company that resells Patriots tickets, something the Patriots have long fought against and recently won a judgment against StubHub! over the issue.

Then, there is also the network of brokers that currently work with TicketsNow, a group that has long distrusted Ticketmaster. The two companies will have to smooth over some of the ruffled feathers of brokers who are not enamored of the deal.

“This deal is also incredibly contradictory to the position Ticketmaster has trumpeted in the past, suing companies that produce broker technology to acquire tickets, setting geographic restrictions for ticket on sales as well as limits on ticket purchases. All of those measures are designed to thwart the ticket broker community. Then today, Ticketmaster buys the largest ticket brokerage on the internet?” Sean Pate, spokesperson for StubHub!, told TicketNews.

However, on a positive note, the deal “further validates the secondary ticket market,” said Eric Baker, founder of secondary ticket reseller viagogo.com. Baker, an industry veteran, helped create StubHub! back in 2000 before opening viagogo in Europe. “This is now the hot growth area in the ticketing industry. This is where the opportunity is.”