Will Ticketmaster's New Acquisition Help Beat Live Nation?

Ticketmaster (TKTM) is taking its business in a whole new direction. Yesterday the ticket behemoth agreed to acquire a majority interest in Front Line Management Inc, arguably the most powerful artist-management company in the music industry, with the likes of artists from Christina Aguilera to Neil Diamond in its stable.

These big names should help Ticketmaster convince big venues to use its ticketing service, and to remain dominant in the concert ticket space. Ticketmaster will combine with Front Line, creating a new company called Ticketmaster Entertainment, run by the current CEO of Front Line, Irving Azoff, who will oversee the current Ticketmaster company, which will continue to be run by its current CEO Sean Moriarty, who will also be COO of the new company.

Ticketmaster spun off from Barry Diller's IAC/InterActiveCorp on August 21, and since then the stock has been hammered, it's down over 50 percent. It's been suffering along with the rest of the market, but it's also taking blows as its former partner Live Nation (LYV) continues to build its arsenal to become a bigger rival to Ticketmaster. Live Nation is the world's largest concert promoter, and provides Ticketmaster with about 15 percent of its revenues; this year Live Nation announced it would start a ticketing service to compete with Ticketmaster. Not only is Live Nation taking 15 percent of Ticketmaster's revenue with it, it's also made a number of long-term deals (for a hefty price) with artists including Jay-Z and Madonna. Called "360 deals" these give Live Nation rights to many revenue streams, including not just ticketing and merchandise, but in some cases, also recording.

Ticketmaster's move to acquire a majority stake in Front Line and merge the two business says loud and clear that the ticketing giant will put up a fight as its former partner becomes a rival, and is determined to maintain its near monopoly on the ticketing business. There's more competition than ever -- from the likes of StubHub (owned by eBay (EBAY) as well) and there's of course a question of whether the economic environment will hurt ticket sales. Azoff is known for using his powerful group of artists to get good deals, and that leverage would certainly prove beneficial here. Azoff has said he won't give his clients an advantage, but that "all artists will benefit." I'll be curious to see how the details pan out, and I'm looking forward to interviewing Azoff.

TIcketmaster already holds a minority stake in Front Line, which it got from its parent IAC/InterActiveCorp when it was spun off in August. To turn that into a majority stake Ticketmaster is expected to pay Warner Music Group (WMG) about $123 million for Warner Music's 30 percent stake. Azoff will trade his ownership of Front Line for about 4.5 percent of Ticketmaster, making him one of the company's largest shareholders.

Both Ticketmaster and Live Nation are bringing out the big guns, getting music superstars in their corner to fight for the concert and ticketing space.