The Bear Case on Hollywood Media (HOLL)

I received an interesting email from a reader about Hollywood Media's (ticker: HOLL) Broadway.com ticket service. Broadway.com accounts for most of HOLL's reported revenue, though most analysts think it accounts for only a minority of Hollywood Media's stock value. With that background, here are the comments:

There's a service fee of 20% at broadway.com, compared to less than 7% at ticketmaster.com. In addition, there's no exclusive content, if I'm not mistaken. It's hard to tell if revenues for broadway.com include ticket face value costs.

Question: Do they have their own ticketing system? It looks to me as though the content is owned by Ticketmaster systems. Hence, they are only a "reseller" of tickets with no leverage besides their domain and 1-800 number. I do not believe that a service fee three times as high as ticketmaster.com is sustainable. Especially as theaters can easily sell directly to consumers (and have an incentive to do so).

He then addresses a point I made in this post, in which I reported that Hollywood.com (HOLL's movie information web site) now carries Google AdSense ads, a net positive given that HOLL has had unsold ad inventory in the past:

In addition, to quote the CEO directly from your web page: "…we have more demand by advertisers for advertising on Hollywood.com than we have supply of page impressions…" So, why implement Google AdSense? There's no way they make more money with pay per click ads than with CPM deals on that site.

Hence, I do not know what to think about HOLL.

Interesting...

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