TicketMaster Buys TicketsNow For $265 Million

Just in time for the Super Bowl and ahead of IAC’s (IACI) breakup, Ticketmaster has struck a deal to acquire online ticket scalper TicketsNow for $265 million. This follows eBay’s (EBAY) acquisition of StubHub for $310 million last year. TicketsNow is the second-largest online ticket scalper after StubHub, having sold $200 million worth of tickets in 2006.

Many of the tickets that scalpers, er, brokers, sell on these secondary marketplaces are initially purchased from the Ticketmasters of the world. So the markup is a missed opportunity for Ticketmaster, whose own TicketExchange has shown lackluster performance.

The TicketsNow deal shows how hot the secondary event ticket market is becoming, and Ticketmaster’s entry will likely help legitimize the sector (see our previous coverage on some of the problems with the industry).

The WSJ, which broke the story, reports (subscription required):

Ticketmaster President and Chief Executive Sean Moriarty said the company plans to share revenue from its new division with clients that own venues or promote events, although he said details on how the money would be distributed aren’t final. He said the move highlights a shift in the way ticket resellers are perceived, both by the public and by concert-industry participants. Where resellers once were viewed as shady scalpers, now, thanks largely to the Internet, they are becoming more respectable.

“Clients who five years ago were not willing to allow a ticket to be resold now want a piece of it,” Mr. Moriarty said. The size of the secondary ticket market is hard to judge, but estimates range from $2.5 billion to $5 billion a year in the U.S.

That’s a nice growth market for a business that is about to be spun off as its own stock.

Comments

[alejotoa:]

Miami based Tickets of America President CEO Michael J Lipman is encouraged by publicly traded companies such as Ebay and IAC’s ability to foresee the opportunities in the billion dollar secondary resell market and believes they will pave the way for future merger and acquisitions.
The acquisition of Ticketsnow is a surprising move for Ticketmaster since the majority of tickets posted on Ticketsnow’s website are ticket brokers’ inventory, may of whom will now pull the plug by not listing them anymore as a result of this partnership. Ticketsnow’s business model caters to brokers and the majority of the web hits are from fellow brokers, not from fans listing inventory.

Ticketmaster, a dominant primary market ticket seller, actively encourages teams and concert promoters to buy and then sell their tickets on Ticketmaster’s secondary market exchange. As a result of losing several legislative battles in states such as New York and being investigated in states such as Missouri, Ticketmaster’s “Ticketexchange” and “auctions” have failed in the public eye. Ticketmaster must use the Ticketsnow brand name to market premium seats to events such as Hannah Montana to the secondary market which will inflate the prices.

The law of supply and demand dictates the price of tickets on the secondary market, consumers reselling their tickets on the Internet are a contributing factor for what the market price is, reputable companies such as ticketsofamerica.com , Ebay, and Stubhub encourage fans to buy/sell at market prices which often times causes prices to sell at less than face value. Ticketmaster, Promoters, Sports Teams, and Venue partners often hold back the supply of tickets which artificially inflates the prices by hyping the scarcity of supply and deceiving the public by saying “sold out.” This is not in the best interest of the consumer and prices are never going to be less than face value or at true market price.

2008 Jan 16 01:04 PM

[TicketGuy:]

I'm not sure having TicketMaster being apart of the growing secondary market selling tickets above face value is really bringing any more legitimacy to this space. In the end the consumer is still paying inflated prices. It just means the fans in the end are going to need to go to yet another ticket site to see who has the best priced tickets. The price comparison tickets sites like www.tickex.com are the best place to go for the consumer to feel like they aren't getting ripped off.

2008 Jan 16 09:42 PM