LOS ANGELES (CelebrityAccess MediaWire) — After the announcement of the deal for Live Nation to provide ticketing for all of SMG's North American venues, investors responded sharply, and Ticketmaster stock slid to a 52-week low on Thursday.
Ticketmaster subsequently responded to the Live Nation/SMG deal by issuing a statement in which they raised three points:
1. The announcement will have no short term impact on our business. Why? Because last week SMG signed an extension to our global master agreements with them through the end of 2010, and ratified multi-year contract extensions to half of the buildings they manage and we ticket today. In other words, less than 250 thousand tickets (of the 141 million we sold in 2007) are at possible risk with SMG in 2009; and SMG has exclusive contractual obligations to Ticketmaster through December 31, 2010 covering approximately 70 percent of the tickets we sell in SMG venues today.
2. We expect that the announcement will have little medium term impact, and we will do our best to ensure it has minimal long term impact as well. Why? Because SMG does not own the venues they manage. SMG has a responsibility to make recommendations in accordance with the best interests of the municipalities that they represent. They mostly choose partners based on either a formal "request for proposal" process or otherwise in a competitive bidding process. Regardless of this announcement, we will continue to bid and expect to win on the merits.
3. Similar to our need to constantly prove our value and re-sign expiring venue contracts in a competitive marketplace, SMG must compete for venue management contracts against AEG, Global Spectrum, VenueWorks and others. If SMG makes decisions which no longer reflect the best interests of their clients, the results will be obvious – and causes us to consider whether we should enter the venue management business as well."
While there is some validity to these claims, the underlying factors that made Live Nation an attractive partner for SMG haven't changed. Live Nation's exclusive deals with major touring artists and the importance of Live Nation venues for touring artists not under contract with the promoter will continue to make them significant leverage with either SMG or the municipalities SMG is managing venues for. Additionally, beyond vague rumblings about getting into venue management, Ticketmaster's refutation provides no insight into how they intend to challenge Live Nation's growing dominance.
Wall Street seems to agree with this assessment and Ticketmaster's stock price was only up by approximately 3/10ths of a percent from Thursday's lows. Stifel Nicolaus & Co.'s Scott Devitt reiterated a "hold" rating on Ticketmaster. – CelebrityAccess Staff Writers