IAC down, Live Nation up over ticket dispute

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NEW YORK -- Shares in IAC/InterActiveCorp fell 2% on Thursday on concerns the Internet conglomerate would take a financial hit from a breakup between its Ticketmaster unit and concert promoter Live Nation.

Ticketmaster, the largest U.S. boxoffice service, said Wednesday that it was not able to extend its long-term agreement with Live Nation, its largest client.

In an internal memo obtained by Reuters and other media, Ticketmaster said it expects their partnership to end when their contract expires at the end of 2008.

"If IACI lost the Live Nation account, we estimate that the impact would be between $30 million to $35 million" to earnings before interest, tax, depreciation and amortization (EBITDA), Stifel Nicolaus analyst Scott Devitt said.

That would amount to 3%-4% of IAC's EBITDA, Devitt wrote in a note to clients.

Live Nation has yet to respond to the news. Shares in the company gained nearly 3% on Thursday amid investor expectations it will move more aggressively into direct ticket sales and marketing.

"A decision by Live Nation to go it alone in ticket distribution can only be driven by a want to control the relationship with the customer and possibly attain incremental revenue from such relationships," Devitt said.

Sources familiar with the matter said the talks between the two parties broke down over such issues as ticket inventories and the ability to directly market to consumers coming to Live Nation events and concerts.

Devitt also suggested Live Nation could find it challenging to operate profitably the financial mechanisms behind boxoffice services. Under their contract, Ticketmaster has covered credit card processing fees and the costs of installing and managing boxoffice systems at the venues.

He kept a "buy" rating on IAC.

IAC shares slipped 55 cents to $26.92 on the Nasdaq while Live Nation rose 47 cents to $20.71 on the New York Stock Exchange.
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