Analyst to IAC/Ticketmaster: Not so Fast

By Alfred Branch, Jr.

Disillusioned by IAC/InterActiveCorp’s plan to spin off Ticketmaster and other assets, financial analyst Mark Mahaney is recommending his clients hold shares of media company for the time being. Just after 1:30pm today, IAC/InterActiveCorp stock was trading at $26.06, down 22 cents, or nearly 1 percent.

Mahaney, a media industry research investment analyst with Citigroup, downgraded the stock on Wednesday from a “buy” rating because the company “will continue to lose market share in core businesses, does not have new revenue streams, has limited exposure to international markets and few hedges against a downturn in the U.S. economy,” according to a report from the Associated Press. The company announced its plan to spin off Ticketmaster and other assets in November, following word of its high-profile split with rival Live Nation, which is expected at the end of the year.

In early November, Mahaney elevated his rating on the company from a “hold” to a “buy,” partly on the strength of Ticketmaster, which reported a strong increase in revenue for the quarter ended Sept. 30, 2007.

What happens with Live Nation remains a bit of a wildcard for Ticketmaster. While Ticketmaster and Live Nation are developing rivals within the ticketing industry, they are not true competitors yet, partly because Live Nation has not fully ramped up its ticketing efforts, but more importantly Ticketmaster will continue to work with the company at Live Nation’s House of Blues and other venues Live Nation doesn’t own.

The perception behind the split, however, is part of what’s hurting IAC and Ticketmaster, because the primary ticketing giant will lose more than 14 percent of its revenues when Live Nation, Ticketmaster’s largest client, goes out on its own.

“Our read is that companies that have demonstrated market share gains in their core segments have had their above industry growth rates rewarded by the financial markets with higher or expanding multiples,” Mahaney wrote to clients, AP reported. Mahaney also issued a hold rating on IAC in fall of 2005.