So how’s the market for sports and concert tickets holding up, given the economic turmoil that has dominated the public imagination since last year? Better than you’d think, according to Mike Janes, the founder and CEO of FanSnap, a live-event ticket search engine that launched in March.

“People’s appetite for the shared experience of a game or show hasn’t changed. Their bank accounts may have changed, but not the desire,” Janes said.

The difficult economy has had the effect of bringing many ticket prices down, he said, meaning there are plenty of bargains out there. While there will always be insatiable demand for big-name performers or games (Springsteen; Yankees vs. Red Sox) keeping those ticket prices high, Janes said tix for your average major league baseball game can be had for below face value in some cases, as folks looking to resell tickets flood the market with supply. It’s a bit too early to see about NFL games, he said.

FanSnap, whose main investor is VC and private equity firm General Catalyst Partners, runs in a similar way Kayak does flight searches. Since there is so much variability in ticket prices (unlike in airline tickets) FanSnap’s search engine turns up seats within mere feet of each other — displayed on a nifty interactive map — but with very different asking prices.  (Janes said the site aims to “make it really hard to overpay for tickets.”)

FanSnap has deals in place with dozens of vendors and re-sellers, including big names like StubHub and RazorGator, and is working to bring others into the fold.

The proposed merger between Ticketmaster, the world’s largest ticketing firm, and Live Nation, the world’s largest concert promoter, met with huge uproar when it was announced back in February and is still being examined by federal regulators.

Most of the uproar was prompted by fears the combined company would have too much power and be able to control (read ‘raise’) concert ticket prices whenever they want. There were also separate complaints about Ticketmaster’s use of a secondary ticketing company (read: scalper) to sell tickets such as Bruce Springsteen’s at exorbitant prices.

Perhaps with one eye on getting the merger past regulators, both companies are this summer trying new ways to win over music fans. Live Nation, for instance, said it is expanding its “No Service Fee Wednesday” program to include every single ticket in each of its amphitheaters this summer.

Fans often complain about the ‘convenience fees’ when they buy tickets. Such add-ons to the ticket price can sometimes significantly increase the final bill. Live Nation said last week’s debut of No Service Fee Wednesday generated a sales spike 500 percent higher than the average number of tickets sold on  a Wednesday.

Meanwhile over at Ticketmaster the company is hoping to “thwart scalpers” by introducing paperless tickets according to this Wall Street Journal story. Ticketmaster will launch its first major trial with teen pop star Miley Cyrus’ 45-date tour later this year (Cyrus pictured left).

The Journal said the technology is meant to make seats impossible to sell or transfer because they can be redeemed only at the concert, using the credit card with which they were bought.

Ticketmaster’s plan makes sense.  It brings parts of the company’s operations into the 90s — when many airlines first started selling paperless tickets. And like the airlines we should necessarily expect an improvement in service just because there’s been a cut in costs (not having to print and send out tickets to fans).

That said, paperless tickets might also do away with one of Ticketmaster’s more unpopular surcharge practices. Ticketmaster has charged fans extra for the convenience of printing off their concert tickets at home rather than having them sent out in the post.

Keep an eye on:

• Boston Globe workers to vote on costs cuts (NY Times)
• Some Americans are still not ready for digital TV switch (WSJ)
• Viacom launching Epix movie channel in online beta (paidcontent)

(Photo: Reuters)

Deal-making in the U.S. media and entertainment sectors is going to be down this year, says a new PricewaterhouseCoopers survey (request a copy here). Now, that’s not a new or startling conclusion given the state of the economy, but it’s just another piece of evidence that when consumers and advertisers get thrifty, deal makers can end up become benchwarmers as companies struggle with cost cuts and other exigencies.

Here are some industry trends for 2009 from the PWC survey:

• Declining consumer spending is hitting many media and entertainment companies. What’s more, these declines were exacerbated by technological convergence, as these firms adapt to and look for ways to make money off new Internet technologies.
• Overall U.S. advertising market is going to shrink as sponsors cut ad budgets across retail, consumer goods, automotive, financial and other sectors.
• Companies will continue to divest their non-core assets, but those that don’t get a good price will prefer to hold on rather than sell at bargain prices.
• Bolt-on deals will likely be popular for risk-averse companies, so deals below $1 billion — mostly small and mid-market companies — will be a rising trend.
• Private equity will remain quiet since the debt markets aren’t really healthy yet.
• Deal structures will change this year, given the difficulty of getting debt financing. The strategic rationale for doing a deal will be more important than getting a favorable capital structure.

But all hope is not lost, according to PWC’s Transaction Services Entertainment & Media Leader Thomas Rooney:

With M&A activity ingrained in the DNA of so many companies and the ever growing presence of private equity, E&M deal activity might not be as quiet as many expect in 2009… History has shown the E&M industry to be one of the more active M&A sectors irrespective of market and economic conditions.

And there have been a couple of deals already this year, although no mega-transactions, as the PWC report suggests. Live Nation wants Ticketmaster and Sumner Redstone’s National Amusements theater chain is being shopped to potential buyers. Could Lions Gate be next?

(Photo: Viacom chairman Sumner Redstone/REUTERS)

Live Nation and Ticketmaster might have plenty of people out there who are not pleased with the idea of the two companies coming together but they have received support from several superstars in the run-up to a U.S. anti-trust hearing in Washington DC on Tuesday.

Names like Seal, Shakira, Journey, Van Halen and Billy Corgan (The Smashing Pumpkins) have all offered support to a merger some legislators, smaller rivals and fan groups worry will put too much power over the U.S. and global live music industry in the hands of just one company.

Some of the superstars have long-running relationships with Live Nation’s concert promotion business or are clients of Front Line Management, the artist management firm owned by Ticketmaster. Front Line has more than 200 acts under its wing giving it plenty of leverage in dealing with many promoters, venues and even record labels.

Eddie Van Halen, of 80s rockers Van Halen, wrote in a letter to the anti-trust committee seen by Reuters that the merger could help up-and-coming musicians like his 17-year old son Wolfgang (pictured together}) who joined the band as a bassist a couple of years ago:

There are so many problems facing the music industry today. Van Halen suceedeed based on our record sales and the many tours that we did to increase our record sales. But that business model just doesn’t work anymore. Today, the majority of artists earn their living from playipng live. What my son — and any future band he plays in — needs are new and innovative approaches to the problems facing the live entertainment industry. And I believe that the merger of Ticketmaster/Live Nation is one of those solutions.

Pop act Journey, probably best known for their anthem “Don’t Stop Believing“, were also supportive of the deal:

The music industry has changed dramatically in the last several years. As technology changes the way people get access to their music, one thing stands true — the live show. And the live show has become an even more important jumping off point to maintain the relationship between artists and our fans. The proposed merger of Live Nation and Ticketmaster Entertainment will provide artists at all levels of their careers with the opportunity to leverage a broader universe of venues and to expand their ability to reach current as well as new fans.

Seal, one of the few stars not currently in business with either company, wrote in another letter that in spite of his own success, he recognizes the music business has become a different place from when he started out in London, England, 20 years ago:

The record business is not what it used to be. That is why I support the Live Nation/Ticketmaster merger — because not only would it benefit established acts like myself, but the up-and-coming acts who are trying to build a following, as well.

As an artist, I’m constantly searching for new and better ways to connect with fans, get my music to more people, and be fairly compensated for my work in the process. The merger will help me and countless other artists do that.

Do you think these artists are right? Can this merger be a positive step towards helping fix the music business as the two CEOs Irving Azoff and Michael Rapino say?

We’d like to hear your thoughts.

(Photo: Reuters)

When it comes to Microsoft, you can count on one thing: Whatever they do will get plenty of scrutiny in on the wires, in newspapers, and across blogs. Think A-Rod or Brad and Angelina.

Last night, they announced plans to start opening retail stores, which generated a lot of attention (rightfully so, too). Here’s the plan, as Reuters put its:

The world’s largest software company, which also makes the Xbox video game console and the Zune digital music player, did not say how many stores it was looking to open, or when, or which of its products would be on sale.

That is to be decided by David Porter, a former DreamWorks Animation executive, which Microsoft named as its new vice president of retail stores.

Turner, a former Wal-Mart Stores Inc manager, will report to Microsoft chief operating officer Kevin Turner.

The long-rumored move to open stores comes as consumer spending is under severe pressure due to the recession, which has already pushed electronics chain Circuit City into bankruptcy. A similar attempt by computer maker Gateway to open its own stores some years ago was not successful.

As you would expect, plenty of others weighted in on the story. Here’s a sampling…

Silicon Alley Insider says:

If done right, Microsoft might be able to show consumers the benefits (if any) of having a Windows computer, Xbox 360, Windows Mobile phone, and Zune, all in one place. At very least, they could do a better job than Best Buy at showing off PCs. (We’re not sure how well the gurus Microsoft hired last fall to do that at other big-box stores worked out.)

Conceivably, they might convince more people to buy PCs — or at least to buy newer PCs with Windows 7.

TechCrunch writes:

“This is, of course, ripe for mockery, and we’re sure tomorrow will bring the fruits of Photoshop contests from around the web. Will it be wall-to-wall Vista boxes? Will you have to sign a license agreement to get in? Will they avoid the color “BSOD blue”? All very funny questions, but the fact is that Microsoft’s stores could be the beginning of… well, another beginning for the oft-maligned software baron. After all, despite what the web has to say, they do manufacture more than error screens.”

The Wall Street Journal notes the poor results of other tech companies looking to move into retail:

“The failures of other stores opened by technology companies will loom over Microsoft as it launches its stores. In 2004, computer maker Gateway Inc. shuttered a network of more than 188 company-owned retail stores after weak sales. Microsoft itself operated a Microsoft store inside a movie-theater complex in San Francisco beginning in 1999, but two years later shut down the store — which showcased, but didn’t sell, Microsoft products.”

And finally, Endgadget is spot on with this note:

“We can’t wait to see how the Simpsons mock this one.”

Keep an eye on:

• Live Nation Inc expects to beat Wall Street’s forecasts for fourth quarter adjusted operating profit when it posts earnings next month and said 2009 summer concert ticket sales are running ahead of the same period in 2008 (Reuters)
• YouTube, the hugely popular online video site, has renewed a global licensing deal with Sony Music Entertainment which allows it to continue showing music videos of artists like Beyonce and Avril Lavigne (Reuters)
• Google Inc has abandoned its efforts to sell advertising for broadcast radio stations, acknowledging that the three-year project has failed (Reuters)

(Photo: Reuters)

Will it survive? That’s the main question looming over today’s official news that Live Nation will indeed buy Tickemaster Entertainment, a deal that has been much in the news this week.

Already, Sen. Charles Schumer, a member of the Judiciary Committee and Democrat from New York, has called for a federal probe into Ticketmaster’s relationship with resale subsidiary TicketsNow (a relationship that was roundly criticized recently when fans tried to buy Bruce Springsteen tickets) and said a merger with Live Nation “must be viewed skeptically).

As the New York Times recently pointed out, the deal will mark “an early test of the Obama administration’s views on concentrated corporate power, particularly in an area with potentially stark implications for consumers.”

“The combination of the two companies would place under one corporate umbrella dominant players in all sides of the live concert business: the sale of tickets, the representation of artists and the control of concert halls. Of particular issue to regulators, say lawyers with expertise in antitrust law, would be Live Nation’s recent entry into the ticket-selling business — essentially a challenge to Ticketmaster on its own turf,” the story noted.

Of course, even if the deal does survive, and even if it gets approval from antitrust regulators, the process could take some time. Months. A year. Maybe more. Such a time lapse could causes problems of its own — the economic landscape can change, strategy can shift, relationships can fray — and you end up, in some ways, far worse than when you began the whole darned thing.

Just ask XM and Sirius.

(Photo: Reuters)

We won’t be tempted by puns. Or any sort of lame wordplay.  We’ll play this straight. Seriously. Here goes: After all the bad publicity caused by a photo of Michael Phelps apparently taking a bong hit, Kellogg has decided to dump the superswimmer.

Okay, now that’s out of the way. Here’s the basics from Reuters:

The world’s largest cereal maker said on Thursday it would not extend a contract with Phelps, who charmed audiences in Beijing last year with a record-breaking, eight-gold medal haul, saying the photo of the swimmer was inconsistent with its public image.

Phelps, estimated to make millions of dollars annually from marketing deals, issued an apology this week after a British newspaper published a photograph purportedly showing him smoking marijuana during a student party at the University of South Carolina in November.

The move doesn’t come as a complete surprise. Marketers often get nervous about this sort of thing, especially when forking out big bucks in this economy. Phelps has other deals worth millions of dollars with brands including Speedo swimwear, Omega watches, Visa Inc, Subway sandwiches and Hilton Hotels. Phelps’s agency, Octagon, said earlier this week that it had been in touch with his sponsors and that none had indicated any intention of backing out of their deals.

What changed? What’s the deal with Kellogg? The difference? One marketing executive tells AdWeek that it’s all about the kids.

Kevin Adler, founder of Engage Marketing, a sports-marketing firm in Chicago, said Kellogg’s decision comes as no surprise. While others may not have gone public in their stance towards Phelps, it’s imperative that Kellogg do so because after all, the cereal maker is heavily perceived (as) a kids’ brand, he said.

“Athletes are brands. That’s the most important umbrella concept we have to understand is if you do something that runs contrary to your brand image, it will affect your ability to monetize that brand image. It really kind of is that simple,” said Adler.

Over at Gawker, they had a slightly different take.

Kellogg, in the most boneheaded move in the entire history of all celebrity endorsements ever, is dumping Michael Phelps over his pot photo. Has any brand ever been more out of touch with its customers?… Hello? This is the best possible recommendation one can make for breakfast cereal, the favored foodstuff of THC-induced munchies victims everywhere.”

Ahhh, advertising.

Keep an eye on:

• Bruce Springsteen in none to happy with the notion of a Ticketmaster-Live Nation merger (Bruce Springsteen)
• U.S. magazine empire Conde Nast has replaced the publisher of The New Yorker, as the number of ad pages tumbled during the past year (Reuters)
• Rockers, rappers and record executives gather in Los Angeles on Sunday for the annual Grammy Awards, but there is little to celebrate at the music industry’s biggest night (Reuters)

(Photo: Reuters)

Hey, Madonna meet Miley Cyrus. Jay-Z, these are the Eagles. You all could be one big happy family. Sort of like the Brady Bunch.  Or the Partridge family!

Only, however, if merger talks talks between Ticketmaster Entertainment and Live Nation result in a deal — and if that deal isn’t blocked by regulators worried about too few power players in the ticket  

Here’s what we reported: A source briefed on the matter told Reuters that talks are at an advanced stage, but could still fall apart over issues such as management control.

 Another hurdle would be competition issues because such a merger would concentrate power in the music industry under one roof.

 One music label source said the deal will “face major antitrust issues from managers, record companies, ticketing companies and concert promoters to name a few — not to mention the Obama administration will be very tough on this stuff.”

The Wall Street Journal, which broke the story, also brought up the anti-trust question: Sticking points remain to any deal. Because a merger would concentrate so much power in the music industry under one company, it would require review by antitrust authorities.

The newspaper provides the following details: The combined company would be called Live Nation Ticketmaster; boards of both companies have yet to approve the all-stock merger; it is being described as a merger of equals, but terms have yet to be worked out; it is unclear which company is acquiring the other; it is unknown what titles would be taken by Ticketmaster chief Irving Azoff and Live Nation Chief Michael Rapino.

Stay tuned.

Keep an eye on:

• Time Warner forecast a flat 2009 profit after posting quarterly results below Wall Street forecasts as it grapples with the impact of a worsening recession (Reuters)
• Walt Disney reported a sharply lower-than-expected quarterly profit as the global downturn hurt its TV advertising, DVD sales and theme parks (Reuters)
• Citigroup might have difficulty escaping its $400 million marketing deal with the New York Mets, but the bank could reduce its obligation by finding another company to assume the most important part of the contract: sponsoring the new baseball stadium (Reuters)

(Reuters photo of Live Nation CEO Michael Rapino)

With financial markets in turmoil and the U.S. economy in recession, we asked top entertainment and sports executives at the Reuters Media Summit for some investment advice.

Our question: "If we gave you $50,000, where would you invest?" One rule: They couldn't pick their own company. But then we thought $50,000 was too little for well heeled executives, so we switched it to $50 million. But that seemed excessive. After all, we're talking about personal investments -- so we settled on giving them a cool $1 million.

Here's what they said:

"In a pillow ... You might look at the energy sector, you might see what happens with gold. I've got cousins who work in the banking industry. When I asked them, they told me put it in my pillow. That is your answer."
-- Havas's MPG Chief Operating Officer Steve Lanzano

"I would be in the most conservative mechanisms I could -- treasury bills, whatever, absolutely. The old trite bromide about cash is king? Well, that is true and more true today than ever before."
-- Major League Baseball Commissioner Bud Selig

"I'd put 40 percent of it into exceedingly high-yielding senior debt securities in a diversified array of businesses. I'd put 30 percent of it with a pretty diverse array of fund managers who have a strong track record of navigating choppy times in an array of strategies. And then I'd take the final 30 percent and buy Time Warner stock ... I will tell you why I love Time Warner. OK, so it's trading at 50 percent of book, and these are people who, post AOL, were incredibly aggressive about writing down their book value. So it's trading at 50 percent of essentially tangible books, tangibles you are going to get for a media company. They are not especially exposed to advertising. A lot of their revenues are very sticky. They still own their cable assets. You are getting a free option on the value of whatever happens in the spin-off. They generate, I think, $13 billion in EBITDA right now, if I'm not mistaken. And all their debt obligations are laddered out well into the future so they have no particular financing risk. So if you figure we have three horrible years ahead of us -- and I don't believe we do, but if you do -- they are perfectly fine from a capital point of view for the next few years. And even after all obligations, all repayments, all capex, they still generate loads of free cash flow. Even if you don't think they are particularly well-positioned strategically -- they are currently yielding 2.7 percent, and I see no reason for the dividend to go down."
-- Take Two Interactive Inc Chairman Strauss Zelnick

"If I had a knife, I would probably put it in my mattress. No, seriously, I think if somebody gave you $1 million today, I think my gut tells me that the market would probably be a good place to put it ... But there's a little bit of hesitancy there. Have you reached bottom yet? Who knows. Do you actually have to actually reach bottom before it's a good time to invest? Probably not. But this might be a good time to put money in the market if somebody just hands you $1 million ... I would avoid the financial stocks for now because I'm not sure all the bad news is out. You know, you would think as low as some of those stocks are, that there would be buys, but some of them may not be around at all. So I would stay out of the financial sector. I probably would steer more toward durables and things that people are going to need year in and year out. They can be a bit volatile too, but you know that they are going to be around for years to come. I don't think I would invest in domestic auto stocks today. You know, natural resources and products that are going to continue to be in demand, even some of the medical and drug companies."
-- Regal Entertainment Group CEO Mike Campbell

"Pay off my mortgage would be number one. Yes, absolutely, I would pay my mortgage. And then other than that I would ... because I live in California and my family does it for a living, I think real estate is a great buy right now in California. There's a lot of depressed prices -- business is out there and real estate out there. I like real estate. It will come back."
-- Live Nation CEO Mike Rapino

"It looks to me like there are buys all over the place. I am not an investor or an economist, but just generally speaking, it looks like these companies that we deal with that I know are well managed, companies like Coca-Cola or Disney that are well managed, many of them are just going to be good buys. But I'm not an investor, so what do I know?"
-- NASCAR CEO Brian France

"So 12 years... I took every dime that I had and I put it into tax-free municipal bonds. And then a year ago, but for what I own in Sirius, every dime that I have is either in insured, tax-free municipal bonds or treasuries. So I have been a terrible investor because if you look at the last 12 years, my portfolio has only grown for those 12 years about 3 percent a year. Now if you looked at the stock market during that period of time, I have left an awful lot of money on the table. But if you look, I guess, over the last year, I have done OK compared to where a lot of people were."
-- Sirius XM Radio Inc CEO Mel Karmazin

"I would invest at least 70 percent of it in stocks. I would put a big chunk in Goldman Sachs. I would put some in GE. I would put some in McDonald's. I would put some in new energy, new innovations. I would definitely put a load in Google, and I would put a chunk in Microsoft. So that's split between technology, and I would think about retailers as well. And then I would keep a chunk in cash, 20 percent. And then I'd put 10 percent in governent bonds. But I believe the valuations at the moment, the prices are so disconnected from values of some great companies with tremendous equities that there's tremendous value for the long term."
-- Interpublic's Mediabrands CEO Nick Brien

Would you put your million in the piggy bank?

(Photo: Reuters)

Sorting out what the economic downturn means for the sports world has become something of a sport itself.

Will consumers’ need to escape with some old-fashioned football trump their anxiety about shelling out hard-earned money for tickets, parking and hotdogs at the game?

Will TV broadcasters cash in on higher ratings, as consumers skip more expensive entertainment to spend time at home watching baseball or basketball on television? Or has devastation across the financial services and auto industries — two big advertisers in sports — doomed TV broadcasters regardless of audience size?

We already know what happened with GM and Tiger Woods.

“If you just look at the numbers, straight at the numbers, on the broadcast side in sports, anywhere — and especially when you look at football or anywhere — between 6 percent to 8 percent of their revenue is automotive and then you take out the financial picture there and now maybe you’re up to 9 percent or 10 percent,” MPG North America Chief Operating Officer Steve Lanzano told the Reuters Media Summit. “That’s a ton of money that’s moving out of the marketplace. That is very scary.”

NFL Executive Vice president Eric Grubman acknowledged that the economy is hurting the league on several fronts: it makes financing tougher; it crimps advertising revenue for its partners; and it undercuts consumer spending on everything from tickets to jerseys.

But, says Grubman, it’s not all gloom and doom.

“There is a part of the National Football League that is I believe very countercyclical and very recession resistant. And that is that when people are experiencing tough times… economic or otherwise… they go back to things that they love and they go back to things that they enjoy. And sports is one of them,” he said.

Hmmmm.

NASCAR and Major League Baseball drop into the Reuters Media Summit later today.

Keep an eye on:

• National Amusements Inc’s negotiations to restructure its debt are moving slowly — that means a deal may not happen this year (WSJ.com)
• Blockbuster will sell tickets for top U.S. concert producer Live Nation (Reuters)
• Publicis Groupe is building its Asian assets with a deal to buy W&K Communications, a full-service agency in China (Adweek)

(Photo: Reuters)