Troubled merger plagued by power struggle, sinking stock
Barry Diller, the media mogul who claimed credit for the merger of Live Nation and Ticketmaster, said Tuesday he would resign as chairman of the merged company after a boardroom power struggle with another media giant and director, John Malone, according to a person with knowledge of the situation.
Diller announced his resignation at a board meeting on Tuesday, effective as of the next meeting, said the person, who declined to be identified because of the sensitivity of the situation. News of the resignation was earlier reported by The Hollywood Reporter.
Live Nation Entertainment Inc.’s stock has plummeted this year following a disastrous summer concert season. Since hitting a high of $16.70 in late April, shares are down 41 percent, closing Tuesday at $9.85.
The troubles were brought to light at an investor meeting in July, when the company said its adjusted operating income for 2010 was expected to be $405 million, down from $445 million last year, despite the benefits of its merger. That day alone chopped 11 percent off the shares.
Diller owns less than 1.5 percent of the stock outstanding compared to Malone’s Liberty Media Corp., which owns 14.3 percent, and there was growing resentment at the outsized role Diller was playing in running the company, the person said.
Liberty Media was likely to be especially disappointed with the share collapse since it had topped up its stake shortly after the merger by buying nearly a million shares from other shareholders for $12 apiece. There are about 173 million shares outstanding.
Malone and Diller’s personal dislike for each other also played a role in Diller’s resignation, the person said.
Earlier this month, CEO Michael Rapino told investors that the company was “within striking distance” of meeting its reduced annual profit forecast this year, but that many artists had postponed tours until next year given shaky consumer confidence and poor ticket sales.
Live Nation, the world’s largest concert promoter, and Ticketmaster, the dominant ticket-seller in the U.S., merged in January, partly to avoid butting heads in trying to secure ticketing contracts from third parties.
Live Nation had been Ticketmaster’s largest customer, accounting for some 15 percent of its revenue, but it decided to break off and sell tickets to its own concerts in January 2009. Shortly after, the companies announced they were merging.
Diller, 68, a billionaire media executive and CEO of former Ticketmaster parent IAC/InteractiveCorp, told investors in February 2009 that he had been “trying and mostly consistently failing to put these companies together for many years now” and that together they would be financially stronger by creating a greater connection between artists, performers, athletes and fans.