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Ticketmaster will pay approximately $123 million in cash to acquire a controlling equity interest in Irving Azoff’s music management company Front Line and install Azoff as CEO of the company created by the acquisition, to be called Ticketmaster Entertainment.

The move aligns the ticketing giant with one of the strongest and largest music management companies in the industry a little more than two months before it loses one of its most significant clients, the concert promoter Live Nation.

Live Nation, the largest promoter in the world, will expand its inhouse ticketing operations on Jan. 1 after its current contract with Ticketmaster expires.

Ticketmaster will acquire the stake in Front Line that is currently owned by Warner Music Group, one of several investors in the company that has been aggressively acquiring smaller management firms over the last four years. Azoff will receive restricted stock awards representing some 4.5% of Ticketmaster’s stock. Azoff will continue to serve as its chief exec.

Upon completion of the transaction, Ticketmaster will change its name to Ticketmaster Entertainment, making it a combination live entertainment and marketing company. The transaction, which is subject to customary closing conditions, is expected to close in this quarter. Ticketmaster was spun off from Barry Diller’s IAC in August and began trading separately on the Nasdaq exchange.

Under Nasdaq’s inducement grant exception, Ticketmaster has agreed to grant to Azoff an award of Ticketmaster restricted equity in exchange for Front Line equity awards that he has agreed to forfeit. The grant includes $35 million of restricted Ticketmaster preferred stock that is convertible at Azoff’s election into 1.75 million shares of Ticketmaster common stock plus 1 million shares of restricted Ticketmaster common stock.

Ticketmaster has also agreed to grant Azoff options to purchase 2 million shares of Ticketmaster common stock at an exercise price of $20 per share.

Known primarily as the manager of the Eagles, Azoff set up Front Line Management in the 1970s and rejuvenated the business after several stints as the head of record companies in the 1980s and ’90s. In 2004, Front Line, owned by Azoff together with partner Howard Kaufman, began an aggressive campaign to acquire smaller agencies, growing the business to where Azoff and Kaufman now have nearly 200 clients and more than 80 executive managers. Front Line artists include the Eagles, Jimmy Buffett, Neil Diamond, Van Halen, Fleetwood Mac, Christina Aguilera, Stevie Nicks, Aerosmith, Steely Dan, Chicago, Journey and Guns N’ Roses.

Without getting into specifics, Azoff released a statement that noted, “We have the opportunity to redefine the business at a time of great change and opportunity. Consumers, artists, teams and venues will all benefit from this exciting new Ticketmaster Entertainment platform going forward.”

In the U.S., ticketing operations are handled by the venues, which generally sign deals that run five to 10 years. Buildings without a direct relationship with Live Nation, such as Staples Center in Los Angeles and Madison Square Garden in New York, may now have an extra component to consider when negotiating deals for box office operations.

Beyond Azoff’s job as CEO of Ticketmaster Entertainment, Sean Moriarty will be president of Ticketmaster Entertainment and CEO of Ticketmaster; Terry Barnes, chairman of Ticketmaster; Eric Korman, president of Ticketmaster; and Kaufman, special adviser to Azoff.

Ticketmaster operates in 20 global markets. In 2007, the company sold more than 141 million tickets.