Ticketmaster Teams With DEAG

The world’s leading ticketing company is taking on its main European-based competitor in its own backyard, as Ticketmaster is teaming with Deutsche Entertainment AG to set up a company that will challenge CTS’ domination of the German market.

At the end of August, DEAG chief Peter Schwenkow threw down the gauntlet to CTS, which is also his biggest rival in the live music market, by letting it be known that he’s entering the Internet ticketing business.

Paul Lafontaine, Ticketmaster’s VP of European business development, fueled rumours that his company might be involved in a joint venture with DEAG by declining to comment. Last June, he reacted to questions about rumours of his company’s intention to buy Finnish ticketing giant Lippupalvelu in exactly the same way.

Confirmation that Ticketmaster and DEAG have joined forces came in an October 4th press statement announcing they’ve formed a new company called Ticketmaster Deutschland. Although it’s known that DEAG has the minor stake in the company, and industry estimates pitch it at around 10 to 15 percent, neither side is prepared to give the full details of the financial arrangements.

Schwenkow’s previous venture into ticketing ended in 2001 with the euro 10 million bankruptcy of Qivive, in which DEAG had a 33 percent interest. He greeted his new deal with the global brand leader by telling Pollstar it crowns the best three months his company has ever had.

The announcement followed news that the U.S.-based Octave Entertainment Fund Ltd is guaranteeing DEAG a US$30 million (euro 25.1 million) war chest to buy future tours, the company’s last income before interest and tax figure was positive and it’s also raised US$3.66 million (euro 3.1 million) by issuing 1.375 million new shares.

Schwenkow said he’s delighted to welcome the “grandmaster” of ticketing into the German market.

Although he wouldn’t comment on CTS or other competitors, Schwenkow did play up Ticketmaster’s “state-of-the-art technology,” its experience in customer care and his belief that it will bring more “transparency” to the Germany ticketing market.

Since taking over Ticketmaster’s European business development at the beginning of 2004, apart from snapping up Lippupalvelu and its euro 74 million annual sales volume, Lafontaine had already paved the way for Scandinavian dominance by overseeing the company’s acquisition of Sweden’s BiljettDirekt Ticnet AB.

He was no keener than Schwenkow to talk about a head-to-head clash with CTS, preferring to say, “We don’t make our plans based on what other companies are doing, neither do we discuss those competitors.”

When asked why Ticketmaster didn’t just set up its own operation in Germany, he said, “It’s because we saw a client and went in and struck a deal. Local partners with local expertise are critical in our business, and our expansion has always been based on securing inventory and developing from there.

“We’re impressed with what DEAG is doing in new markets, particularly in classical music, and we believe we can build together using Ticketmaster’s technology.”

The next three months are likely to reveal exactly where Ticketmaster Deutschland is starting out and where it intends going. Neither Schwenkow nor Lafontaine are saying where HQ will be based, and they’re not giving any clues to further expansion – although both admit that it’s very much on the cards.

An obvious target would appear to be the Zurich-based Ticketcorner as Andre Bechir’s Good News, the Swiss-based promoter in which DEAG still has the largest stake, must be its best customer.

A Lafontaine quote from a Ticketmaster press release began by referring to “Germany and the surrounding German-speaking countries” – which puts Switzerland top of the list – before going on to say that the link with DEAG is a means of establishing Ticketmaster’s state of the art ticketing system “throughout these markets.”

If CTS also has an eye on Ticketcorner, which has long been considered ripe for acquisition, then it may soon find itself toe-to-toe against the U.S.-based invader. With both companies scrapping for the same patch, punters may hope to benefit if CTS and the Ticketmaster-DEAG axis are prepared to compete for business by cutting margins.

CTS chief Klaus-Peter Schulenberg, who greeted his promoting rival’s original announcement that it would expand into ticketing by saying, “We will react to DEAG entering the ticketing market once they’ve done so,” wasn’t available for comment at press time.

— John Gammon