Software pioneer emerges as top Ticketmaster suitor.

Sale is expected by year-end as potential buyers line up

Ticketmaster, the dominant computerized ticket broker in the U.S., is on the block, and Paul G. Allen, a co-founder of computer software giant Microsoft Corp., has emerged as the leading suitor, according to industry sources.

Seattle-based Allen has visited Ticketmaster's Mid-Wilshire offices several times in the last few weeks to meet with its chairman, Fred Rosen.

Ticketmaster's majority owner, the Pritzker family, has put the company up for sale and Rosen has held discussions with other suitors, including Time Warner Inc., sources said. Media industry sources estimate the acquisition price could be between $200 million and $275 million. A deal is expected by year-end.

There are several reasons for Ticketmaster's probable ownership change, according to former Ticketmaster employees and competitors who speculate that the company has "maxed out" its growth as a pure ticket seller and needs a large strategic partner with deep pockets and technological know-how to broaden Ticketmaster's services.

Another possible reason for the sale is that Ticketmaster is facing legal challenges that could have embarrassed the company's major shareholder, Chicago's low-profile-but-very-affluent Pritzker family. Ticketmaster has been slapped with several consumer-based antitrust suits rising out of its allegedly excessive service charges, according to recent reports in the Los Angeles Times and other newspapers.

Rosen is not commenting on the negotiations, nor are the Pritzkers.

Allen, owner of the Portland Trailblazer's basketball team, has created a new high-tech company, Asymetrix, in Bellevue, Wash. That company produces software for multimedia computer programs. He is also not commenting on his rumored interest in Ticketmaster, according to his spokesman.

As a possible precursor to Allen's buyout of Ticketmaster, America Online, an interactive computer service in which Allen holds a 24.9 percent stake, has entered into an agreement with Ticketmaster to sell tickets and merchandise through personal computers in Chicago and Florida. Chicago-based Tribune Co., which owns a television station in Chicago, is part of that agreement.

Ticketmaster fields more than 30 million calls annually and reaps about $200 million in revenues for transacting overall tickets sales of $1.3 billion. The company has no major national competition after buying out its main competitor, Ticketron, two years ago.

Ticketron was the pioneer in this business, but Ticketmaster moved aggressively with updated technology and overtook its competitor.

However, over the last two years, there has been a consumer backlash over Ticketmaster's charges for its services. On some events, the handling fee reached as high as $6 for a single ticket. And this has led to several ongoing lawsuits against Ticketmaster.

In the major California case, San Francisco attorney Joseph Alioto filed a suit brought by 10 plaintiffs alleging that Ticketmaster and Northern California-based Bay Area Seating Service Inc. created a ticket-selling monopoly in California by splitting the state in half at San Luis Obispo County. According to the suit, each company agreed to not sell tickets in the other's territory. The suit was granted class action status by a Superior Court judge in San Francisco. Thousands of California residents have paid fees to both companies and could be covered in an award or settlement.

Those close to Ticketmaster said the lawsuits are not forcing the sale. Instead the deal is being motivated by the need for a new partner that can help the company bridge the technological leap into interactive television, they said.

Rosen wants to sell retail goods, in addition to tickets, via television and end the company's reliance on the telephone, according to media industry observers.

The company has moved into the movie-ticketing business and is selling recorded music by mail in connection with its ticket sales.

Callers for certain events, such as stage shows and rock concerts, are pitched soundtracks and CDs to the events they are buying tickets for. Ticketmaster's move into the movie-ticketing business has been impeded by stiff competition from similar services, such as MovieFone, according to its competitors in that business.

Rosen has been given free rein by the Pritzkers and has built the business since the early 1980s. However, his status under new ownership could complicate any possible deal. He has a reputation as a tough, "bombastic" manager, and his role in any new ownership structure would probably change, sources indicated.

Other possible suitors, in addition to Allen and Time Warner Inc., are QVC Network and Kohlberg Kravis Roberts & Co., according to a recent report in the Los Angeles Times.