Live Nation Entertainment Inc. on Friday said Barry Diller had stepped down as chairman and John Malone would serve as interim chairman, following several weeks of internal division at the music industry giant.

Diller will keep his board seat at the Beverly Hills live entertainment ticketing and artist promotion company. Reports that he would step down began appearing late last month. Malone, chairman of Liberty Media Corp., joined Live Nation's board in January.

The resignation follows a contentious July conference during which investors criticized the company’s efforts to overcome slumping ticket sales amid the recession. The company, which was formed from the merger of concert promoter Live Nation and Ticketmaster Entertainment, now manages artists in addition to producing concerts and selling T-shirt and souvenirs.

Live Nation has warned that operating income this year could fall by 10 percent.

Shares were up 38 cents, or 4 percent, to $9.71 in midday trading on the New York Stock Exchange.

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