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Ticketmaster

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By SARA FISHER

Staff Reporter

What’s it like to have a tiger by the tail? Just ask the shareholders of Ticketmaster Online-CitySearch Inc.

In the two months since the Pasadena-based company’s initial public offering, its stock has spiked on opening day, dipped, soared by more than 300 percent, and then plummeted.

“We only watch the stock movement with one eye,” joked Chief Operating Officer David Hagan.

Last week provided no respite for white-knucked investors, as Ticketmaster Online-CitySearch’s stock plummeted about 35 percent on news that USA Networks Inc. had agreed to merge with Internet portal firm Lycos Inc.

USA Networks owns a controlling stake in Ticketmaster Online-CitySearch, and Wall Street quickly turned its nose at the complex deal, which was orchestrated by USA Networks Chairman Barry Diller. On the Tuesday following the announcement, Lycos lost about 25 percent of its stock value.

The downturn was an unusual reaction to Internet mergers, which more typically cause stock prices to soar. “We make a point of not watching the stock price,” said Chief Financial Officer Brad Ramberg. “We are much more focused on continuing to develop the company and create value.”

Some Ticketmaster insiders attribute the sell-off to the deal’s complexity and to Wall Street’s difficulty in grasping its long-term potential. “This is not a simple merger, so we’re working to help everyone understand,” Hagan said. “But both our employees and stockholders are genuinely excited.”

Under the deal, Ticketmaster Online-CitySearch will be folded into the new entity, to be named USA Networks Lycos Interactive Inc. Its shareholders will receive 0.4464 of a share of the USA Network Lycos company for every share of Ticketmaster Online-CitySearch, meaning they will control 8.5 percent of the merged company.

By the end of last week, the stocks of both Lycos and Ticketmaster Online-CitySearch had begun to recover a bit.

Meanwhile, shareholders of Ticketmaster Online-CitySearch have had plenty to say in online investor chat rooms. Most expressed confidence about their investments in the long run, some talked about cutting their losses, and all voiced confusion.

“It takes a true believer to ride through that kind of investment,” said Barry Parr, an analyst at Framingham, Mass.-based International Data Corp. “It takes someone who strongly believes in the long run, and who wishes they had bought Microsoft shares in 1975.”

The initial public offering for Ticketmaster Online-CitySearch, which both sells online tickets to events and offers extensive entertainment guides for cities across the country, debuted on Dec. 3, 1998 at $14 per share, and closed the day at $40.25.

For most of December, the stock followed a general downward trend, and bottomed out at $32.69 per share. Then, primarily due to early industry reports of unexpectedly strong e-commerce sales during the holiday season, it shot up, reaching a record high of $80.50 per share on Dec. 24.

From that height, the price drifted back to $46.75 on Jan. 5, but didn’t stay down for long. The next week, it jumped above $71. One reason was that the company finalized an agreement to acquire an Internet auction company, CityAuction Inc., in a stock deal valued at around $45 million.

For most of January, the stock continued to ebb and flow. It got a slight upward boost to $64 per share when the company released its first-quarter financial report on Jan. 28. It actually lost money $16.9 million but the amount beat the Street’s expectations by a bit.

Then came last week’s merger announcement, and the plunge from $57.75 to $42.25 a share. It declined further to $37.12 the following day.

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