Live Nation chairman resigns; shares drop

NEW YORK (Reuters) - Live Nation Inc Chairman Michael Cohl, the driving force behind the concert promoter's wooing of superstars such as Madonna, has resigned, the company said on Friday after a disagreement over strategy.

Cohl, who was head of Live Nation's artists division, has moved to a consultant role and stepped down from the board, the company said. Live Nation's shares fell almost 10 percent in anticipation of the news carried in earlier reports.

At issue are "360 deals" under which Live Nation signed major name artists such as Madonna and Jay-Z, giving them big upfront payments in exchange for financial rights to nearly all their business activities, from recording to licensing, according to a person familiar with the talks.

Cohl wanted to sign more such deals at a faster pace, while Live Nation Chief Executive Michael Rapino preferred signing around four to six artists a year, the person said.

"We are committed to acquiring additional artists' rights beyond the concert tour, including unified rights deals with select artists," Rapino said in a statement, adding that the company was near to closing the long-term deal with U2.

"At the same time, we continue to take a disciplined financial approach and are focused on expanding cash flow and margins and increasing value for shareholders."

Cohl said in the statement that he remained committed to helping Live Nation grow.

David Joyce, an analyst at Miller Tabak, downgraded Live Nation earlier on Friday due to the management uncertainty, but said after speaking with Live Nation's Rapino he was reassured by the fact Cohl had not sold off his stock, even though he was stepping down from the board.

"Cohl's never run a public company and wanted to build the business with much more quickly than Rapino," said Joyce. "There's still a good working relationship between Cohl and Rapino."

But music industry sources questioned the ability of Live Nation to seal big-name artists after his departure.

"They can't afford to continue to be in the 360 business without scale. Cohl's the guy with the Rolling Stones relationship and other relationships," said a music executive who declined to be identified.

"The deals they were doing were financially unsustainable, which probably would have bankrupted the company."

Live Nation has not revealed the financial terms of its artists' deals but the agreement with Madonna, which included recording rights, has been estimated to be worth $120 million over 10 years including a three-album commitment.

Miller Tabak's Joyce said Live Nation indicated the fees paid to the stars were spread over the 10-year agreement rather than as an up front lump sum of cash or stock.

According to a filing with the U.S. Securities and Exchange Commission, Cohl will perform consulting services for Live Nation through June 2012 for a lump-sum payment of $4.5 million. It said non-competition clauses in his previous contract remained in effect. Cohl signed a nine-year non-compete agreement with Live Nation when he joined the business last year..

The shares of Los Angeles-based Live Nation fell 9.77 percent to close at $11.73 on the New York Stock Exchange.

(Reporting by Tiffany Wu and Yinka Adegoke; Editing by Ted Kerr and Andre Grenon)