LOS ANGELES (Reuters) - Blockbuster Inc said it has struck a deal to sell tickets for top U.S. concert producer Live Nation, a tie-up that it expects to drive more traffic to its stores and Live Nation hopes will quell consumer ire over rising ticket prices and uneven availability.
The three-year deal, giving retail ticketing privileges and exclusive blocks of tickets to 500 Blockbuster stores starting in January, has been in the works since last spring, Nathan Hubbard, chief executive of Live Nation Ticketing, said on Monday.
Long-brewing complaints of rising service fees and spotty availability of concert tickets came to a head this year when parents protested widespread scalping of tickets to Walt Disney Co’s Hannah Montana tour after online tickets sold out seconds after becoming available. Several state attorneys general opened inquiries of ticket sellers.
The Blockbuster deal, kept under wraps while the companies worked out details, came months after Live Nation, which was not connected to Hannah Montana, decided to take over ticketing at the end of its contract with TicketMaster, Hubbard said.
The movie rental chain’s store footprint and national presence, its ability to “manage cross-country campaigns in a unified manner,” made it the top contender, Hubbard said.
“The fan who buys his ticket offline has a lot of demographic overlap with the consumer who rents his DVD offline,” Hubbard said. “On top of that, you’ve got now in Blockbuster a brand that has almost 100 percent awareness nationwide ... so it’s a more efficient marketing opportunity.”
Blockbuster believes the deal will strengthen same-store sales, which showed positive growth this year for the first time since 2003, a fact that proved to Live Nation the chain was on the right track.
Blockbuster has folded “relatively minor” costs for selling tickets and cross promoting concerts into its planned capital expenditures under a plan by new Chairman and Chief Executive Jim Keyes — a former CEO of 7-Eleven Inc — to reinvent it as a chain of convenience stores for entertainment.
Both companies expect the venture to start slowly and to expand to more stores and a wider array of products, including sales of concert paraphernalia and downloads of digital music and videos from Blockbuster’s in-store kiosks.
Blockbuster will add a number of smaller venues, including the House of Blues chain, when their contract with Ticketmaster expires in 2010.
Although it has lagged Netflix Inc for years in the 12.5 million-subscriber U.S. online rental market, Blockbuster sees an average of 60 million customers each year at its 7,500 stores worldwide.
After changing its focus from costly online subscriber acquisition to store sales, the chain posted same-store sales growth of 2.9 percent, 14.2 percent and 5.1 percent in consecutive quarters in 2008 despite a deepening global recession.
“The current reinvention of Blockbuster is all about convenient access to media entertainment,” Keyes said. “That gives us a much broader canvas from which to work and we believe ... that the consumer also will allow us a broader relevance.”
Reporting by Gina Keating; Editing by Gary Hill