TicketMaster Buys MSN Sidewalk Property

As the searing summer sun continues to bake city sidewalks up and down the East Coast, Microsoft (Nasdaq: MSFT) and TicketMaster Online-CitySearch (Nasdaq: TMCS) decided to produce a little asphalt heat of their own.

The two companies announced Monday that TicketMaster-CitySearch would acquire Microsoft’s MSN Sidewalk city guides for $240 million (US$) in stock. The deal makes Microsoft a nine percent shareholder in the company with an option to increase its stake to 13 percent.

The agreement also calls for TMCS to develop content for MSN network’s new channel, which will feature localized content for individual markets. The content will consist of information on recreational activities and event ticketing.

The deal follows on the heels of an agreement that TMCS signed with Lycos in May to be the featured city search guide on its network. The two agreements in the space of three months have solidified TMCS’ position in its battle with AOL’s Digital City to be the leading city guide site on the Internet.

“We think this is a terrific deal for both companies and for the consumers and merchants we serve,” said TMCS CEO, Charles Conn. “It will allow us to more quickly reach our city expansion goals, to add high-quality distribution relationships with MNS, and immediately to help our consumers to get things done locally.”

Four Key Cities and More to Come

The agreement gives TMCS four new markets in Boston, Chicago, Seattle and Minneapolis-St.Paul and increases its total exposure from 33 cities to 77 cities worldwide. The company said its reach increases 40 percent as a result of the deal.

It’s also tailor-made for TMCS’ new acquisition strategy, which resulted in a reorganization in May to focus on the company’s growth.

Analysts say the deal was also a good one for Microsoft. It gave them an exit strategy from the Sidewalk city guides, which were said to have stalled and become directionless, and added an equity stake in a growing company.

TMCS major shareholder is USAi Network. That company had a merger with Lycos on the table, but it was roundly rejected by Lycos stockholders. TMCS and Lycos did sign their content agreement, salvaging something out of the months of talks between USAi and Lycos.