Inside Eventbrite's $200 Million Purchase of Ticketfly From Pandora, Which Arrived After Dizzying Race to Divest
When Pandora bought Ticketfly in 2015, both companies thought it was a match made in heaven, and Ticketfly founder Andrew Dreskin often described the deal as an “Eventbrite killer.”
But 20 months later, under growing pressure from investors, Pandora began soliciting bids for Ticketfly -- and on Friday (June 9), it offloaded the company to ticketing rival Eventbrite to meet a crucial funding deadline.
It wasn’t a hard sell: Three companies submitted offers to buy Ticketfly, including Live Nation’s Ticketmaster and AEG’s AXS, sources tell Billboard. But Pandora ultimately accepted a $200 million bid from Eventbrite that included $150 million in cash and a $50 million note payable to Pandora, with the sale expected to close in Q3. A senior source involved in negotiating the deal said Providence Equity Partners was helping finance Eventbrite's purchase of Ticketfly, but Eventbrite officials said Providence was not part of the final deal. Eventbrite, Ticketfly, Pandora and Providence declined to comment on the sale for this article.
While the 2015 purchase by Pandora was a game changer for Ticketfly thanks to a boom in client signings and an incremental uptick in sales, the integration never led to tangible results for the streaming service. One source close to the negotiations said aligning with Ticketfly made it difficult for Pandora to do deals with the bigger companies like Ticketfly’s competitor, Ticketmaster, and its owner Live Nation. Live Nation had been working closely with Pandora’s rival Spotify, as has AEG, which just inked a global partnership with the streaming service. The deal allows Spotify’s 100 million-plus global listeners to receive personalized event notifications for shows ticketed by AXS with an integration that allows users to purchase tickets inside Spotify's mobile and desktop apps.
Selling Ticketfly means a large write-down for Pandora -- the ticketing company’s purchase price was widely reported as $450 million in 2015 and a $200 million sale to Eventbrite would equal a $250 million loss. But the $450 million price tag was inflated: Ticketfly’s owners were paid both cash and stock for the company and just weeks after the sale to Pandora was announced, the streaming service’s stock price dropped by over 40 percent. Less than rosy forecasts for the quarter, compounded by a slight dip in users and news of a $90 million settlement for pre-1972 recordings caused the stock to dip from $21.50 on the day the Ticketfly deal was announced down to $12.18 upon closing. That reduced the value of the deal to $335 million; in the end, Pandora paid $198 million in cash for Ticketfly and $136 million in stock.
Pandora's sale of Ticketfly opens up the possibility of the streaming service working more closely with Live Nation. SiriusXM is owned by Liberty Media, which owns a large stake in Live Nation, and Pandora is considering sharing the integration it built with Ticketfly, which includes push notifications when artists are playing at nearby venues and email digests of upcoming shows -- with Live Nation to build upon its success with other streaming services.
As part of the agreement, Eventbrite also will be given access to the Pandora integration for its clients and Ticketfly CEO Dreskin will join Eventbrite, leading music operations.
How will the two former rivals work together? Both firms have traded barbs in recent years, with Ticketfly positioning itself as a music company with deep roots, while Eventbrite has operated more like a tech company, with a culture steeped in Silicon Valley (although the two businesses are headquartered only a few blocks from each other in San Francisco).
The deal comes after Eventbrite completed the January sale of Amsterdam ticketing company Ticketscript and about a year-and-a-half after acquiring venue software company Queue. Prior to the Tickeftly purchase, Eventbrite had raised $196.8 million in eight funding rounds from seven investors and many believe the company is headed for an IPO in the near future.
For Dreskin, the Pandora integration was always about getting an incremental advantage in the middle market: independently owned nightclubs, festivals and concert venues not affiliated with Ticketmaster. Without a content partner like Live Nation, Dreskin argued that a connection with Pandora’s 80 million users was the next best thing, giving Ticketfly a competitive advantage over rivals like Eventbrite. But now, by purchasing its biggest rival and accessing the same Pandora integration that gave it an advantage, Eventbrite has one less “Eventbrite killer” to worry about.