Everyone's favorite Pearl Jam foe, Ticketmaster, is targeting the competition by merely absorbing it. The subsidiary of IAC/InterActive (NASDAQ: IACI) is scooping up TicketsNow Inc. for about $265 million. TicketsNow, which sold $202 million worth of tickets in 2006, is currently the country's second-largest reseller of tickets for concerts and sporting events. Number one in the resale business (a market with an overall estimated annual value of $2.5 billion to $5 billion in the U.S.) is StubHub - a division of eBay (NASDAQ: EBAY).

Many of the sellers on StubHub, TicketsNow, and other sites procure their tickets originally from Ticketmaster, but Ticketmaster currently misses out on any profit gleaned from a resale. The Wall Street Journal notes that "Where resellers once were viewed as shady scalpers, now, thanks largely to the Internet, they are becoming more respectable."

TicketsNow, according to the article, is primarily a tool for professional ticket brokers, who acquire tickets from Ticketmaster and other sources and then sell to customers. The site currently charges buyers 15% on top of the sale price, and charges variable sellers' fees depending on sales volume and additional factors. Hopefully, with the two ticket names in cahoots, it doesn't essentially mean that Ticketmaster will be earning twice from the sale of a single ticket. But as the Journal points out, "The acquisition raises potentially thorny questions for TIcketmaster..."

It's been a busy year for Ticketmaster in the news ... this deal comes after concert promoter LiveNation vowed to sever ties with Ticketmaster but ahead of a planned spin-off of Ticketmaster into its own publicly traded entity.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Ever since Barry Diller cobbled together the internet Frankenstein called IAC/InterActiveCorp. (NASDAQ: IACI), he had been assuring investors that somehow it all made sense to group together TicketMaster with Evite with Ask.com. Wall Street cried confusion.

Then the media mogul spun off his Expedia travel business into a separate company, figuring that was the reason why investors were confused by the ungainly IAC. Judging from the stock price, investors were just as confused as ever, even as IAC said it was "proud to have so many great brands under one roof." Now, Diller has thrown in the towel and is splitting up IAC into five separate publicly traded companies. As envisioned, IAC would be more or less a media and entertainment company, maintaining businesses including Ask.com, Citysearch, Evite, CollegeHumor and Bloglines. The other companies would be centered around HSN, TicketMaster, and Interval International.

Diller seems to have gotten the message from Wall Street, albeit about five years too late.

"We've been a complex enterprise almost from the very beginning 12 years ago, with hundreds of transactions over those years," he said. "And while we've created a lot of value, I've always believed our complexity and many mouthfuls of sentences to explain who we are and what our strategy is have hampered clarity and understanding with all our constituencies, particularly investors."

Plus, the confusion was costing Diller money.

Ticketmaster, the leading ticket sales website owned by IAC/InterActiveCorp (NYSE: IACI) is being sued by the Cleveland Cavaliers. The NBA basketball team accuses the company of anticompetitive and monopolistic practices.

According to the Associated Press, "The Cavaliers allege in the lawsuit that Ticketmaster is trying to prevent the team's Flash Seats secondary-ticketing Web site from competing with the ticketing giant. Flash Seats provides season ticket holders a way to sell and transfer seats electronically _ a system that is superior to Ticketmaster's TeamExchange program, the lawsuit says."

Ticketmaster has also sued the team, claiming that its contract makes the relationship with Flash Seats illegal.

As Doug McIntyre wrote earlier, IAC reported disappointing earnings today sending the stock down more than 5%. But the drop does not appear to be attributable to the Ticketmaster lawsuit.

Zac Bissonnette is a partner and writer for Hedge Funnies, a satirical take on the financial markets.

Fortress Investment (NYSE: FIG) volatility flat. Investors compare FIG to Blackstone (NYSE: BX). FIG, a global alternative asset manager with approximately $36 billion assets under management, has a market cap of $10.5 billion. Blackstone, a private equity firm, initial public offering was priced at $31 a share, valuing BX at about $33.6 billion. BX manages $88.4 billion, including $19.6 billion in its most recent buyout fund according to Bloomberg. FIG overall option implied volatility of 38 is near its 21-week average according to Track Data.

IAC/InterActive (NASDAQ: IACI) option implied volatility flat at 27. IACI closed at $35. Stifel Nicolaus said on 6/20/07 that it was "upgrading shares of IACI to Buy from Hold and initiating a $42 12-month target price. Our upgrade of IACI is based on 60% probability of a material corporate event occurring within the next 6-months." IACI overall option implied volatility of 27 is near its 26-week average of 25 according to Track Data, suggesting non-directional price fluctuations.

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

New York Governor Eliot Spitzer signed a bill last week eliminating state-imposed price restriction on reselling event tickets, effectively legalizing scalping. More and more states have been repealing anti-scalping laws in recent years, paving the way for companies like eBay Inc. (NASDAQ: EBAY) subsidiary StubHub to create a market for the resale of tickets.

As "deregulation" of scalping continues, StubHub and similar companies should prosper. It's hard to understand why it's taken so long for so many states to eliminate these antiquated laws. According to the Boston Globe, "The justification for anti-scalping laws has been the desire to prevent fans from paying exorbitant amounts for tickets."

But if someone wants to pay $5,000 for a ticket to see the Rolling Stones, why would the government interfere? Who exactly is being protected when the state tells a guy who wants to buy a ticket from someone who wants to sell it that he's not allowed to see the concert.

There's really no economics-based justification for anti-scalping laws. It appears to be a reaction to the unsavory perception of the business, but I can think of plenty of other unsavory industries that are perfectly legal. Now I'm going to go look at my cell phone bill and try to figure out why it's so high.

The mobile search trains of Google (NASDAQ: GOOG) and Yahoo! (NASDAQ: YHOO) left the station some time ago. Even Nokia (NYSE: NOK), the world's largest handset company has its own search function.

With the estimates for mobile-based advertising pointing to $11 billion, according to Informa PLC, no one wants to be left behind.

IAC/Interactive (NASDAQ: IACI) will launch its own Ask Mobile software, which will include features from some of the parent's other websites, including City Search and Ticket Master. It will be introduced with Sprint (NYSE: S).

No matter how well the service works, it has two drawbacks. The first is that Ask.com is among the smallest search operations, with about 5% of the U.S. market. It brings that small share and a relatively late introduction to the mobile space to the table. It is also forming its first partnership with the weakest of the Big Three mobile carriers, which may be an indication it could not get AT&T Wireless (NYSE: T) or Verizon Wireless (NYSE: VZ) to take the product.

Better late than never.

Douglas A. McIntyre is a partner at 24/7 Wall St.

It's been a couple of days and it's time to see how the Street reacted to eBay Inc.'s (NASDAQ:EBAY) recent purchase of StubHub Inc.

Before the purchase, when the announcement wasn't official yet, I said that this acquisition is a good one, taking care of competition and giving eBay a bigger market share of the ticket reselling business.

First, eBay share gained back 3.17% of their value yesterday, as investors obviously reacted positively. What about analysts?

• Mary Meeker of Morgan Stanley expects the purchase to reaccelerate growth for the company. Meeker has an "Outperform" rating on EBAY and expects StubHub to help eBay's struggling tickets category whose growth dropped to 19% in the fourth quarter of 2006 from 31% a year earlier.
• Robert S. Peck of Bear Stearns even thinks that with StubHub, eBay could become a "formidable competitor" to the largest online ticketing platform, Ticketmaster and its TicketExchange. Ticketmaster is owned by IAC/InterActiveCorp. (NASDAQ:IACI).
• Jeetil Patel of Deutsche Bank who has a Hold rating on EBAY warns that the core business continues to struggle. He is more cautious.
• Douglas Anmuth of Lehman Brothers believes the acquisition is a good fit strategically.
• Justin Post of Merrill Lynch thinks that with StubHub, eBay will probably control 40% of the secondary ticket market.

So there you have it. While ticketing is a relatively small business for eBay overall, I think investors were simply happy to see a good and positive move on part of the company.

Next week IAC/InterActiveCorp (NASDAQ:IACI) will introduce new Web-based local city guides. Chairman and CEO Barry Diller announced the move yesterday.

The new guides will debut on December 4 and will be called AskCity. It will combine the assets of Ask.com, Citysearch, Evite and Ticketmaster, all IAC properties.

The Ask.com search service will be redesigned, with a new home page among other changes.

IAC is focusing on growing its own businesses in the never-ending race with Google, Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) for search engine and e-commerce supremacy.