Microsoft Corp. Monday sold its Sidewalk community property to once fierce rival Ticketmaster Online-Citysearch for approximately $240 million in stock.
Under terms of the deal, Microsoft will own 9 percent of Ticketmaster Online-Citysearch with the option of expanding its interest to 13 percent. Sidewalk guides will eventually be merged with Citysearch sites and the Sidewalk name will be eliminated.
Both companies offer local entertainment and shopping news online, covering dozens of cities across the country. Both came on the scene in 1997, although Citysearch debuted several months before the first Sidewalk site.
For Microsoft, the deal represents another setback in its Internet and online strategy. Once expected to be the dominant player in every market it entered, its online efforts have had different results. While the company’s Expedia travel service is enormously successful, Microsoft’s MSN Internet access and Sidewalk units never generated the same results.
As part of the Ticketmaster deal, Microsoft will direct visitors to its MSN network to Ticketmaster Online-Citysearch’s ticketing operation. Ticketmaster is also expected to supply much of the content for a new local channel that would be launched on Sidewalk. Microsoft will retain ownership of Sidewalk’s buying guides and business directories and fold them into MSN.
The Sidewalk acquisition expands the number of Citysearch cities from 33 to 77 worldwide. It also makes Citysearch the most popular city guide network, reaching 11 percent of U.S. Internet users, according to audience measurement firm Media Metrix.
The deal is unique because it is one of the few times Microsoft has sold a business. Last year, the software giant sold computer graphics firm Softimage to Avid Technology for $285 million in cash and stock. The sale also represents Microsoft’s continuing moves toward e-commerce transactions and services and away from content.
Microsoft and Ticketmaster Online-Citysearch’s past relationship has been less than amicable. In February 1997, Citysearch sued Microsoft claiming it was illegally linking to content. Citysearch, which had signed a deal with Ticketmaster to provide ticketing services for its online guides, said Microsoft was trying to get for free what Citysearch was paying for.
The suit was settled last year when Barry Diller, chief of USA Networks, purchased a controlling stake in Ticketmaster.
