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Ticketmaster-CitySearch buys auction site

The purchase of CityAuction means that Barry Diller now has two auction sites in his online stable.

The red-hot online auction sector today saw a $54 million acquisition and new evidence that auctions, though popular with consumers, have the ability to transform business relationships in industry sectors too.

Ticketmaster Online-CitySearch today announced the acquisition of CityAuction for 800,000 shares of Ticketmaster stock, a deal worth $54 million after the stock gained 10.625 today to close at 67.50. CityAuction conducts auctions for specific geographic areas.

Meanwhile Manheim Online, an online auction for automobile dealers, reported its 1998 revenues hit $275 million, up 376 percent from 1997 sales of $58 million. Weekly sales exceeded $7 million by year's end.

Traditionally, most used cars have been sold at physical auctions, where Manheim Online's parent, Manheim Auctions, is a major player. The online auctions let dealers buy and sell inventory between regular auctions or when they can't attend the events in person.

Manheim said Net-based auctions have increased volume at physical auctions by freeing up space so more cars can be exhibited. Manheim is a subsidiary of media giant Cox Enterprises.

CityAuction's acquisition by Ticketmaster Online-CitySearch makes it a second auctioneer in Barry Diller's stable at USA Networks, which owns 61 percent of Ticketmaster Online. USA Networks also owns First Auction, a site started by its Internet Shopping Network unit.

"I have long believed auctions to be an effective interactive experience on the Internet," said Diller, USA Networks CEO. He said sales at First Auction more than tripled in December.

CityAuction is a person-to-person online auction where items from specific regions are bought and sold. That makes it suitable for bulky items too large to transport great distances or high-value goods where buyers and sellers want to exchange goods and payment in person, Ticketmaster CEO Charles Conn said.

"This is an important extension for our platform of local transactions online," Conn said. "We think auctions intrinsically make sense locally for goods either to bulky or expensive to be sold in national auctions."

But Zona Research told its clients today that Ticketmaster Online's acquisition is aimed at a traditional nemesis--ticket scalpers.

"We believe the company can make it very easy for its customers to bid on ticket prices for sold-out events right at Ticketmaster's site rather than in the parking lot on the night of the event," the firm said. It also predicts that other retailers will adopt the auction format, undermining auction sites.

While the stocks of auction sites eBay, Onsale, and uBid have been hot performers, Conn said that was not a factor in making the acquisition.

Conn sees local auctions as giving people a way to sell goods that might otherwise be sold through want ads, traders, or newspaper classified ads. While that may put Ticketmaster Online in competition with local newspapers, Conn noted that individual ads are not the core revenue generators for newspapers. The company has partnerships with local newspapers in about half of its 60 markets.

Because personal auction site eBay doesn't allow geographically limited auctions at present, Conn sees no other direct competitors to the CityAuction service.

CityAuction has a relatively small number of registered users, under 50,000, but the combined might of Ticketmaster Online-City Search could boost that figure dramatically. The company intends to maintain CityAuction's separate home page but plans to integrate links to local auction from sections of its 60 or so city-specific Web sites.