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HSN drops cash bid for Ticketmaster

HSN Inc. dropped an all-cash $307.5-million offer for the half of Ticketmaster Group Inc. it doesn't already own and told the company to consider instead a tax-free stock bid that is now worth about $274-million.

The move comes after Ticketmaster said it appointed a committee of two outside directors to consider the offer. HSN, the Barry Diller-run company that operates the Home Shopping Network and just agreed to buy the USA Network cable channel, wants Ticketmaster for cross-promotion and its data base of customers.

It wasn't immediately clear why St. Petersburg-based HSN dropped the cash offer, which was worth $25 a share. The terms of the stock offer, originally made Oct. 23, valued Ticketmaster, the nation's largest ticket distribution company, at $22.55 a share, or $277.3-million.

HSN's stock, though, has dropped 15 percent to 40 since it made the offer.

That kicks in a provision of the offer that adjusts the exchange ratio so that the value of the bid is $22.264. The ratio is capped at 0.557 of a share of HSN stock if the price is between 40 and 44.

HSN declined to comment. Ticketmaster could not be reached.

In July, HSN bought about half of Ticketmaster from Chairman Paul Allen, co-founder of Microsoft Corp., for $235.8-million in stock.

The committee named to evaluate the offer consists of Jonathan Dolgen, who also is an executive with Viacom Inc.'s Paramount Pictures studio, and Peter Barton, the former head of Tele-Communications Inc.'s Liberty Media Group.

HSN's shares were unchanged at 40.

West Hollywood, Calif.-based Ticketmaster's shares rose 37{ cents to $23.12{.