SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

or

Commission File Number 0-25041

Ticketmaster

(Exact name of registrant as specified in its charter)

(213) 639-6100
(Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

Securities Registered Pursuant to Section 12(g) of the Act:
Class B Common Stock, par value $.01 per share (Title of class)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes ý No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

        The aggregate market value of the voting stock of the registrant held by non-affiliates of the registrant, based upon the closing price of the Class B Common Stock on March 21, 2002, as reported by Nasdaq, was approximately $1,181,471,878. Shares of voting stock held by each officer and director and by each person who owns 5% or more of the registrant's outstanding voting stock have been excluded in that such persons may be deemed to be affiliates. This calculation similarly excludes 92,740,544 shares of the registrant's voting stock that are held by Ticketmaster Group, Inc. and its subsidiaries (collectively, "TGI"), which are wholly-owned subsidiaries of the registrant. The determinations of affiliate status set forth in the preceding two sentences are not necessarily conclusive determinations for other purposes.

        The number of shares of the registrant's Common Stock outstanding on February 28, 2002 was 43,507,492 shares of Class A Common Stock and 98,955,056 shares of Class B Common Stock. The number of shares outstanding does not include 42,480,143 shares of Class A Common Stock and 50,260,401 shares of Class B Common Stock held by TGI, as such shares are indirectly held by the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the proxy statement for the registrant's 2002 Annual Stockholders Meeting are incorporated by reference into Part III herein.

TICKETMASTER

INDEX TO ANNUAL REPORT ON FORM 10-K

For The Fiscal Year Ended December 31, 2001

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PART I

ITEM I. BUSINESS

        Unless the context otherwise requires, references to "Ticketmaster" or the "Company" include Ticketmaster (the company formerly known as Ticketmaster Online-Citysearch, Inc.; "TMCS") and Ticketmaster Group, Inc. ("TGI") and their predecessors, wholly-owned subsidiaries, majority-owned or controlled subsidiaries and ventures and their licensees.

        Ticketmaster as currently organized was formed in January 2001, pursuant to the consummation of the provisions of a contribution agreement, under which TMCS, the predecessor to Ticketmaster, acquired TGI's businesses from USA Networks, Inc. ("USA Networks") in exchange for 52,000,000 new shares of TMCS's Class B common stock (the "Combination"). As a result of the Combination, TGI and the former subsidiaries of Ticketmaster Corporation ("TM Corp") whose equity interests were contributed to TMCS became direct subsidiaries of TMCS and TM Corp became an indirect subsidiary of TMCS.

        Upon the closing of the Combination on January 31, 2001, TMCS changed its name to "Ticketmaster."

General

        Ticketmaster is a leading provider of automated ticketing services with over 7,000 domestic and foreign clients, including many of the foremost entertainment facilities, promoters and professional sports franchises. Ticketmaster is also a leading local portal and electronic commerce company that provides in-depth local content and services to help people get things done online. Ticketmaster's principal online businesses are ticketing, personals, city guide and camping reservations. Ticketmaster's family of websites includes ticketmaster.com, Match.com, citysearch.com, reserveamerica.com, museumtix.com, ticketweb.com, evite.com and livedaily.com, among others. Ticketmaster's businesses are operated in three segments: (1) ticketing, (2) personals and (3) city guide. Ticketing includes both online and offline ticketing and camping reservations operations, personals includes online personals, and city guide includes all of Ticketmaster's other online properties.

Ticketing

General

        Ticketmaster provides its clients with comprehensive ticket inventory control and management, a broad distribution network and dedicated marketing and support services. Ticket orders are received and fulfilled through operator-staffed call centers, independent sales outlets remote to the facility box office and through the ticketmaster.com website and related international websites. Ticketing revenue is generated principally from convenience charges and order processing fees received by Ticketmaster for tickets sold on its clients' behalf. Ticketmaster generally serves as an exclusive agent for its clients and typically has no financial risk for unsold tickets.

        Ticketmaster sold 86.7 million tickets in fiscal 2001, generating revenues of $579.7 million. Gross transaction value for fiscal 2001 was $3.6 billion.

        Based upon recent trends in the entertainment, sporting and leisure industries, Ticketmaster believes that its principal business, live entertainment ticketing, will continue to experience increased revenues under existing venue contracts. Ticketmaster believes that significant opportunities also exist to increase penetration of this principal market. Additionally, Ticketmaster believes that further ticketing opportunities will arise from an increase in the number of concerts and theatrical and family shows, the construction of new and larger facilities, an increase in the number of professional sports teams and the development of new sports leagues. Furthermore, Ticketmaster plans to continue to

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broaden its client base to include such venues as museums, amusement parks and state and county fairs. In addition, Ticketmaster intends to continue to grow its online businesses and to acquire additional online and offline businesses when appropriate opportunities become available.

        Ticketmaster has continued to expand its ticketing operations into territories outside of the United States, and has experienced growth in these markets, with international ticket sales increasing from 14.2 million in fiscal 2000 to 17.8 million in fiscal 2001, and revenues from international ticket sales increasing from $47.0 million to $61.4 million for the same periods. Ticket sales and revenues from international markets represented approximately 21% and 11%, respectively, of total ticket sales and revenues in fiscal 2001 (convenience fees are typically lower outside of the United States).

        Ticketmaster believes that significant additional opportunities exist in international markets to attract existing and new venues in a historically under-penetrated market for automated ticketing services for live entertainment events. In addition, Ticketmaster believes that the continued enthusiasm for music, theatre, family and arts touring shows, as well as for soccer, rugby and cricket, coupled with the growing popularity of major American sports such as football, baseball and basketball, will lead to increased use of international venues and provide additional revenue opportunities for Ticketmaster. Ticketmaster is seeking to enhance its ability to capitalize on these trends by expanding its existing operations in Canada, the United Kingdom, Ireland, Norway, Australia and Mexico and exploring further opportunities in Europe and Asia.

        Ticketmaster also has expanded its ticket distribution capabilities through the continued development of the ticketmaster.com website and related international websites, which are designed to promote ticket sales for live events and disseminate event information. Ticketmaster has experienced significant growth in ticket sales through its websites in recent years and this trend is expected to continue during the next several years. For the year ended December 31, 2001, online ticket sales through ticketmaster.com and related websites accounted for approximately 32.1% of Ticketmaster's ticketing business, with ticket sales of approximately 27.8 million tickets having a gross dollar value of over $1.3 billion. Online ticket sales accounted for approximately 35.4% of the Company's domestic ticketing business, with ticket sales of approximately 24.4 million tickets having a gross dollar value of over $1.2 billion in 2001.

        Ticketmaster is continuing to use its widely recognized brand name and extensive distribution capabilities to develop new opportunities in related areas, such as entertainment information, advertising, promotional services and direct marketing. Examples of these efforts include offering integrated brand management and marketing services to strategic partners through sponsorship and advertising opportunities during live events, during telephone ticketing services, on its ticket stock and envelopes, on event promotional material and in additional media outlets that Ticketmaster is developing.

        Ticketmaster believes that its proprietary operating system and software, which is referred to as the Ticketmaster System, and its extensive distribution capabilities provide it with benefits that enhances Ticketmaster's ability to attract new clients and maintain its existing client base. The Ticketmaster System, which includes both hardware and software, is typically located in a data center that is managed by Ticketmaster staff. The Ticketmaster System provides a single, centralized inventory control and management system capable of tracking total ticket inventory for all events, whether sales are made on a season, subscription, group or individual ticket basis. All necessary hardware and software required for the use of the Ticketmaster System is installed in a client's facility box office, call centers or remote sales outlets. The Ticketmaster System is capable of processing over 100,000 tickets per hour, and each of its 26 regional computer systems can support 32,000 users, of which as many as 5,000 can theoretically be actively using the system at any one time.

        In addition, Ticketmaster has developed or acquired a number of ticketing products that provide clients with an integrated ticketing and access solution as a complement to the Ticketmaster System. In

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October 2000, Ticketmaster introduced ticketfast™ to customers using ticketmaster.com as a new ticket delivery option. This technology allows Ticketmaster to deliver tickets instantly to customers via e-mails that enable ticket purchasers to print secure, uniquely bar-coded tickets on plain paper using their home or office printer. ticketfast™ tickets (and other tickets that are bar-coded) can be used for admission at any venue that uses Ticketmaster's FanTM™ access control technology. In January 2002, Ticketmaster launched Ticketmaster Marketplace™. Ticketmaster Marketplace™ is a way for ticketing clients (currently sports teams) to allow their season ticket holders to forward and sell their tickets to other fans over the Internet and deliver "virtual" tickets safely and securely using Ticketmaster's ticketfast™ service.

        The backbone of these new ticketing and access solutions is a grouping of software and hardware systems developed or acquired by Ticketmaster. Specifically, Ticketmaster offers its clients the ARCHTICS™ system, which is a database software product that allows clients to manage their season ticket sales and accounts, and that allows clients and their fans to participate in the Ticketmaster Marketplace™. Ticketmaster AccountManager™ works in conjunction with ARCHTICS™ and allows season ticket fans to conduct a variety of transactions on their accounts via the Internet. FanTM™ (Facility Access Network by Ticketmaster) provides venues with access control through wireless scanning devices that read the barcodes on ticketfast™ and other tickets and are located at the venues' entrances. Finally, TM Ultimate Fan™ is a venue-based, card data collection system that works much like a "frequent flyer program", designed to track fans' loyalty and to reward them for their support by accumulating points they can redeem in various team-designed promotions. Ticketmaster also has acquired several other systems, such as its Synchro division's Venuemaster client server relational database ticketing system targeted for clients abroad, the Microflex ticketing system offered through the Company's Admission Network USA Inc. subsidiary to clients in the United States and in Canada, notably used by Cirque du Soleil, among other clients, and the Company's Pacer Cats subsidiary's concessions and movie ticketing inventory management system. Ticketmaster believes that its continued commitment to expanding its technology systems and capabilities in response to its clients' needs is a critical component to its growth.

        In addition, Ticketmaster's ticketing segment includes its other ticketing companies, TM VISTA, Inc. (formerly known as 2b Technology, Inc.) and TicketWeb Inc., which were acquired by Ticketmaster in June 2000 and May 2000, respectively. TM VISTA is a Richmond, Virginia-based visitor management software developer and offline and online ticketing company. In 2001, TM VISTA changed its name from 2b Technology to reflect the focus on its core software product, the VISTA ticketing system. TM VISTA targets venues such as museums, cultural institutions and historic sites through its websites tmvista.com and museumtix.com. Representative clients include the Guggenheim Museum and the Los Angeles County Art Museum.

        Ticketmaster has a comprehensive ticket distribution system that includes approximately 3,300 retail Ticket Center outlets and 20 worldwide call centers with approximately 1,750 operator and customer service positions. Ticketmaster provides the public with convenient access to tickets and information regarding live entertainment events. Ticket purchasers are assessed a convenience charge for each ticket sold outside of the venue box office by Ticketmaster on behalf of its clients. These charges are negotiated and included in Ticketmaster's contracts with its clients. The versatility of the Ticketmaster System allows it to be customized to satisfy a full range of client requirements.

        TicketWeb is a leading provider of self-service, Internet-based box-office ticketing operations. TicketWeb revenue is generated principally from convenience charges and order processing fees received by TicketWeb for tickets sold in its clients' behalf. TicketWeb's primary clients are small- to medium-sized venues and event promoters that generally sell fewer than 5,000 tickets per year. In exchange for a license fee, TicketWeb provides its clients with password-protected access to TicketWeb's proprietary system, TicketWeb 2.0. Using a standard Internet Web browser, TicketWeb

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clients can perform a full range of box-office operations, such as create and edit events, monitor ticket sales, download will-call lists and take advantage of TicketWeb's sales and marketing tools.

        Also included in the ticketing segment is Ticketmaster's wholly-owned subsidiary, ReserveAmerica Holdings, Inc., a campground reservation services company acquired in February 2001. ReserveAmerica is a leading provider of outdoor recreation reservation services and software to United States federal and state agencies for camping activities, recreation ticketing and other access privileges to public land attractions. ReserveAmerica also offers its software and services to private campgrounds. The ReserveAmerica system permits the general public to make camping reservations and obtain access to public recreation attractions over the Internet, by telephone or in person. ReserveAmerica's Internet sites (www.reserveamerica.com and www.reserveusa.com) service up to 30,000 visitors daily, and its three telephone call centers are located in New York, California and Wisconsin. ReserveAmerica also utilizes a portion of Ticketmaster's call center located in Orlando, Florida.

Client Relationships

        Ticketmaster's ticketing clients include many of the most well known arenas, stadiums, theaters, sports teams and promoters in the United States and abroad. Ticketmaster currently provides service to ticketing clients ranging in size from large stadiums with more than 100,000 seats to smaller theaters with seating in the hundreds, and from multi-event promoters to one-time single event promoters.

        Ticketmaster's clients also include professional sports leagues and franchises in the United States, including the National Basketball Association and most of its member teams, National Hockey League teams, Major League Baseball teams, National Football League teams, Major League Soccer teams, Women's National Basketball Association teams, PGA Tour, Inc. and numerous participating PGA Tour events, European football clubs, International sports clubs and special events such as the Commonwealth Games.

        In 2001, Clear Channel Entertainment, a promoter and marketer of live entertainment, accounted for approximately 17% of the revenues of Ticketmaster's ticketing segment and approximately 15% of Ticketmaster's consolidated revenues. Clear Channel Entertainment, formerly known as SFX, is a subsidiary of Clear Channel Communication.

        Ticketmaster generally enters into written agreements with its clients pursuant to which it agrees to provide the Ticketmaster System and related systems purchased by the client, and to serve as the client's exclusive ticket sales agent for all sales of individual tickets sold to the general public outside of the facility's box office, including any tickets sold at remote sales outlets, over the phone or via the Internet, for a specified period, typically three to five years. Pursuant to an agreement with a facility, Ticketmaster generally is granted the right to sell tickets for all events presented at that facility, and as part of such arrangement Ticketmaster installs the necessary ticketing equipment in the facility's box office. An agreement with a promoter generally grants Ticketmaster the right to sell tickets for all events presented by that promoter at any facility, unless the facility is covered by an exclusive agreement with Ticketmaster or another automated ticketing service company. The terms of Ticketmaster's agreements with its clients are generally negotiated on a contract-by-contract basis, except in the case of contracts subject to public bid (e.g., for facilities owned or managed by municipalities or governmental agencies), the terms of which are largely defined by the specifications and conditions set forth in the formal requests for bids.

        Clients are routinely required by contract to include the Ticketmaster name in print, radio and television advertisements for entertainment events sponsored by such clients. The Ticketmaster name and logo are also prominently displayed on printed tickets and ticket envelopes.

        Ticketmaster generally does not buy tickets from its clients for resale to the public and typically has no financial risk for unsold tickets. All ticket prices are determined by Ticketmaster's clients.

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Ticketmaster's clients also generally determine the scheduling of when tickets go on sale to the public and what tickets will be available for sale through Ticketmaster. Facilities and promoters, for example, often handle group sales and season tickets in-house. Ticketmaster only sells a portion of its clients' tickets, the amount of which varies from client to client and varies as to any single client from year to year.

        Ticketmaster believes that the Ticketmaster System provides its clients with numerous benefits, including (1) broader and expedited distribution of tickets, (2) centralized control of total ticket inventory as well as accounting information and market research data, (3) centralized accountability for ticket proceeds, (4) manageable and predictable transaction costs, (5) wide dissemination of information about upcoming events through Ticketmaster's call centers, ticketmaster.com and other media platforms, (6) the ability quickly and easily to add additional performances if warranted by demand and (7) marketing and promotional support.

        The Ticketmaster System and related systems such as ARCHTICS™, FanTM™, PCI (a personal computer interface which provides a Windows-like interface to the Ticketmaster System) and TM Ultimate Fan™ also provide Ticketmaster's clients with flexibility in processing season, subscription and group ticketing, database management, access control and fan loyalty programs. For example, using the Ticketmaster System, a sports team can choose to give priority to season tickets, mini-ticket plans and group sales, permitting those ticket purchasers to have first choice of tickets before their sale to the general public. In addition, Ticketmaster's clients have the ability to structure single or multiple events, including seasonal events, in almost any number and type of pricing and discount plans. Ticketmaster believes that its clients also place high value on the ability to integrate their on-site networks with the Ticketmaster System, enhance access control with the FanTM™ system, and offer ticketfast™ at home and various fan loyalty programs through the TM Ultimate Fan™ system.

        Pursuant to its contracts with clients, Ticketmaster is granted the right to collect from ticket purchasers a per ticket convenience charge on all tickets sold at remote sales outlets, by telephone, through ticketmaster.com and other media. There is an additional per order "order processing" fee on all tickets sold by Ticketmaster at other than remote sales outlets. Generally, the amount of the convenience charge is determined during the contract negotiation process, and typically varies based upon numerous factors, including the services to be rendered to the client, the amount and cost of equipment to be installed at the client's box office and the amount of advertising and/or promotional allowances to be provided, as well as the type of event and whether the ticket is purchased at a remote sales outlet, by telephone, through ticketmaster.com or otherwise. Any deviations from those amounts for any event are negotiated and agreed upon by Ticketmaster and its client prior to the commencement of ticket sales. During fiscal 2001, the convenience charges generally ranged from $1.50 to $8.25 per ticket. Average revenue per ticket (which includes convenience charges and order processing fees and other revenue sources directly related to the sale of tickets) was $6.11 in fiscal 2001. Generally, the agreement between Ticketmaster and a client will also establish the amounts and frequency of any increases in the convenience charge and order processing fees during the term of the agreement.

        The agreements with certain of Ticketmaster's clients may also provide for a client to participate in the convenience charges and/or order processing fees paid by ticket purchasers for tickets bought through Ticketmaster for that client's events. The amount of such participation, if any, is determined by negotiation between Ticketmaster and the client. Some agreements also may provide for Ticketmaster to make participation advances to the client, generally recoupable by Ticketmaster out of the client's future right to participations. In isolated instances, the client may negotiate the right to receive an upfront, non-recoupable payment from Ticketmaster as an incentive to enter into the ticketing service agreement. The agreements also specify the additional systems, if any, that may be used and purchased by clients.

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        If an event is canceled, Ticketmaster's current policy is to refund the per ticket convenience charges (but not the order processing fee that is payable with respect to transactions by telephone and online orders). Refunds of the ticket price for a canceled event are funded by the client. To the extent that funds then being held by Ticketmaster on behalf of the client are insufficient to cover all refunds, the client is obligated to provide Ticketmaster with additional amounts within a specified period of time (typically 24 to 72 hours) after request by Ticketmaster. Clients have historically fulfilled these obligations.

Distribution System

        Ticketmaster's ticketing distribution system is principally comprised of remote sales outlets, call centers and the ticketmaster.com website. During fiscal 2001, ticket sales at the remote sales outlets, at call centers and on ticketmaster.com and related international websites accounted for approximately 34.1%, 33.8% and 32.1%, respectively, of Ticketmaster's ticket sales.

Remote Sales Outlets

        At the end of fiscal 2001, Ticketmaster had approximately 3,300 retail Ticket Center outlets worldwide, approximately 2,800 of which were located in the United States and approximately 500 of which were in foreign territories, compared to approximately 3,460 retail Ticket Center outlets worldwide at the end of fiscal 2000. Ticketmaster has emphasized the establishment of retail outlets in high visibility chain stores with existing name recognition, significant customer traffic and customer profiles consistent with the type of events sold through the Ticketmaster System. The majority of Ticketmaster's remote sales outlets are located in major department, grocery and music stores. Among the retailers that serve as remote sales outlets are May Company (Filene's, Foley's, Hecht's, Kaufmann's, Robinsons-May), Saks Incorporated (Carson Pirie Scott, Boston Store, Bergner's, Younkers), Target Corporation (Marshall Field's), Kroger (Kroger, Fred Meyer, Fry's Marketplace, Smith's Food and Drug), Publix grocery and drug stores and music stores, Wherehouse Music, Tower Records and Trans World Entertainment (Camelot Music, Coconuts, Record Town, Spec's Music, For Your Entertainment). The specific stores within each chain that serve as remote sales outlets are negotiated by Ticketmaster with each chain.

        Ticketmaster is responsible for installation and maintenance of the hardware and software necessary to sell tickets through the Ticketmaster System at the remote sales outlets. Ticketmaster also trains the remote sales outlet's employees in the use of the Ticketmaster System and related systems, provides support and oversight in connection with the sale of tickets and furnishes the remote sales outlets with promotional materials related to the Ticketmaster System and events for which tickets are available. The remote sales outlets are responsible for the staffing of the stores and their daily operation. The remote sales outlets are generally paid a commission of approximately 17% to 20% of the convenience charge (approximately 30% in the United Kingdom), typically subject to a maximum amount per ticket. Since February 1997, Ticketmaster has accepted credit cards in addition to cash at the outlets. Ticket purchasers receive their tickets at the point of sale. The remote sales outlets generally deliver sales proceeds and convenience charges to Ticketmaster on a schedule ranging from daily to weekly depending on the financial condition of the particular remote sales outlets and other factors. Ticketmaster has not suffered any material loss with respect to funds collected by its remote sales outlets for remittance to Ticketmaster.

Call Centers

        As of December 31, 2001, Ticketmaster operated 20 call centers worldwide. Ticket purchasers seeking a greater degree of convenience than is afforded at facility box offices or remote sales outlets can purchase tickets by telephone seven days a week, up to 14 hours per day, using a major credit card. Sales agents, staffing up to approximately 1,100 telephone and customer service positions domestically

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and approximately 650 in foreign markets, take the caller's credit card order and mail the tickets directly to the ticket purchasers. Tickets that are purchased by telephone can also be picked up at the appropriate facility's "will call" ticket window. Ticketmaster typically assesses a per order "order processing" fee in addition to the per ticket convenience charge. Ticketmaster generally receives the ticket sales proceeds and convenience charge and order processing fees from telephone credit card transactions within two business days after submission to the credit card company. The call centers also respond to large numbers of informational calls related to events, including requests for facility characteristics, directions, telephone numbers, disability access and seating and local hotels and restaurants. Concurrently with the sale of tickets to entertainment events, Ticketmaster's call centers may offer other products for sale related or unrelated to the events for which tickets are being sold. Ticketmaster generally fulfills these sales by ordering the products from a third party.

        An important feature of Ticketmaster's domestic telephone system is the ability to channel all or a portion of incoming calls from any city to a selected call center. Accordingly, the number of telephone positions available to receive telephone orders in a given region is capable of being increased in advance of the commencement of sales activity for a major event. Similarly, the ability to network call centers affords Ticketmaster back-up capabilities in the event that a call center experiences operating difficulties.

        In addition, Ticketmaster has effectively handled a number of ticket orders through its interactive voice response system, which processes ticket orders on the phone without operator assistance. In 2001, approximately 16.4% of its call center sales (representing 5.6% of all of Ticketmaster's ticket sales) were processed through the interactive voice response system.

Online Ticketing Services

        Online services permit consumers to purchase tickets and access information about events on their personal computers via the Internet. Ticketmaster's ticketing transactions are processed primarily through ticketmaster.com and, to a lesser extent, through ticketweb.com, museumtix.com and various international versions of these websites. Ticketmaster expects online sales to continue to expand as more consumers engage in transactions over the Internet. Additionally, this medium provides Ticketmaster with a cost efficient way to disseminate information and cross-promote, which may help reduce costs for these services across Ticketmaster's other distribution channels. From September 1998 until the Combination, Ticketmaster's online ticketing operations were conducted exclusively by TMCS; since the Combination, they are conducted by Ticketmaster.

        Ticketmaster.com, Ticketmaster's primary online ticketing website, is a leading online ticketing service. The service enables consumers to purchase tickets for live music, sports, arts and family entertainment events presented by Ticketmaster's clients and related merchandise over the Web. Consumers can access the ticketmaster.com service at www.ticketmaster.com, from Ticketmaster's other owned and operated websites, including citysearch.com, and through numerous direct links from banners and event profiles hosted by third party websites. In addition to these services, the ticketmaster.com website and related international websites provide local information and original content regarding live events for Ticketmaster clients throughout the United States, Canada, Norway, Ireland and the United Kingdom.

        Since the commencement of online ticket sales in November 1996, ticketmaster.com has experienced significant growth in the volume of tickets sold through its website. Gross transaction dollars for ticket sales through its website increased from approximately $223,000 in November 1996 to $115.1 million in December 2001. Similarly, tickets sold on the ticketmaster.com website in November 1996 represented less than 1% of total tickets sold by Ticketmaster, while tickets sold online in the quarter ended December 31, 2001 represented approximately 33.9% of tickets sold.

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        The ticketmaster.com ticketing system interfaces on a real-time basis with the host ticketing systems developed by Ticketmaster. This process is designed to ensure that, except in limited circumstances, the inventory of tickets available online is identical to that which is available through Ticketmaster's other distribution methods (e.g., telephone call centers and remote sales outlets) and to enable consumers to order tickets on a "best available seat" basis. Ticketmaster has taken various measures designed to prevent system failure in Ticketmaster's computer center. Each system has a live back-up available in the event of a primary system failure. Rooms housing computer-related equipment are protected by computer-safe fire protection systems. To guard against power outages, uninterruptable power supplies are utilized. High capacity back-up generators eliminate dependency on public electric sources and all data is continually recorded to multiple back-up systems. In addition, the ticketmaster.com website is mirrored in three separate co-location facilities across the United States.

        Ticketmaster uses Secure Sockets Layer encryption technology, which is designed to allow users to transmit their personal information securely over the ticketmaster.com website. The decrypted data is then passed through two levels of firewalls, using an internally developed communications protocol, to the Ticketmaster host systems where credit cards are processed and customer accounts are created. The host systems communicate directly with bank processing centers for instantaneous online credit card authorization and electronic deposit of credit card receipts. Essentially, all order processing, credit card billing, order fulfillment and consumer service functions for online ticketing orders are handled by Ticketmaster in the same manner as orders which are placed by telephone.

        Ticketmaster.com has an extensive database of live event information, with event information updated 20 times every hour and more than 200 times daily. This database contains information on more than 30,000 events and over 3,000 clients and is designed to support an easy-to-use and reliable dynamic event calendar and ticket-buying interface to the Ticketmaster System.

        The ticketmaster.com system is deployed as a multi-tiered system of servers that separate database functions, Web page serving functions, transaction processing functions and ticketing system interfacing functions. The system is built using a combination of commercial and proprietary software and hardware and is integrated into the Ticketmaster System. All ticketmaster.com ticket sales occur on one of 26 geographically dispersed host systems. Credit card authorization and deposit, inventory control for events, customer account management and ticket printing and distribution are all handled on the Ticketmaster System. Internet users interact with various Web servers to find an event using various criteria including event location, event type or performer name. Once an event is located, users interact with forms-based HTML pages to guide them through the ticket-buying process. The Web servers communicate via a proprietary gateway to the host ticketing systems where the transaction actually takes place.

The Ticketmaster System

        Ticketmaster specifically developed its proprietary operating system, application software and its computer and telephone systems for the live event ticketing industry. The Ticketmaster System provides clients with the means to maintain and control their ticket inventory efficiently. Users of the Ticketmaster System can effect a range of functions from the most basic to the most complex, including individual advanced ticket sales, season and subscription ticketing, day of show walk-up ticket sales and group ticket sales.

        The Ticketmaster System software is maintained in-house, eliminating any reliance upon outside software companies. Ticketmaster believes that this allows it to more readily adapt to its clients' needs, changing market conditions and advances in hardware and other technologies. The Ticketmaster System communicates directly with bank processing centers for instantaneous online credit card authorization and electronic deposit of credit card receipts. All of the Ticketmaster System's online terminals at the call centers and outlets and at selected facility box offices have access to the authorization network.

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        Significant measures are taken to prevent system failure in each computer center. Each system has a live back-up standing ready in the event of a primary system failure. Rooms housing computer-related equipment are protected by computer-safe fire protection systems. Dual custom air conditioning units provide constant climate control. To guard against power outages, Ticketmaster employs uninterruptable power supplies. High capacity back-up generators eliminate the dependency on public electric sources. Moreover, all data are continually recorded to multiple back-up systems. Ticketmaster maintains an online disaster recovery site in one of its principal offices. Historically, the Ticketmaster System has experienced minimal downtime.

        Ticketmaster's proprietary software and system is the product of over 20 years of innovation and continual enhancement by a team of in-house software and system professionals currently numbering over 80. Ticketmaster's research and development staff has produced significant enhancements to the Ticketmaster System, including proprietary ticket printers and data telecommunications multiplexors, and regularly upgrades Ticketmaster's software. In order to further expand its product line and offer specialized products to its clients, Ticketmaster has acquired a number of system and software development companies. For example, in January 1998, Ticketmaster acquired the software capabilities of Distributed System Architects, Inc., which provides ARCHTICS™ software and services for professional sports teams. Similarly, other acquisitions have facilitated Ticketmaster's expansion of its development team and the integration of related products and services, including FanTM™, PCI, TM Ultimate Fan™, Synchro and Pacer Cats.

        In April 2000, Ticketmaster further expanded its product line and development team by acquiring the Microflex Ticketing System used by Admission Network USA Inc. in North America and by Cirque du Soleil, among other clients. In October 2000, Ticketmaster also began to implement its ticketfast™ program, which is currently only available through ticketmaster.com. This technology allows Ticketmaster to deliver tickets instantly to customers by allowing them to print their own safe and secure bar-coded tickets on their home or office printers. Using Ticketmaster FanTM™ access control technology, facilities can accept and verify tickets created using ticketfast™ as well as other bar-coded Ticketmaster tickets.

Ticketing Industry Overview

        Ticketmaster believes that, although a material percentage of all tickets for live entertainment events sold in the United States during fiscal 2001 were sold through retail outlet networks, call centers and online services operated by automated ticketing service companies, the domestic market represents a growth opportunity as consumers increasingly use the Internet and seek the convenience offered by ticket locations away from the facility box office.

        The use of automated ticketing is generally in an earlier stage of development outside of the United States, although the actual level of use varies greatly from country to country. While Ticketmaster believes that there is substantial potential for international growth, the timing and rate of penetration within each international market will vary.

        The supply of tickets, both domestically and internationally, has increased in recent years due to, among other factors, increases in the number of concerts and family shows, the number of facilities (e.g., construction of new arenas and amphitheaters) and facility size and seating capacity, event expansion into new market areas (e.g., the increase in the number of professional sports teams and the development of new sports leagues) and increases in the number of performances of a particular event (e.g., expanded post-season play by sports leagues and associations). Ticket supply has also been enhanced by the facilities' desire to present as many revenue-producing events as possible in order to meet their financial and other obligations. In recent years, the public's increased demand for tickets to certain live entertainment events has been evidenced by its willingness to pay higher ticket prices to attend these events and the spread of public interest in certain types of events beyond historical levels

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(e.g., increased worldwide interest in football, baseball and basketball). In addition to live entertainment events held at arenas, amphitheaters, stadiums and performing arts venues, automated ticketing for live events has expanded into servicing ticket issuing facilities that do not generally have seats (e.g., museums, amusement parks and state and county fairs).

        The success of automated ticket service companies depends on their ability to develop and maintain relationships with facilities, sports teams and promoters by providing high quality service as well as the availability of, and public demand for, tickets for all types of events, including sports, family entertainment, concerts, fine arts and cultural attractions.

Personals

Service

        Match.com is a leading online matchmaking and dating service that offers single adults a safe, convenient and private environment for meeting other singles. Match.com, in combination with the One & Only Network, another online personals company operated by Match.com, features more than 2.5 million members with profiles. As of December 31, 2001, the personals operations had 382,150 paying subscribers.

        Match.com is designed to provide adults with a secure, fun environment for meeting other single adults. Match.com provides users with access to other users' personal profiles and enables a user interested in meeting another user to send email messages to that user through Match.com's double-blind anonymous email system. Email recipients can respond, or not, depending on their interest in the sender. Match.com offers users a free service that includes searching, matching and responding to emails from Match.com users; should the user elect to initiate email contact with another Match.com user, Match.com charges a subscription fee, starting with a single-month term, with discounts for longer term subscriptions. Match.com seeks to maintain a balanced number of male and female users by, among other things, forming relationships with women-oriented Internet sites. Match.com also has implemented a number of measures designed to keep the site secure for use by single women.

        In September 1999, Ticketmaster purchased One & Only Network, another Internet personals company, which also operates an online affiliate program focused on online matchmaking. These affiliates are able to join the One & Only Network for free, and earn commissions on each customer subscription they sell into One & Only Network's online matchmaking service. One & Only Network is operated as part of the Match.com network, and Ticketmaster is focusing its partnership and advertising efforts on building the Match.com system and brand.

Strategic Alliances; Sales and Marketing

        Match.com has entered into partnerships and strategic alliances with third parties in order to increase subscriptions in general as well as to target particular segments of its potential subscriber base. Typically, these partners earn a commission on each customer subscription they sell into the Match.com service. Match.com expects to continue to pursue strategic alliances and partnerships domestically and in foreign markets, both through its affiliate program and through agreements with third parties, in an effort to expand its overall subscriber base and to encourage subscriptions from targeted audiences. Match.com purchases advertising on websites, including strategic placement of ads on Web pages related to romance and personals, and television in an effort to increase subscriptions and promote the Match.com brand name.

Technology

        Match.com and One & Only Network have developed and implemented several technologies to support their matchmaking services and affiliate marketing network.

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        The Match.com personals service is deployed as a tiered system consisting of Web servers, database servers, customer support applications and transaction processing applications. These technologies are based on commercial application servers, databases and hardware. Internet users interact with forms-based HTML pages to specify their desired match. Match.com's database is then searched to provide the results to the user. User transactions and customer support are accomplished with custom-built applications.

        The affiliate marketing service provides registration, customization, transaction tracking and reporting services to independent Web masters allowing them to participate in the personals service or any other service which Ticketmaster may make available to the affiliate network from time to time. Match.com technology provides near real-time reporting capabilities on the subscription performance of affiliated sites.

City Guide

General

        Citysearch.com is a network of local city guide sites that offer primarily original local content for major cities in the United States and abroad, as well as practical transactional tools to get things done online. The city guides provide up-to-date, locally produced information about a city's arts and entertainment events, bars and restaurants, recreation, community activities and businesses (shopping and professional services), real estate related information, as well as local sports and weather updates. Citysearch also features a comprehensive directory listing, similar to a yellow pages directory, of local businesses in over 3,000 zip codes in the United States. In addition, Citysearch city guides let people act on what they learn by supporting online business transactions, including ticketing, hotel and restaurant reservations, and matchmaking through affiliations with leading ecommerce websites providing these products.

        Ticketmaster has citysearch.com sites in 106 cities in the United States, 103 of which are owned and operated by Ticketmaster and the remaining three of which are partner-led. During 2001, Ticketmaster reduced the number of domestic markets in which Ticketmaster maintains local sales and content staff for from 33 to 16, reflecting a realignment of the city guide focus to a more regionally-based structure. During 2001, Ticketmaster has also increased the number of its partner-led international citysearch.com sites from 21 to 43. Ticketmaster's international media partners bring capital, brand recognition, promotional strength and local knowledge to their city guides and allow Ticketmaster to build out its international network of sites faster than it could solely through owned and operated sites.

        City guide revenues are generated through the sale of online advertising, both local and national, product licensing and consulting services and to a smaller extent, transaction fees from affiliate partners. Local advertising revenues are derived primarily from targeted media placement, sale of self-enrollment enhanced listings in search results, in context advertising and targeted sponsorship packages. In addition, while becoming a smaller part of the total revenue stream, Ticketmaster continues to generate local advertising income from Web site development, hosting and placement in Citysearch's directory listings.

Business-to-Consumer Products

        Citysearch provides local, regional and national businesses with a wide range of Web advertising options designed to reach growing local audiences. Throughout 2001, Citysearch shifted focus from comprehensive Web site design and hosting, toward advertising solutions that are more targeted and client driven, including those solutions described below.

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        Media Products.    Citysearch offers businesses an opportunity to target interested users through one of two bundled packages, a "targeted sponsorship package" and a "traffic builder package". A "targeted sponsorship package" includes a premium placement advertisement on the citysearch.com search results pages; a cover advertisement on the front page of city guide content section; and a priority listing advertisement on a user initiated search return. The "traffic builder package" features both the premium placement advertisement and the cover advertisement, but does not include a priority listing.

        Self-Enrollment Listings.    Businesses can choose from a variety of listing options on citysearch.com, including an enhanced listing that allows a business to boost its presence in citysearch.com search results by ensuring that its ad will be placed above the standard alphabetical listings in its category. As of September 2001, Citysearch automated the enrollment process for directory listings so that a business can now self-enroll and manage its enhanced listing without reliance on Citysearch personnel.

        Web Site Design and Hosting.    Citysearch offers several options for businesses seeking to create a Web presence, from a basic Web site to a multi-page site with additional features and functionality. Citysearch charges between $75 and $150 per month for its Web site hosting and maintenance services. In addition, Citysearch charges an upfront development and design fee between $900 and $1,500 in connection with all its Web site design services.

        Banners and Sponsorships.    Citysearch offers local, regional and national businesses opportunities to gain exposure through Citysearch's banner, sponsorship and promotion products. A business can promote its message by sponsoring one of Citysearch's four major editorial guides. Citysearch also sells sponsorships of various sections within its city guides on a local and national basis.

        Promotional Opportunities.    Elements of Citysearch's marketing programs include online sweepstakes and fulfillment/database building, consumer incentive programs and offline marketing programs such as point-of-purchase, employee incentives and special event sponsorships.

Strategic Alliances

        Citysearch has entered into partnerships and strategic alliances with third parties in order to:

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rapidly build its national and international network of Citysearch local city guides;



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generate licensing revenue from Citysearch partner-led markets;



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facilitate branding;



•

gain access to additional content; and



•

drive traffic on its network of sites.

        Newspaper and Telephony Partnerships.    Citysearch has entered into strategic partnerships with major newspapers and media companies in the United States and other countries, including Australia, Sweden, Denmark, Canada, Korea and Japan. In these partner-led markets, the partner provides capital and management, while Citysearch contributes technology, a business model, consulting services, business systems and processes and network participation. Citysearch typically receives up-front and ongoing license fees, fees for consulting services and, in many cases, royalties based on partner-generated revenues. Citysearch believes these arrangements allow it to expand its international network of cities in a more rapid and cost-effective manner than an exclusively owned and operated network would allow. Citysearch does not expect to enter into additional domestic partnerships to launch city guides.

        Marketing Agreements.    Citysearch has entered into both local and national marketing agreements. For example, Citysearch entered into an extensive distribution and marketing agreement with Microsoft

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as part of the transaction involving Citysearch's purchase of the Sidewalk assets from Microsoft. The agreement, which was recently extended for an additional three years, provides promotion and linking arrangements for Citysearch's various Web sites and promotion of its advertising customers on the Microsoft online yellow pages. Citysearch intends to continue to pursue such marketing agreements in order to attract additional business customers and increase usage of citysearch.com sites by consumers.

        Content Distribution Alliances.    Citysearch has entered into agreements with a number of companies to distribute its content and drive traffic to its Web sites. Citysearch has recently begun to syndicate its citysearch.com content to non-competitive third party Web sites in exchange for cash payments and/or branding and promotional consideration.

Marketing and Sales

        Citysearch emphasizes marketing activities in its owned and operated markets aimed at increasing awareness of its local city guides by both consumers and business customers.

        In partner-led markets, Citysearch's marketing efforts rely substantially on the partner's existing franchise and resources in the community.

        In connection with its transition from a locally-based structure to a regionally-based structure, Citysearch has been able to reduce its reliance on a large local direct sales force. Citysearch has effectively reduced its sales force from approximately 111 account managers as of December 31, 2000, to approximately 94 account managers as of March 1, 2002.

Operations

        Though no longer focused on the aggressive roll-out of additional local city guides, Citysearch continues to license its roll-out capabilities to media companies in its partner-led markets. Citysearch has analyzed and documented the most successful practices associated with its early city launches to refine and standardize its field and home office production processes. Citysearch's software systems monitor much of the sales and customer care functions. Additionally, Citysearch has built custom systems that streamline the site creation and maintenance process.

        City guide customer service operations are located in Citysearch's central city guide production site in the Los Angeles, California area. Citysearch's enterprise management systems enable customer service staff members to view a customer's full profile, including billing and interactive history, as they take such customer's call, and to use Citysearch's software tools to make changes to a business customer's site in real time.

Technology

        Citysearch has developed and implemented a number of technologies to support its local city guide service and business operations, including an online city guide application and a suite of integrated enterprise management systems.

        Local Search Functionality.    Citysearch launched its local search functionality in September, 2001. This feature allows users to conduct free form keyword searches for businesses and information in any of over 3,000 zip codes in the country by exact address, airport code, zip code, neighborhood, city or state.

        Citysearch Online Application.    Citysearch's online application provides a simple and intuitive user interface for finding local information online. Citysearch employs a multi-tiered architecture, separating a standard relational database from business rules and presentation logic. Citysearch's tiered architecture is designed to provide for rapid development cycles and code reuse.

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        Enterprise Management Systems.    Citysearch has developed and implemented a suite of integrated enterprise management systems consisting of third-party and internally developed applications covering sales force automation and telemarketing, production management and tracking systems and customer service, accounting, billing and commissions systems.

Additional Web Sites

        Ticketmaster's city guide segment also includes a number of other Web sites operated by Ticketmaster that have their own following on the Internet and that round out its citysearch.com, ticketmaster.com and online personals offerings. These Web sites include:

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evite.com


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livedaily.com; and


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cityauction.com.

Evite.com

        Evite, Inc. is a free online invitation service acquired by Ticketmaster in March 2001. In addition to its invitation service, Evite offers a reminder service, polling, payments collection, restaurant and concert listings, event shopping and local resources. Evite now averages more than 3.6 million sent invitations a month.

Livedaily.com

        Livedaily.com is Ticketmaster's online daily entertainment news webzine. Ticketmaster has integrated livedaily.com with its citysearch.com and ticketmaster.com Web sites, providing music fans with access to news about event tickets and promotions as well as local music and event information.

Cityauction.com

        In March 1999, Ticketmaster purchased CityAuction, Inc., which provides person-to-person online auctions through its cityauction.com Web site. In addition to national and regional auctions, cityauction.com lets users post and search in their own locality, allowing them to trade items that would be considered too valuable or difficult to transport over long distances, such as electronic equipment, office equipment, furniture and automobiles. In September 1999, in connection with Ticketmaster's investment in FairMarket, Inc., another online auction company, Ticketmaster integrated the cityauction.com services into the FairMarket network allowing cityauction.com users to access a greater number of users and listings. Ticketmaster also licensed the cityauction.com technology systems to FairMarket as part of the investment.

Company History

        Ticketmaster Group, Inc. and its principal operating subsidiaries, Ticketmaster Corporation, which was organized in 1976, and Ticketmaster LLC, the entity into which certain subsidiaries of Ticketmaster were merged as of December 31, 1998, were organized for the primary purpose of developing stand-alone automated ticketing systems for sale to individual facilities. Ticketmaster Online-Citysearch, Inc. was the result of the September 1998 combination of CitySearch, Inc. and Ticketmaster Multimedia Holdings, Inc. (Ticketmaster.com), then a wholly-owned online subsidiary of TM Corp. CitySearch, Inc. was incorporated in September 1995 and launched its first local city guide in May 1996. Ticketmaster.com was formed in 1993 to administer the online business of TM Corp and began selling live event tickets and related merchandise online in November 1996.

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        During the 1990s, Ticketmaster continued to expand both through acquisitions and strategic alliances with joint venture partners, including, in 1991, the acquisition of certain assets (principally client contracts) of Ticketron, which previously had been one of Ticketmaster's major competitors; in 1997, when it acquired its licensee, Ticketmaster Canada; in 1997, when it acquired its 50% interest in Ticketmaster Ireland; and in 2000, when it acquired Réseau Admission Inc. in Canada, and certain contracts formerly serviced by ETM Entertainment Network, Inc. and Dillard Ticketing System, Inc. (collectively, "ETM") when ETM ceased operations in June 2000. During the past six years, Ticketmaster reacquired the rights to use its name and the Ticketmaster System that had previously been granted to joint ventures and to licensees such that, as of December 31, 2001, in the United States Ticketmaster had only two remaining licensees: the University of Texas and in the Washington, D.C./Baltimore area.

        In 1999, TMCS acquired CityAuction, Inc. (cityauction.com), an online auction company, and Match.com, Inc. (Match.com) and Web Media Ventures, LLC (d/b/a One & Only Network), which are both online personals services. In addition, in 1999, TMCS acquired the arts and entertainment portion of The Microsoft Network (MSN) Sidewalk (sidewalk.com) city guides, significantly expanding the reach of its citysearch.com city guides. In January 2000, TMCS acquired 2b Technology, Inc., a Richmond, Virginia based visitor management software developer and offline and online ticketing company targeted at venues such as higher volume museums, cultural institutions and historic sites. In May 2000, TMCS acquired TicketWeb Inc., a ticketing company whose Web-based ticketing software allows venues and event promoters, including symphony concerts, clubs, museum exhibitions, amusement parks and film festivals, to perform box-office operations remotely, over the Internet. In February 2001, Ticketmaster (the combined company) acquired ReserveAmerica Holdings, Inc., an online and offline camping and outdoor activity reservations company. In March 2001, Ticketmaster acquired Evite, Inc., a free online invitation service.

Ticketing Joint Ventures and Licensees

        As summarized above, in addition to the ticketing operations performed directly by Ticketmaster, the Ticketmaster System is operated in certain territories through joint ventures and licensees. Included among Ticketmaster's current joint ventures and strategic alliances are the following:

Australian Joint Ventures

        On December 1, 1995, Ticketmaster and the Victorian Arts Centre Trust ("VACT") formed joint ventures (the "Australian Joint Ventures") for the purpose of conducting Ticketmaster's live entertainment ticketing business in Australia and, possibly, in New Zealand. In September 1999, VACT sold its interest in the venture to Seven Pty Limited. As a result of this transaction, Ticketmaster has a 50.1% interest in, Ticketmaster 7 Pty Limited ("Ticketmaster Australia"). Through June 2001 the Company exercised control over the Australian Joint Ventures and its assets, liabilities and results of operations were consolidated. In the third quarter of 2001, certain rights were relinquished and the Company no longer exercised control over the Australian Joint Ventures and accordingly, the entity was deconsolidated and effective the third quarter of 2001 has been accounted for under the equity method of accounting. Some of Ticketmaster Australia's clients include the Victorian Arts Centre, the Australian Football League, the Melbourne Cricket Grounds and the Australian Chamber Orchestra.

Ireland Joint Venture

        On July 31, 1997, Ticketmaster acquired 50% of the capital stock of Ticket Shop Limited, the entity through which Ticketmaster conducts its live entertainment ticketing business in Ireland. In December 2000, Ticketmaster acquired an additional 10% of the capital stock of Ticket Shop Limited and therefore, the accounts of Ticket Shop Limited are included in the consolidated financial statements. Ticketmaster serves as the managing partner of the joint venture.

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Latin American License Arrangement

        Ticketmaster and Corporacion Interamericana de Entretenimiento, S.A. de C.V. ("CIE") entered into a license arrangement (the "Latin American License") for the purpose of marketing and operating the Ticketmaster System throughout Central and South America. Accordingly, Ticketmaster is licensor to CIE's operating ventures, which are currently operating in Brazil, Argentina and Chile. CIE is currently the owner of a 50.01% equity interest in Ticketmaster's Mexico licensee with Ticketmaster owning the remaining 49.99% equity interest in this licensee.

Domestic Licensees

        Ticketmaster has selectively licensed its name and technology to third parties for use in the Washington, D.C./Baltimore area and to the University of Texas. Ticketmaster derives revenues from its licensees in the form of license fees and/or ongoing per ticket royalties. Less than 1% of Ticketmaster's total revenues during fiscal 2001 were derived from these license arrangements. On December 18, 2000, Ticketmaster acquired its Oregon licensee.

City Guide Investments

Active.com

        In December 1999, TMCS completed the purchase of approximately 19% of the fully-diluted equity of Active.com, Inc. in the form of preferred stock which, as of December 31, 2001, had been diluted to approximately 6%. Active.com is an online participatory sports registration and information company. Active.com is the company resulting from the merger of RaceGate.com and ActiveUSA.com, which were each in the same business category. The total consideration paid to Active.com for the preferred stock was valued at $15.5 million. In November 2000 and November 2001, TMCS invested an additional $1 million and $750,000, respectively, in Active.com in follow-on investment rounds.

Competition

Ticketing Operations

        Ticketmaster's ticketing business, including ticketmaster.com, faces competition and potential competition from other national and regional ticketing service companies, entertainment organizations with ticketing capabilities, as well as from its clients who may elect to fulfill ticketing distribution and management functions through their own systems. Not all facilities, promoters and other potential clients use the services of an automated ticketing company, choosing instead to distribute their tickets through their own internal box offices or other distribution channels. Accordingly, Ticketmaster competes with the facilities, promoters and other potential clients for the right to distribute their tickets at retail outlets, by telephone and on the Internet.

        Other companies compete with Ticketmaster by selling stand-alone automated ticketing systems to enable the facilities to do their own ticketing. Several of Ticketmaster's competitors have operations in multiple locations, while others compete principally in one specific geographic location. Ticketmaster experiences substantial competition for potential client accounts and renewals of contracts on a regular basis. Accordingly, there can be no assurance that prospective or renewal clients will enter into contracts with Ticketmaster rather than Ticketmaster's competitors (including clients that choose to self-distribute with, or without, the assistance of the numerous companies that support self-distribution). Ticketmaster competes on the basis of products and service provided, capability of the ticketing system, its distribution network, reliability and price.

        As an alternative to purchasing tickets through Ticketmaster, ticket purchasers generally may purchase tickets from the facility's box office at which an event will be held or by season, subscription or group sales directly from the venue or promoter of the event. Although Ticketmaster's clients may

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process sales of these tickets through the Ticketmaster System, Ticketmaster derives no convenience charge revenue from the ticket purchasers with respect to those ticket purchases.

Personals

        The dating services business is very competitive. Match.com's and One & Only Network's primary competitors include the personals sections of newspapers and weeklies, free online dating services, other online-pay-dating services, including local online offerings from stand-alone dating websites or local media.

City Guide

        The markets for local content and services are highly competitive and diverse. Citysearch's primary competitors include online providers of local content, numerous search engines and other site aggregation companies, media, telecommunications and cable companies, Internet service providers and niche competitors which focus on a specific category or geography and compete with specific content offerings provided by Citysearch, paper city guides and listings contained in various newspapers and magazines. Many of Ticketmaster's city guide competitors have greater financial and marketing resources than it has and may have significant competitive advantages through other lines of business and existing business relationships. Furthermore, additional major media and other companies with financial and other resources greater than Ticketmaster may introduce new Internet products addressing the local interactive content and service market in the future.

General

        Ticketmaster believes that the principal competitive factors for all its services, including its ticketing, personals and city guide businesses, include: depth, quality and comprehensiveness of content; ease of use; distribution; search capability; and brand recognition. Ticketmaster cannot ensure that it will be able to successfully compete against its current or future competitors or that competition will not have a material adverse effect on its business, financial condition and results of operations. Furthermore, as a strategic response to changes in the competitive environment, Ticketmaster may make certain pricing, servicing or marketing decisions or enter into acquisitions or new ventures that could have a material adverse effect on its business, financial condition and results of operations.

Trademarks and Patents

        Ticketmaster owns a number of registered trademarks in various countries relating to, among other things, the names Ticketmaster, Match.com, Evite, ReserveAmerica and their related logos. Ticketmaster believes that such trademarks are widely recognized throughout North America and other parts of the world and have considerable value. Ticketmaster is not aware of any actions against its trademarks used in its businesses domestically and has not received any notice or claim of infringement in respect of such trademarks.

        Ticketmaster presently has no patents pertaining to the Ticketmaster System or any of its other business operations. Although Ticketmaster may in the future file for patent protection on products developed or to be developed by it, there can be no assurance that any patents will be issued or, if issued, that such patents will provide Ticketmaster with meaningful protection. Furthermore, the technology used by Ticketmaster in many of its products is likely to be within the state-of-the-art and may not be more advanced than the technology used by or available to certain of its present or potential competitors. Ticketmaster may be unable to prevent its competitors and others from incorporating features of Ticketmaster's products into their own products.

        Ticketmaster regards its copyrights, service marks, trademarks, trade dress, trade secrets, proprietary software and similar intellectual property as critical to its success, and rely on trademark

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and copyright law, trade secret protection and confidentiality and/or license agreements with employees, customers, partners and others to protect its proprietary rights.

        Effective trademark, service mark, copyright and trade secret protection may not be available or sought by Ticketmaster in every country in which its products and services are made available, or in any particular country, with regard to all of its products or services which are available in that country. Ticketmaster has licensed in the past, and expects that it may license in the future, certain proprietary rights, such as trademarks or copyrighted material, to third parties. In addition, Ticketmaster has licensed in the past, and expects to license in the future, certain content, including trademarks and copyrighted material, from third parties. While Ticketmaster attempts to ensure that the quality of its brands is maintained by such licensees, there can be no assurance that such licensees will not take actions that might materially adversely affect the value of Ticketmaster's proprietary rights or reputation, which could have a material adverse effect on its business, financial condition and results of operations.

        Ticketmaster licenses the registered trademark "Citysearch" from a third party, and there can be no assurance that Ticketmaster will be able to continue to license the trademark on terms acceptable to it. The initial term of the license expired in March 2001, and is subject to indefinite annual renewals at Ticketmaster's option. Ticketmaster exercised its renewal rights in March 2001 and 2002 and intends to continue to do so in the future. Ticketmaster may be subject to legal proceedings and claims of alleged infringement of the trademarks and other intellectual property rights of third parties by Ticketmaster and its licensees or licensors. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources which could result in a material adverse effect on Ticketmaster's business, financial condition and results of operations.

Regulation

        Ticketmaster is regulated by certain state and local regulations, including, but not limited to, a law in Georgia, that establishes maximum convenience charges on tickets for certain sporting events. Other legislation that could affect the way Ticketmaster does business, including legislation that would regulate the amount of convenience charges and order processing fees, are introduced from time to time in federal, state and local legislative bodies. Ticketmaster is unable to predict whether any such legislation will be adopted and, if so, the impact thereof on its business.

        Ticketmaster has recently introduced, and intends to continue to introduce in the future, new products and services. Many of these products and services, such as Ticketmaster Marketplace™, have either never previously existed or have developed rapidly due to the fast rate of change in Internet-based business models. As a result, the impact of existing laws and regulations on these new products and services is uncertain. Ticketmaster believes that its new products and services comply with existing laws and regulations, but there can be no assurance that such laws and regulations will not in the future be applied to these new products and services in unforeseen ways. As such, the impact of the application of such laws and regulations on certain of Ticketmaster's businesses cannot be foreseen and may have a material adverse effect on such businesses and the applicable products and services.

        Ticketmaster's products and services are subject to various sales and use tax provisions under applicable State and local law. The application of such tax provisions to Ticketmaster's historical and new products and services is subject to interpretations by the applicable taxing authority. Ticketmaster believes it is compliant with these tax provisions, but there can be no assurance that taxing authorities will not take a contrary position and that such position will not result in a material adverse effect to Ticketmaster's business, financial condition and results of operations.

        Ticketmaster posts privacy policies for most of its Internet websites concerning Ticketmaster's use and disclosure of user data. In addition, Ticketmaster is subject to Federal, State and local laws relating to Internet commerce generally and privacy of Internet user data specifically. While there are currently

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relatively few laws specifically directed to online commerce, the Federal Trade Commission and State and local legislative bodies are debating many proposed new Internet related laws and regulations designed, among other things, to impose new obligations and restrictions with respect to user data collected on Internet sites. Failure by Ticketmaster to comply with its posted privacy policies or with existing or new privacy-related laws and regulations could result in regulatory proceedings or private party litigation. Any such proceeding or litigation could have a material adverse effect on Ticketmaster's business, results of operations or financial condition, if not resolved in Ticketmaster's favor.

        In addition, increasing concern over consumer privacy has led to the introduction from time to time of proposed legislation that could impact the direct marketing and market research industries. Ticketmaster does not know when or whether any such proposed legislation may pass or whether any such legislation would relate to the types of services currently provided by Ticketmaster or which Ticketmaster intends to develop. Accordingly, Ticketmaster cannot predict the effect, if any, that any such future regulation may have on its business.

        Ticketmaster is subject to certain laws and regulations in the foreign markets in which it operates but does not believe that such laws or regulations will materially impact its ability do business in such markets.

        Furthermore, there may be additional federal or state legislation or changes in regulation implementation that would limit the activities of Ticketmaster or its clients in the future or significantly increase the cost of compliance.

Relationship with USA

        Ticketmaster is currently a direct, majority-owned subsidiary of USA Networks, Inc. ("USA"). As of December 31, 2001, USA beneficially owned shares of Ticketmaster's Class A and Class B Common Stock representing approximately 92% of the total voting power of its total outstanding Common Stock. As a result, USA generally has the ability to control the outcome of any matter submitted for the vote or consent of Ticketmaster's stockholders. Subject to applicable Delaware law, USA is generally not restricted with regard to its ability to control the election of Ticketmaster's directors, to cause the amendment of its Amended and Restated Certificate of Incorporation, or generally to exercise a controlling influence over Ticketmaster's business and affairs. This control relationship may have the effect of delaying or preventing a change in control of Ticketmaster and might adversely affect the market price of its Class B Common Stock.

        Conflicts of interest may arise between Ticketmaster and USA and its affiliates in areas relating to past, ongoing and future relationships and other matters. These include corporate opportunities; indemnity arrangements; tax and intellectual property matters; potential acquisitions or financing transactions; sales or other dispositions by USA of shares of Ticketmaster's Class A and Class B Common Stock held by it; and the exercise by USA of its ability to control Ticketmaster's management and affairs. Ownership interests of Ticketmaster's directors or officers in USA common stock, or service as both a director or officer of Ticketmaster and a director, officer or employee of USA, could create or appear to create potential conflicts of interest when directors and officers are faced with decisions that could have different implications for Ticketmaster and USA. Several of the members of Ticketmaster's board of directors are also directors, officers or employees of USA. In addition, USA is engaged in a diverse range of media, electronic and online commerce businesses. These businesses may have interests that conflict or compete in some manner with Ticketmaster's business. Subject to applicable Delaware law, USA is under no obligation, and has not indicated any intention, to share any future business opportunities available to it with Ticketmaster.

        Ticketmaster's Amended and Restated Certificate of Incorporation also includes provisions which provide that: USA shall have no duty to refrain from engaging in the same or similar activities or lines

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of Ticketmaster's business, thereby competing with Ticketmaster; USA, its officers, directors and employees shall not be liable to Ticketmaster or its stockholders for breach of any fiduciary duty by reason of any activities of USA in competition with Ticketmaster; and USA shall have no duty to communicate or offer corporate opportunities to Ticketmaster and shall not be liable for breach of any fiduciary duty as a stockholder of Ticketmaster in connection with these opportunities, provided that the relevant procedures set forth in Ticketmaster's Amended and Restated Certificate of Incorporation are followed.

        There can be no assurance that any conflicts that may arise between Ticketmaster and USA, any loss of a corporate opportunity to USA that might otherwise be available to Ticketmaster, or any engagement by USA in any activity that is similar to Ticketmaster's business will not have a material adverse effect on Ticketmaster's business, financial condition and results of operations or its other stockholders.

Employees

        As of December 31, 2001, Ticketmaster employed approximately 3,800 domestic and 800 foreign employees, determined on a full-time equivalent basis.

        Ticketmaster's telephone sales agents in Toronto and Montreal, Canada are the only employees of Ticketmaster covered by collective bargaining agreements. The collective bargaining agreement covering the telephone sales agents in Toronto, Canada is scheduled to expire on March 31, 2003. The collective bargaining agreement covering the telephone sales agents in Montreal, Canada expires on October 31, 2006. Ticketmaster believes that its relations with its employees are good.

ITEM 2. PROPERTIES

        Ticketmaster's corporate offices are located at 3701 Wilshire Boulevard, Los Angeles, California, where it currently leases approximately 73,700 square feet under leases expiring in 2003 and 2006. Ticketmaster leases office space in various cities throughout the United States, the United Kingdom, Ireland, Canada, Norway, Germany and France. As of December 31, 2001, Ticketmaster had approximately 835,500 square feet of space under lease, with scheduled expirations ranging from April 2002 to June 2014. In addition, Ticketmaster owns a small office in Vancouver, Canada.

        Ticketmaster's personals businesses are located in Richardson, Texas, where it currently leases approximately 31,300 square feet under a lease expiring in 2005.

        Ticketmaster's city guide headquarters are located in Pasadena, California, where it currently leases approximately 48,200 square feet under a lease expiring on March 31, 2002. Ticketmaster has recently leased approximately 36,900 square feet at 3731 Wilshire Blvd., Los Angeles, California, under a lease expiring 2006 and intends to move its city guide headquarters to such space in the first and second quarters of 2002. Ticketmaster also leases local office space for its city guide business in approximately 14 cities throughout the United States. Local offices range in size from less than 2,000 square feet to 7,500 square feet and have lease terms that range from month-to month to seven years. None of such leases expires later than 2005, except for the San Francisco lease which expires in 2006.

        Ticketmaster believes that its facilities are adequate in the locations where it currently does business.

ITEM 3. LEGAL PROCEEDINGS

        Ticketmaster is from time to time party to various legal proceedings arising in the ordinary course of its business. In addition to the legal proceedings described below, Ticketmaster is also party to various legal proceedings in which it is the plaintiff and seeks injunctive relief and/or damages from third parties for breach of contract and unauthorized use of Ticketmaster's intellectual property.

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        From time to time, federal, state and local authorities commence investigations or inquiries with respect to Ticketmaster's compliance with applicable antitrust, consumer protection, deceptive advertising, unfair business practice and other laws. Ticketmaster has historically cooperated in and satisfactorily resolved each such investigation or inquiry.

        Ticketmaster believes that it has conducted its business in compliance with all applicable laws, including federal and state antitrust laws. In the opinion of Ticketmaster's management, none of Ticketmaster's legal proceedings will have a material adverse effect on Ticketmaster's financial position or results of operation, but Ticketmaster can give no assurance that it will not incur material damages or costs in connection with such litigation. Ticketmaster has incurred significant legal expenses in connection with these and other investigations and lawsuits and may incur additional significant legal expenses in the future should investigations or lawsuits be instituted.

        Ticketmaster or its affiliates could become the subject of future governmental investigations or inquiries or be named as a defendant in claims alleging violations of federal or state antitrust laws or any other laws. Any adverse outcome in such litigation, investigation or proceeding against Ticketmaster or its affiliates could limit or prevent Ticketmaster from engaging in the ticketing business or subject Ticketmaster to potential damage assessments, all of which could have a material adverse effect on Ticketmaster's business, financial condition or results of operations. Regardless of its merit, source or outcome, any such litigation, investigation or proceeding would at a minimum be costly and could divert the efforts of our management and other personnel from productive tasks, which could have a material adverse effect on Ticketmaster's business, financial condition or results of operations.

Tickets.com Litigation

        On July 23, 1999, Ticketmaster Online-Citysearch and Ticketmaster Corporation filed a Complaint seeking damages and injunctive relief against Tickets.com, Inc. ("Tickets.com"), entitled Ticketmaster Corporation and Ticketmaster Online-Citysearch, Inc. v. Tickets.com, Inc., Case No. 99-07654 HLH, in the United States District Court for the Central District of California. Ticketmaster claims that Tickets.com violates Ticketmaster's legal and contractual rights by, among other things, (i) providing deep-links to Ticketmaster's internal Web pages without Ticketmaster's consent, (ii) systematically, deceptively and intentionally accessing Ticketmaster's computers and computer systems and copying verbatim Ticketmaster event pages daily and extracting and reprinting Ticketmaster's Uniform Resource Locators ("URLs") and event data and information in complete form on Tickets.com's website and (iii) providing false and misleading information about Ticketmaster, the availability of tickets on the Ticketmaster website, and the relationship between Ticketmaster and Tickets.com. On January 7, 2000, Ticketmaster filed a first amended complaint. Tickets.com filed a motion to dismiss Ticketmaster's first amended complaint on or about February 23, 2000, which was denied in part and granted in part with leave to amend. Ticketmaster filed a second amended complaint on April 21, 2000.

        On March 3, 2000, Ticketmaster filed a motion for preliminary injunction, requesting the Court to enjoin Tickets.com from, among other things, deep-linking and "spidering" to Ticketmaster's internal Web pages, accessing Ticketmaster's computers and computer systems and copying Ticketmaster's event pages, and providing misleading and false information about Ticketmaster, the availability of tickets on the Ticketmaster website and the relationship between Ticketmaster and Tickets.com. On July 31, 2000, the Court held a hearing. On August 11, 2000, the Court issued a ruling denying Ticketmaster's motion for preliminary injunction. On September 8, 2000, Ticketmaster filed a notice of appeal of the Court's order denying Ticketmaster's motion for preliminary injunction. On January 11, 2001, the Ninth Circuit Court of Appeals affirmed the District Court's order denying Ticketmaster's motion for preliminary injunction.

        On May 30, 2000, Tickets.com filed its Answer to Ticketmaster's second amended complaint and counterclaims against Ticketmaster Corporation and Ticketmaster Online-Citysearch, Inc. Tickets.com asserted claims for relief against Ticketmaster for violations of the Sherman Act, sections 1 and 2,

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violations of California's Cartwright Act, violations of California's Business and Professions Code section 17200, violations of common law restraint of trade and unfair competition and business practices, interference with contract and declaratory relief. Tickets.com claimed that Ticketmaster Corporation's exclusive agreements with Ticketmaster Online-Citysearch, Inc., venues, promoters and other third parties injure competition, violate antitrust laws, constitute unfair competition and interfere with Tickets.com's prospective economic advantages. On July 19, 2000, Ticketmaster filed a motion to dismiss any claim based in whole or in part on Ticketmaster's alleged litigation conduct as well as Tickets.com's ninth claim for relief under California's antitrust laws (the Cartwright Act). On September 25, 2000, the court entered an order denying Ticketmaster's motion on the ground that Tickets.com has the right to pursue discovery on the issues raised in the motion before the issue can properly be resolved.

        The Court recently amended the pretrial schedule setting September 1, 2002 as the discovery cut-off date, January 3, 2003 as the date for the final pre-trial conference, and has indicated that the trial will be set to commence in February 2003. The parties currently are actively engaged in document and deposition discovery in the matter. Tickets.com seeks monetary damages which, if awarded, would have a material adverse effect on Ticketmaster. Ticketmaster is vigorously defending against the claims brought by Tickets.com. However, Ticketmaster can give no assurances that it will not incur material damages or costs in connection with the litigation.

Class Action Litigation Related To Magazine Sales

        Florida:    On or about December 18, 2000, Ticketmaster Corporation and Time, Inc. were named as defendants in a purported class action lawsuit filed in the Florida Circuit Court of the Thirteenth Judicial Circuit in Hillsborough County. The lawsuit is entitled Victoria McLean V. Ticketmaster Corporation and Time, Inc., Case No. G0009564. The lawsuit alleges that the offering for sale by Ticketmaster Corporation of subscriptions to Entertainment Weekly magazine, a publication of Time, Inc., as an agent of Time, Inc., involves a pattern of criminal activity, conspiracy and unfair and deceptive trade practices by allegedly disclosing credit card account information to third parties without express written consent and unauthorized posting to credit card accounts. As the prayer for relief in the lawsuit, the plaintiff seeks to have the Court enjoin the business practices of which the plaintiff has complained. In addition, the plaintiff seeks treble monetary damages, as well as attorneys' fees and the costs for pursuing the action. Ticketmaster Corporation and Time, Inc. filed a motion to dismiss the complaint on various grounds.

        On or about May 30, 2001, the plaintiff filed an amended complaint which purported to add a second consumer as a plaintiff. In response to the amended complaint, Ticketmaster and Time requested that their motion to dismiss be taken off calendar, and on July 23, 2001, Ticketmaster filed an Answer. Discovery is in its beginning stages. Ticketmaster believes the lawsuit is without merit and expects to vigorously defend against the lawsuit.

        Michigan:    On or about August 17, 2001, Ticketmaster L.L.C. and Time, Inc. were named in as defendants in a purported class action lawsuit in the Circuit Court for the County of Macomb, State of Michigan. The lawsuit is entitled Glenn R. Matecun, and all others similarly situated v. Ticketmaster L.L.C. and Time, Inc., Case No. 01-3573 CP. On or about January 11, 2002, the plaintiff filed his First Amended Complaint, alleging that Ticketmaster is providing credit card information to Time so that Time can sell unwanted magazine subscriptions without the consumer's knowledge or consent in violation of various Michigan state laws. Plaintiff seeks monetary damages, treble damages, exemplary damages, attorneys' fees, and equitable relief. Discovery is in the beginning stages. Ticketmaster believes the case is without merit and intends to vigorously defend against the lawsuit.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market for Ticketmaster's Common Stock

        Ticketmaster's Class B Common Stock began trading publicly on The Nasdaq National Market on December 3, 1998 under the symbol "TMCS." The following table lists quarterly information on the price range of Ticketmaster's Class B Common Stock based on the high and low reported last sale prices for its common stock as reported on The Nasdaq National Market for the periods indicated below. These prices do not include retail markups, markdowns or commissions.

        As of March 21, 2002, there were approximately 304 holders of record of Ticketmaster's Class B Common Stock. Ticketmaster estimates there are more than 14,000 beneficial holders of its Class B Common Stock. On March 26, 2002, the last reported sale price on The Nasdaq National Market for the Class B Common Stock was $28.22.

        On March 21, 2002, there were approximately 114 holders of record of Ticketmaster's Class A Common Stock. There is no public market for the Class A Common Stock, but each share of Class A Common Stock will be automatically converted into one share of Ticketmaster Class B Common Stock upon any transfer of such share, subject to certain exceptions. In addition, each share of Class A Common Stock may be converted at any time into one share of Class B Common Stock at the option of the holder thereof.

        Ticketmaster has not paid any dividends since its inception and does not intend to pay any dividends on its common stock in the foreseeable future.

Recent Sales of Unregistered Securities

        Ticketmaster has used, and intends to continue to use, its Class B Common Stock to make tactical and strategic acquisitions and investments. In addition, Ticketmaster has issued, and may in the future issue, shares of its Class B Common Stock to raise additional funds to fund acquisitions, investments and operations. Typically, these issuances are not registered by Ticketmaster under the Securities Act of

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1933, as amended (the "Securities Act"); rather Ticketmaster provides the party receiving such shares with registration rights permitting the registration of the resale of such shares by such persons under the Securities Act. In addition to issuances of shares that were not registered under the Securities Act that were reported by Ticketmaster in its previously filed Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, Ticketmaster has made the following issuances for the following purposes.

(1)

In January 2001, Ticketmaster issued 48,958,000 shares of its Class B Common Stock to TM Corp in exchange for the equity interests and assets contributed by TM Corp to Ticketmaster in the first step of the Combination. In addition, on the same date, Ticketmaster issued 53,302,401 shares of its Class B Common Stock and 42,480,143 shares of its Class A Common Stock to USA Networks in part as consideration for the capital stock of TGI contributed to Ticketmaster by USA Networks in the second step of the Combination and in part to replace the number of shares of Ticketmaster's Class B and Class A Common Stock held by USA Networks through TM Corp prior to the Combination, which Ticketmaster now holds through TM Corp as a result of the Combination. The aggregate number of new shares issued by Ticketmaster in the Combination was 52,000,000 shares of its Class B Common Stock.

        The sales of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, or Regulation D promulgated thereunder, as transactions by an issuer not involving a public offering.

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ITEM 6.    SELECTED FINANCIAL DATA

        The selected financial data below as of December 31, 2001, 2000, 1999 and 1998, and the years ended December 31, 2001, 2000 and 1999, the eleven months ended December 31, 1998 and the year ended January 31, 1998 are derived from the audited financial statements of Ticketmaster and periods prior to the Combination have been restated to give effect to the Combination. The selected financial data presented below as of January 31, 1998 is derived from audited financial statements of Ticketmaster Group, Inc. The selected financial data are indicative of the accounting for the Combination on a historical basis in a manner similar to that in pooling-of-interests accounting. The selected Ticketmaster financial data set forth below, including the accompanying notes, are qualified in their entirety by, and should be read in conjunction with, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements of Ticketmaster and Notes thereto included elsewhere in this report.

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(1)

Reflects operating results of acquisitions including the amortization of goodwill and other intangible assets from the date they were acquired.

(2)

Includes the operating results of Citysearch from September 29, 1998 to December 31, 1998 as a result of the merger of Ticketmaster.com and Citysearch. The eleven-month period reflects our change in year-end to December 31 from January 31. Comparable amounts for the prior period are not presented because such presentation would not be considered meaningful.

(3)

In 2001, these costs were primarily restructuring charges including severance and facilities costs associated with Citysearch's reorganization initiative. In 2000 and 1999, these costs were primarily a result of advisory fees, regulatory filing fees and legal and accounting costs related to the Combination and our terminated merger with certain assets owned by our majority stockholder and Lycos, Inc., as well as certain expenses related to the operation of Sidewalk city guides before the integration of these properties into the Citysearch network in 1999.

(4)

For all periods, the calculation of basic and diluted net income (loss) per share adjusts the historical weighted average outstanding Class A and Class B Common Stock shares to reflect the 52,000,000 shares issued to USA Networks in the Combination as if issued at the beginning of the period. For the year ended December 31, 1999, the shares used to compute basic and diluted net income (loss) per share include the outstanding Class A Common Stock issued in the merger of Ticketmaster.com and Citysearch for ninety-four days subsequent to the merger of Ticketmaster.com and Citysearch.

(5)

Adjusted EBITDA before interest, income taxes, depreciation and amortization ("Adjusted EBITDA") is defined as the Company's earnings before interest, taxes, depreciation, amortization, minority interest, merger and other non-recurring charges, advertising provided by USA Networks (for which no cash was paid by the Company), non-cash compensation, equity in net income (loss) of unconsolidated affiliates, investment losses, net, and other income and expenses. Adjusted EBITDA is presented herein as a management tool and as a valuation methodology for companies in the media, entertainment and communications industries. Adjusted EBITDA does not purport to represent cash provided by operating activities. Adjusted EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles.

(6)

Total assets at December 31, 2001, 2000, 1999 and 1998 and January 31, 1998 reflect goodwill and other intangible assets, net of accumulated amortization, of $1,032.8 million, $1,185.9 million, $1,278.5 million, $933.1 million and $145.6 million, respectively. This goodwill resulted from the acquisition of Ticketmaster Group by USA Networks in June 1998, the merger of ticketmaster.com and Citysearch in September 1998, the acquisition of Sidewalk.com assets in September 1999 and several acquisitions made by Ticketmaster in 1999, 2000 and 2001.

(7)

Clients payable, net is defined as accounts payable, clients offset by accounts receivable, ticket sales. Accounts payable, clients represents contractual amounts due to clients for tickets sold by the Company on behalf of the organizations that sponsor events. Accounts receivable, ticket sales are principally from ticketing outlets and credit card processors and represent the face value of the tickets sold plus convenience charges, generally net of outlet commissions.

(8)

Long-term debt includes amounts due to third parties and USA Networks and affiliates.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the audited Consolidated Financial Statements of the Company and the related Notes thereto included elsewhere in this report. This discussion contains forward-looking statements about the Company, including statements concerning its future product plans. These forward-looking statements involve risks and uncertainties. Forward-looking statements include information concerning possible or assumed future results of operations, and include statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates" or similar expressions. For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth below and elsewhere in this report.

        The following important factors, in addition to those discussed elsewhere in this document and in the documents which may be incorporated by reference, and in other public filings, press releases and discussions with Company management, could affect the future results and could cause these results to differ materially from those expressed in our forward-looking statements:

•

the Company may not realize the synergies and other intended benefits of the combination of Ticketmaster Group, Inc. and Ticketmaster Online-Citysearch;



•

the Company may have difficulty overcoming problems associated with rapid expansion and growth;



•

the dependence of the Company's business on entertainment, sporting and leisure events;



•

quarterly fluctuations in the Company's revenues which could adversely affect the market price of the Company's stock;



•

the risks of operating internationally;



•

the dependence of the Company on its relationships with clients;



•

the Company's future capital needs and the uncertainty of additional financing;



•

the Company's dependence on key personnel and need to hire additional qualified personnel;



•

control of the Company by USA Networks, Inc.;



•

the potential for conflicts of interest between the Company and USA Networks, Inc.;



•

the Company's need to continue to promote its brands;



•

risks associated with competition;



•

the Company's reliance on third party technology;



•

network security risks;



•

the Company's need to be able to adapt to rapid technological changes;



•

liability associated with the information displayed or accessed on the Company's Web sites;



•

intellectual property infringement risks;



•

risks associated with changing legal requirements on the Company's operations, including privacy concerns;



•

litigation risks;



•

the dilutive effect of future acquisitions;

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•

risks associated with the failure to maintain the Company's domain names;



•

the risk to its stock price associated with the Company's anti-takeover provisions;



•

the risk associated with ongoing litigation and governmental investigations related to the Company's business practices;



•

material adverse changes in economic conditions generally or in the markets served by the Company;



•

material changes in inflation;



•

future regulatory and legislative actions affecting the Company's industry;



•

product demand and market acceptance;



•

the ability to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms;



•

and obtaining and retaining skilled workers.

        The forward-looking statements are based on the Company's expectations as of the date of this document and the Company undertakes no obligation to update these statements. The forward-looking statements herein do not include the potential impact of any mergers, acquisitions or other business combinations that may be completed after December 31, 2001.

Overview

        Ticketmaster, as currently organized, was formed in January 2001 when Ticketmaster Online-Citysearch, Inc. acquired the equity and businesses of Ticketmaster Group, Inc. and its subsidiaries from USA Networks, Inc. in exchange for 52,000,000 new shares of TMCS' Class B Common Stock. Upon the closing of the Combination, TMCS changed its name to "Ticketmaster."

        The Combination was accounted for as an exchange of assets between entities under common control in a manner similar to the pooling of interests method of accounting and, accordingly, prior periods have been restated to give effect to the Combination.

        Ticketmaster is a leading provider of automated ticketing services with domestic and foreign clients throughout the world, including many of the foremost entertainment facilities, promoters and professional sports franchises. Ticket orders are received and fulfilled through operator-staffed call centers, independent sales outlets remote to the facility box office and through the ticketmaster.com Web site. Revenue is generated principally from convenience and order processing charges received by Ticketmaster for tickets sold on its clients' behalf. Ticketmaster generally serves as an exclusive agent for its clients and typically has no financial risk for unsold tickets. Ticketmaster is also a leading local portal and electronic commerce company that provides in-depth local content and services to help people get things done online. Ticketmaster's principal online operations are ticketing, personals, city guides and camping reservations. Ticketmaster's family of Web sites includes ticketmaster.com, match.com, citysearch.com, reserveamerica.com, museumtix.com, ticketweb.com, evite.com and livedaily.com, among others.

Recent Development

        On March 27, 2002, the Company announced that it has entered into an agreement to acquire Soulmates Technology for approximately $23 million to be paid primarily in stock. Soulmates Technology is a global online personals group providing dating and matchmaking services in nearly 30 countries worldwide.

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Recent Accounting Pronouncements

        In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations," effective after June 30, 2001, and No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives.

        Effective January 1, 2002, the Company adopted the new rules on accounting for goodwill and other intangible assets. During the first quarter of 2002, the Company will perform the first of the required impairment tests for goodwill and indefinite lived intangible assets recorded at January 1, 2002. Although it has not completed its assessment, the Company anticipates a write-off of $75 to $125 million primarily related to the City guide segment. Although Citysearch is expected to generate positive cash flows in the future, due to cash flow discounting techniques required by the new rules, the discounted future cash flows do not support current carrying values. The new accounting rule would reduce the Company's annual amortization of goodwill and other intangible assets by approximately $115 million, assuming the mid-point of the range of the potential write-off.

        In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", effective for fiscal years beginning after December 15, 2001. The Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company believes that this Statement will not have a material effect on the results of operations and financial position of the Company.

Critical Accounting Policies

        The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to allowance for doubtful accounts, long-term investments, goodwill and other intangible assets and income taxes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

        We believe the following accounting policies and the related judgments and estimates affect the preparation of our consolidated financial statements.

Allowance for Doubtful Accounts

        We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances would likely be required.

Impairment of Long-Term Investments

        Our long-lived assets include long-term investments, goodwill and other intangible assets. At December 31, 2001, we had $15.2 million of long-term investments and $1,033 million of goodwill and

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other intangible assets, accounting for approximately 75% of our total assets. Our long-term investments are accounted for using the equity and cost methods of accounting for investments and none represent investments in publicly traded companies. The fair value of our long-term investments is dependent upon the performance of the companies in which we have invested, as well as volatility inherent in the external markets for these investments, such as currency fluctuations. In determining when and if an investment decline in value is other than temporary, we evaluate the market conditions, recent financings, trends of earnings and other key measures surrounding the investment in question. When a decline in value is deemed to be other than temporary, we recognize an impairment loss in the current period operating results to the extent of the decline. For equity method investments that do not have a readily determinable market value, we compare the net carrying amount to estimated future cash flows and recent historical performance. For cost method investments that do not have a readily determinable market value, we compare the net carrying value to recent equity investments, recent historical performance, recent financing transactions with the investee and estimates of future profitability, if available. Although we believe our estimates reasonably reflect the fair value of our investments, our key assumptions regarding future results of operations and other factors may not reflect those of an active market, in which case the carrying values may have been materially different than the amounts reported. During the years ended December 31, 2001 and 2000, we recognized $10.8 million and $8.8 million of impairment losses, net related to its long-term investments, respectively.

Goodwill and Other Intangible Assets Impairment

        Effective January 1, 2002, we adopted Statement of Financial Accounting Standard No. 142 and will be required to analyze our goodwill and other intangible assets for impairment indicators on an annual basis. In assessing the recoverability of our goodwill and other intangible assets, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. Our future cash flows are based on current volume and pricing levels with an anticipated growth rate. If our estimated future cash flow or their related assumptions were to change, we would be required to record impairment charges for these assets in which the carrying value is not supported by the future cash flows. Although we have not completed our assessment, we anticipate a write-off of $75 to $125 million to goodwill and other intangible assets, primarily related to the City guide segment. Although Citysearch is expected to generate positive cash flows in the future, due to cash flow discounting techniques required by the new rules, the discounted future cash flows do not support current carrying values. During the year ended December 31, 2001, we did not record any impairment losses related to goodwill and other intangible assets.

Income Taxes

        The carrying value of our net deferred tax assets assumes that we will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. Components of our deferred tax assets, of which 96% has a valuation allowance, are principally related to domestic loss carryforwards and nondeductible goodwill and other intangible assets. If our estimates and assumptions change in the future, we may be required to record additional valuation allowances against our deferred tax assets resulting in additional income tax provision in our consolidated statement of operations. Management evaluates the realizability of the deferred tax assets quarterly and assesses the need for additional valuation allowances quarterly. At December 31, 2001, we had recorded a valuation allowance of $103.1 million.

Related Party Transactions

        USA Networks has provided advertising to us on its wholly-owned television properties, Sci-Fi Channel and USA Network, for no additional shares of common stock or other consideration. During

30

the year ended December 31, 2001, we received a total of $21.3 million from USA of which $9.7 million was provided to satisfy our obligation to a third party business partner and $11.6 million was provided to us. USA Networks is committed to provide an additional $11.7 million to satisfy the remaining third party obligation for no additional shares or consideration. However, there is no guarantee that USA Networks will provide any other future advertising for no additional shares of common stock or other consideration.

Revenues

        Revenues are derived primarily from three sources: ticketing, online personals subscriptions, and city guide sponsorships and advertising. Ticketing operations revenues primarily consist of convenience, order processing and delivery charges generated through ticket sales. The sale of tickets for an event often commences several months prior to the date of the event. The Company recognizes ticketing operations revenue when the ticket is sold. Fluctuations in ticket operations revenues occur largely as a result of changes in the number of tickets sold and change in the average revenue per ticket. The number of tickets sold can vary as a result of (i) additions or deletions to the list of client facilities serviced by the Company; (ii) fluctuations in the scheduling of events, particularly for popular performers; (iii) overall consumer demand for live entertainment events; and (iv) the percentage of tickets for events which are sold directly by clients and not through the Company's distribution system. The average revenue per ticket will vary as a result of the amount of convenience, order processing and delivery charges earned on each ticket. The amount of the convenience, order processing and delivery charges typically varies based upon numerous factors, including the type of event, whether the ticket is purchased at a retail sales outlet, through call centers or via the Internet, as well as the services to be rendered to the client. Ticketing operations revenues also includes revenue from advertising and sponsorship agreements, computerized ticketing and concession systems sales and services, transaction fees related to reservations, and software licensed under noncancellable license agreements including maintenance, training, installation, consulting and support services.

        Personals revenues consist of subscription fees generated from customers who subscribe to the Company's online matchmaking services for one to twelve months on Match.com and the Company's other personals Web sites and online advertising revenue.

        City guide revenues consist of online advertising, both local and national, product licensing and consulting services and to a smaller extent, transaction fees from affiliate partners. Local advertising revenues are derived primarily from sale of premium placement listings, in context advertising and targeted promotional packages. In addition, while becoming a smaller percentage of the total revenue stream, the Company continues to generate local advertising income from Web site development, hosting and placement in Citysearch's directory listings.

Operations Costs

        Ticketmaster records ticketing operations costs specifically associated with the distribution of tickets sold through its system. The largest components of these costs are the clients' share of convenience and order processing charges, salaries and benefits related to ticketing operations, commissions paid on tickets distributed through outlets away from the box office and credit card processing fees, telecommunication charges along with data communication costs, and other less material expenses including ticket stock and postage. Personals operations costs are associated with the production and maintenance of the matchmaking Web sites, commissions paid to affiliates of the Company's online matchmaking services and network infrastructure maintenance costs. City guide operations costs are associated with the design, development, testing, layout, photography, customer service and editorial resources used in production and maintenance of business Web sites and editorial content, network infrastructure maintenance and the costs of consulting services.

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Adjusted EBITDA

        Adjusted earnings before interest, income taxes, depreciation and amortization ("Adjusted EBITDA") is defined as the Company's earnings before interest, taxes, depreciation, amortization, minority interest, merger and other non-recurring charges, advertising provided by USA Networks (for which no cash was paid by the Company), non-cash compensation, equity in net income (loss) of unconsolidated affiliates, investment losses, net, and other income and expenses. Adjusted EBITDA is presented herein as a management tool and as a valuation methodology for companies in the media, entertainment and communications industries. Adjusted EBITDA does not purport to represent cash provided by operating activities. Adjusted EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles.

        The following is a reconciliation of Loss from Operations to Adjusted EBITDA for 2001, 2000 and 1999 (in thousands).

Results of Operations

Year ended December 31, 2001 compared to the year ended December 31, 2000

        Revenues.    Revenues increased by $68.5 million, or 11%, to $675.2 million in the year ended December 31, 2001 from $606.7 million for the year ended December 31, 2000. The increase is primarily attributable to the increase of $61.1 million from ticketing operations and the increase of $20.1 million from personals, offset by the decrease of $12.8 million in city guide and other revenues.

        Operating Costs and Other Expenses.    For the year ended December 31, 2001, operating costs and other expenses increased by $19.2 million, or 2%, to $824.3 million from $805.1 million in the year ended December 31, 2000. The increase is primarily due to the $40.5 million increase in ticketing operations costs to support the 12% increase in ticketing operations revenues, the $13.5 million increase in general and administrative expenses and the $7.0 million increase in personals operations costs to support the 69% increase in personals revenues. These increases are offset by the $16.7 million decrease in depreciation and amortization, the $12.0 million decrease in other expenses primarily due to the transfer of the Company's Electronic Commerce Service ("ECS") operations to USA Networks in June 2000, the $5.2 million decrease in sales and marketing costs, the $4.8 million decrease in city guide operations costs and the $3.1 million decrease in merger and other non-recurring charges.

        The increase in general and administrative expenses was primarily attributable to the acquisitions of Réseau Admission Inc., Concept Électronique Microflex Inc. and Admission Network USA Inc. (collectively, "Admission Canada") in April 2000, TicketWeb, Inc. ("TicketWeb") in May 2000, Essential Data Customer Systems ("EDCS") in July 2000, ReserveAmerica Holdings, Inc. ("ReserveAmerica") in February 2001 and the acquisition of an increased interest in Ticketmaster-Ireland up to 60 percent in December 2000 which required consolidation.

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        The decrease in depreciation and amortization was primarily attributed to the decrease in amortization related to the CityAuction acquisition as its goodwill was fully amortized in December 2000, the transfer of the ECS operations in June 2000 and the decrease in amortization related to the Ticketmaster-Canada acquisition as its purchased contracts were fully amortized in June 2000, offset by the acquisitions of TM VISTA, Inc. (formerly 2b Technology, Inc.; "TM VISTA") in January 2000, Admission Canada in April 2000, TicketWeb in May 2000 and ReserveAmerica in February 2001 and the increased depreciation expense resulting from capital expenditures during 2000.

        The decrease in sales and marketing costs was primarily attributed to savings in compensation due to the reorganization of the city guide operations and reduced marketing expenses, offset by an increase in personals operations.

        Interest Income.    Interest income decreased by $1.8 million, or 46%, to $2.1 million in the year ended December 31, 2001 from $3.9 million in the year ended December 31, 2000, primarily due to lower interest rates and to a lesser extent, lower cash balances invested during 2001.

        Interest Expense.    Interest expense decreased by $6.4 million, or 71%, to $2.5 million in the year ended December 31, 2001 from $8.9 million in the year ended December 31, 2000, primarily due to lower borrowing levels.

        Equity in Net Income (Loss) of Unconsolidated Affiliates.    Equity in net loss of unconsolidated affiliates for the year ended December 31, 2001 of $0.1 million represent income from the Company's minority investment in Ticketmaster-Mexico offset by losses from Ticketmaster-Australia. Equity in net loss of unconsolidated affiliates of $2.2 million during the year ended December 31, 2000 consisted of $3.9 million related to the Company's portion of net losses at foodline.com, Inc. and Active.com, Inc., offset by $1.7 million in net equity income from the Company's minority investments in Ticketmaster-Mexico and Ticketmaster-Ireland. In December 2000, foodline.com, Inc. filed for Chapter 7 bankruptcy protection and ceased operations. The Company will not recognize further losses in the operations of foodline.com, Inc. nor Active.com, Inc. (assuming the Company's investment in the latter remains below 20%).

        Investment Losses, Net.    Net investment losses of $10.8 million and $8.8 million for the years ended December 31, 2001 and 2000, respectively, represent our losses in certain equity investments that suffered declines in value that were other than temporary. We will continue to evaluate our investments in the future to determine if there are any future impairments to fair value.

        Income Tax Provision.    The provision for income taxes was $5.1 million and $14.7 million for the years ended December 31, 2001 and 2000, respectively. The provision for 2001 primarily reflects the income tax expense incurred by our foreign subsidiaries and state income taxes. Prior to the Combination, the Company could not utilize domestic operating losses for tax purposes resulting in a higher provision for 2000. Our effective tax rate differs from the statutory federal income tax rate, primarily due to non-deductible goodwill, foreign income taxes and operating losses not benefited. At December 31, 2001, the Company's balance sheet has a deferred tax asset of $73.4 million related to net operating loss carryforwards which are fully offset by a valuation allowance. The Company will retain the valuation allowance until it is likely that the Company will be able to utilize the net operating losses. Each quarter, the Company will evaluate the need for the full valuation allowance. If the valuation allowance is released, a portion of the benefit will be reflected in the income tax provision and a portion will be reflected through an adjustment to Citysearch goodwill. Also, approximately $13.2 million of the valuation allowance relates to stock option deductions, which if realized, would increase additional paid-in capital.

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Ticketing Operations

        Revenues from ticketing operations increased by $61.1 million, or 12%, to $579.7 million for the year ended December 31, 2001 from $518.6 million for the year ended December 31, 2000. These increases were primarily due to an increase in average revenue per ticket (7% increase from $5.71 to $6.11), an increase in the number of tickets sold, and the acquisition of ReserveAmerica in February 2001. These increases were offset in part by lower revenues from the Company's subsidiary that sells and services computerized ticketing and concession systems to movie theaters as well as a decrease in phone upsell revenue. The increase in the number of tickets sold (from 83.0 million to 86.7 million) primarily resulted from increased ticket sales within existing markets including the United Kingdom, the consolidation of the results of operations of Ticketmaster-Ireland and the acquisitions of Admission Canada in April 2000 and TicketWeb in May 2000. These increases were partially offset by changing the method of accounting for our investment in Ticketmaster-Australia to the equity method in the third quarter of 2001 which resulted in not consolidating their ticketing results in the second half of the year.

        Costs related to ticketing operations revenues and other costs and expenses increased by $56.5 million, or 14%, to $475.0 million in the year ended December 31, 2001 from $418.5 million in the year ended December 31, 2000. Costs related to ticketing operations are primarily variable in nature and increased in accordance with the increase in ticketing operations revenues. To a lesser extent, costs related to ticketing operations and other costs and expenses increased due to the acquisitions of Admission Canada in April 2000, TicketWeb in May 2000, EDCS in July 2000 and ReserveAmerica in February 2001 and the consolidation of Ticketmaster Ireland, offset by the change in accounting method for Ticketmaster-Australia.

        Adjusted EBITDA related to ticketing operations for the year ended December 31, 2001 increased by $6.2 million, or 6%, to $106.2 million from $100.0 million in 2000. Ticketing operations Adjusted EBITDA was impacted in part by a decline in Adjusted EBITDA in selected international markets, lower sales of concession control systems, and somewhat by the impact of September 11^th.

Personals

        Personals revenues increased $20.1 million, or 69%, to $49.2 million for the year ended December 31, 2001 from $29.1 million for the year ended December 31, 2000. This increase is primarily attributable to a 69% increase in subscription revenue. The increase in subscription revenue is primarily due to a 49% increase in the average number of personals subscriptions and a subscription price increase effective in November 2000.

        Costs related to personals revenues and other costs and expenses increased by $15.7 million, or 68%, to $38.6 million in the year ended December 31, 2001 from $22.9 million in the year ended December 31, 2000. This increase is primarily attributable to operating costs associated with the growth in the personals business and increased fees paid to distribution partners and additional advertising expense, including advertising provided by USA Networks for which no cash was paid by Ticketmaster.

        Adjusted EBITDA related to personals operations for the year ended December 31, 2001 increased by $10.3 million, or 166%, to $16.5 million from $6.2 million in 2000. Adjusted EBITDA related to personals operations was positively impacted by revenue growth and reduced advertising expenses, other than fees paid to distribution partners and other than advertisements provided by USA Networks for which no cash was paid by Ticketmaster.

City Guide

        City guide revenues decreased $4.8 million, or 9%, to $46.1 million for the year ended December 31, 2001 from $50.9 million for the year ended December 31, 2000. This decrease is

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primarily attributable to a decrease in partner revenues due to the expiration of a major contract, a decrease in banner advertising revenues, and a decrease in revenue from website development and hosting, partially offset by growth in revenue from new local advertising and content products and services.

        Costs related to city guide revenues and other costs and expenses decreased by $21.1 million, or 17%, to $102.4 million in the year ended December 31, 2001 from $123.5 million in the year ended December 31, 2000. This decrease is primarily attributable to a decrease in sales and marketing expenses and savings in compensation and other operating costs due to the reorganization of the city guide operations.

        Adjusted EBITDA loss related to city guide operations for the year ended December 31, 2001 improved by $20.7 million, or 39%, to $32.8 million from $53.5 million in 2000. Adjusted EBITDA loss related to city guide operations improved as a result of savings in compensation and other operating costs due to the reorganization of the city guide operations, offset in part by declining revenues.

Other

        Other revenues decreased $8.0 million, or 99%, to $0.1 million in the year ended December 31, 2001 from $8.1 million for the year ended December 31, 2000, primarily due to the transfer of the ECS operations to USA Networks in June 2000. The related other operating expenses decreased $12.0 million, or 99%, to $0.1 million in the year ended December 31, 2001 from $12.1 million in the year ended December 31, 2000.

Year ended December 31, 2000 compared to the year ended December 31, 1999

        Revenues.    Revenues increased by $108.2 million, or 22%, to $606.7 million in the year ended December 31, 2000 from $498.5 million for the year ended December 31, 1999. The increase is primarily attributable to the increase of $75.8 million from ticketing operations, the increase of $23.5 million from city guide and the increase of $20.2 million from personals, offset in part by the decrease of $11.3 million in other revenues.

        Operating Costs and Other Expenses.    For the year ended December 31, 2000, operating costs and other expenses increased by $215.1 million, or 36%, to $805.1 million from $590.0 million in 1999. The increase is primarily due to the $96.0 million increase in depreciation and amortization, the $61.1 million increase in ticketing operations costs to support the 17% increase in ticketing operations revenues, the $31.3 million increase in sales and marketing costs, the $14.2 million increase in general and administrative expenses and the $12.8 million increase in city guide operations costs to support the 86% increase in city guide revenues. The increase in depreciation and amortization is primarily attributed to the acquisitions of Match.com in June 1999, Web Media Ventures, LLC and the Sidewalk assets in September 1999, TM VISTA in January 2000, Admission Canada in April 2000, TicketWeb in May 2000 and EDCS in July 2000. The increase in sales and marketing costs is primarily attributable to the growth of the city guide operations, advertising contributed by USA Networks for which no consideration was paid by Ticketmaster and, to a lesser extent, the addition of sales and marketing expenses associated with the personals operations. Ticketmaster began recognizing sales and marketing costs from the Match.com and Web Media Ventures, LLC portions of personals operations in the second and third quarters of 1999, respectively. The increase in general and administrative expenses was primarily attributable to the acquisitions of Admission Canada in April 2000, TicketWeb in May 2000 and EDCS in July 2000. As a percentage of total revenues, these costs decreased from 16% to 15% in the year ended December 31, 1999 and 2000, respectively.

        Interest Income.    Interest income decreased by $1.8 million, or 31%, to $3.9 million in the year ended December 31, 2000 from $5.6 million in the year ended December 31, 1999, primarily due to lower cash balances invested during the periods.

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        Interest Expense.    Interest expense increased by $0.8 million, or 9%, to $8.9 million in the year ended December 31, 2000 from $8.1 million in the year ended December 31, 1999, primarily due to higher borrowing levels.

        Equity in Net Income (Loss) of Unconsolidated Affiliates.    Equity in net loss of unconsolidated affiliates of $2.2 million during the year ended December 31, 2000 consisted of $3.9 million related to the Company's portion of net losses at foodline.com, Inc. and Active.com, Inc., offset by $1.7 million in net equity income from the Company's minority investments in Ticketmaster-Mexico and Ticketmaster-Ireland. In December 2000, foodline.com, Inc. filed for Chapter 7 bankruptcy protection and ceased operations at which time the Company stopped recognizing losses in the operations of foodline.com, Inc. During 2000, the Company's ownership stake in Active.com, Inc. fell below 20% at which time the Company switched to the cost method of accounting. Equity in net income of unconsolidated affiliates for the year ended December 31, 1999 represents income from the Company's minority investments in Ticketmaster-Mexico and Ticketmaster-Ireland.

        Investment Losses, Net.    Net investment losses of $8.8 million for the year ended December 31, 2000 represents our losses in certain equity investments that suffered declines in value that were other than temporary.

        Income Tax Provision.    The provision for income taxes was $14.7 million and $24.0 million for the year ended December 31, 2000 and 1999, respectively. The effective tax rate differs from the statutory federal income tax rate, primarily due to non-deductible goodwill, foreign income taxes and operating losses not benefited.

Ticketing Operations

        Revenues from ticketing operations increased by $75.8 million, or 17%, to $518.6 million for the year ended December 31, 2000 from $442.7 million for the year ended December 31, 1999. The revenue increase is primarily due to an increase in average revenue per ticket (9% increase from $5.25 to $5.71) and an increase in the number of tickets sold. The increase in the number of tickets sold (from 74.9 million to 83.0 million) primarily resulted from increased ticket sales within existing markets, growth in new markets such as Northern California, Arizona and Alabama, and the acquisitions of Admission Canada in April 2000 and TicketWeb in May 2000.

        Costs related to ticketing operations revenues and other costs and expenses increased by $71.5 million, or 21%, to $418.5 million in the year ended December 31, 2000 from $347.0 million in the year ended December 31, 1999. Costs related to ticketing operations are primarily variable in nature and increased in accordance with the increase in ticketing operations revenues. Ticketing operations costs increased as a percentage of ticketing operations revenues to 64% from 61% in the years ended December 31, 2000 and 1999, respectively, primarily due to higher client commissions and credit card charges as a result of higher revenue per ticket, increased costs associated with servicing new territories, the costs incurred to consolidate the domestic call centers and the acquisitions of TM VISTA in January 2000, Admission Canada in April 2000, TicketWeb in May 2000 and EDCS in July 2000.

        Adjusted EBITDA related to ticketing operations for the year ended December 31, 2000 increased by $4.1 million, or 4%, to $100.0 million from $95.9 million in 1999.

Personals

        Personals revenues increased $20.1 million, or 225%, to $29.1 million for the year ended December 31, 2000 from $9.0 million for the year ended December 31, 1999. This increase is primarily attributable to the acquisition of the personals companies, Match.com and Web Media Ventures in June 1999 and September 1999, respectively. The costs related to personals revenues and other costs

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and expenses increased by $13.4 million, or 142%, to $22.9 million in the year ended December 31, 2000 from $9.5 million in the year ended December 31, 1999. Adjusted EBITDA related to personals operations for the year ended December 31, 2000 increased by $6.6 million to $6.2 million from an Adjusted EBITDA loss of $0.4 million in 1999.

City Guide

        City guide revenues increased $23.5 million, or 86%, to $50.9 million for the year ended December 31, 2000 from $27.4 million for the year ended December 31, 1999. This increase is primarily attributable to a growth in revenues from operations in the 25 markets into which the city guide expanded throughout 1999, revenue from new city guide advertising products and services and also to increases in partner-led market consulting fees.

        Costs related to city guide revenues and other costs and expenses increased by $40.0 million, or 48%, to $123.5 million in the year ended December 31, 2000 from $83.5 million in the year ended December 31, 1999. This increase is attributable to the full year impact of the city guide expansion in the year ended December 31, 1999.

        Adjusted EBITDA loss related to city guide operations for the year ended December 31, 2000 increased by $1.8 million, or 3%, to $53.5 million from $51.7 million in 1999. Adjusted EBITDA related to city guide operations was impacted by the full year impact of the city guide expansion in the year ended December 31, 1999.

Other

        Other revenues decreased $11.4 million, or 58%, to $8.1 million in the year ended December 31, 2000 from $19.5 million for the year ended December 31, 1999, primarily due to the discontinuance of the teleservicing business in June 2000. The related other operating expenses decreased $5.7 million, or 32%, to $12.1 million in the year ended December 31, 2000 from $17.8 million in the year ended December 31, 1999.

Liquidity and Capital Resources

        At December 31, 2001, Ticketmaster had cash, cash equivalents and marketable securities available for sale of $76.5 million for its own account, separate from funds held in accounts on behalf of venues, teams and promoters. The Company historically has financed its operations with internally generated funds and advances from USA Networks. Future operations will be financed primarily from internally generated funds.

        Net cash provided by operating activities was $99.4 million for the year ended December 31, 2001 compared to net cash provided by operating activities of $4.0 million for the year ended December 31, 2000. The change primarily reflects increased Adjusted EBITDA from operations and timing differences in net cash collections on behalf of clients and working capital offset by accrued expenses.

        Net cash used in investing activities was $70.4 million for the year ended December 31, 2001. Cash related to investing activities was used primarily for acquisitions requiring $34.2 million, capital expenditures of $32.8 million and purchases of marketable securities of $13.7 million offset by proceeds from the sale of marketable securities of $15.7 million. Net cash used in investing activities was $89.8 million for the year ended December 31, 2000, primarily for acquisitions requiring $49.8 million, capital expenditures of $34.8 million, payment of merger costs of $14.2 million, payments for investments in affiliates of $10.9 million and purchases of marketable securities of $21.9 million offset by proceeds from the sale of marketable securities of $40.5 million.

        Net cash used in financing activities was $5.3 million for the year ended December 31, 2001, primarily for payments on long-term debt of $5.3 million and net proceeds from exercise of options of

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$4.6 million offset in part by advances to USA Networks. Net cash provided by financing activities was $67.3 million for the year ended December 31, 2000 which consisted primarily of advances to USA Networks. As part of the Combination, the USA Networks advances as of the closing date of the Combination were contributed to the Company.

        As of December 31, 2001, the Company had no material financial commitments other than those under existing capital and operating lease agreements. A summary of the Company's capital lease obligations and operating lease commitments with payments due by period and in total follow:

        The Company's investing activities are consistent with its infrastructure build out and expansion into other businesses that complement its current offerings. The Company will continue to evaluate possible acquisitions of, or investments in, businesses, products and technologies that are complementary to its own, which may require the use of cash or other capital resources. In connection with the Combination in January 2001, Ticketmaster entered into a revolving credit facility (the "Revolver") with USA Networks that provided the Company with $25 million in available credit at USA Networks' borrowing rate through May 1, 2001, payable upon demand. The Revolver has expired. During the year ended December 31, 2001, the Company borrowed and repaid USA Networks $24 million.

        Management believes that existing cash, cash equivalents, marketable securities, amounts available from other sources, and the positive cash flow from the ticketing operations will be sufficient to meet the Company's working capital and capital expenditures requirements for the next twelve months. Thereafter, Ticketmaster may be required to raise additional funds through bank financing, issuance of debt or equity. Management cannot make assurances that the Company will not choose to or be required to raise additional financing prior to such time. If additional funds are raised through the issuance of equity securities, Ticketmaster's stockholders may experience significant dilution. Furthermore, management cannot make assurances that additional financing will be available when needed or that, if available, such financing will include terms favorable to the Company or its stockholders. If such financing is not available when required or is not available on acceptable terms, the Company may be unable to develop or enhance its products and services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on its business, financial condition and results of operations.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

        Ticketmaster's exposure to market rate risk for changes in interest rates relates primarily to its cash, cash equivalents and marketable securities. The Company has not used derivative financial instruments in its cash, cash equivalents and marketable securities. The Company invests its excess cash in debt instruments of the U.S. Government and its agencies and in high-quality corporate issuers and, by policy, limits the amount of credit exposure to any one issuer. The Company protects and preserves its invested funds by limiting default, market and reinvestment risk.

        Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, the Company's future investment income may fall short of expectations due to changes in interest rates or the Company may suffer losses in principal if forced to sell securities which have declined in market value due to changes in interest rates.

Foreign Currency Exchange Risk

        As the Company increases its operations in international markets it becomes increasingly exposed to potentially volatile movements in currency exchange rates. The economic impact of currency exchange rate movements on the Company are often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. These changes, if material, could cause the Company to adjust its financing and operating strategies.

        As currency exchange rates change, translation of the income statements of the Company's international businesses into U.S. dollars affects year-over-year comparability of operating results. The Company does not hedge translation risks because cash flows from international operations are generally reinvested locally. Further, the Company does not enter into hedges to minimize volatility of reported earnings because the Company does not believe it is justified by the attendant cost.

        Foreign exchange gains and losses were not material to the Company's earnings for the years ended December 31, 2001, 2000 and 1999.

Seasonality

        Ticketmaster's ticket sales are impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by the client. The second quarter of the year generally experiences the most events.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        Our financial statements, with notes thereto and the report of Ernst & Young, LLP, our independent auditors, are set forth as indicated in Item 14.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        Not applicable.

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PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        The information contained under the headings "Directors" and "Executive Officers" in the definitive Proxy Statement for our 2002 Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 11.    EXECUTIVE COMPENSATION

        The information contained under the headings "Directors" and "Executive Officers" in the definitive Proxy Statement for our 2002 Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The information contained under the heading "Voting Securities and Principal Stockholders" in the definitive Proxy Statement for our 2002 Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The information contained under the heading "Certain Transactions" in the definitive Proxy Statement for our 2002 Annual Meeting of Stockholders is incorporated herein by reference.

PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) Financial Statements:

Schedules other than those listed above have been omitted since they are either not required, not applicable, or the information is otherwise included.

(a)(2) Financial Statements:

        The following financial statements of Ticketmaster are included in response to Item 8 of this report.

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(a)(3) Exhibits filed as part of this report:

41

42

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Confidential treatment has been granted with respect to portions of this exhibit.

**

Reflects management contracts and compensatory plans.

†

Filed herewith.

(A)

Incorporated by reference to exhibits filed in response to Item 16, "Exhibits," of the Registrant's Registration Statement on Form S-1 (File No. 333-64855) filed with the Commission on September 30, 1998.

(B)

Incorporated by reference to exhibits filed in response to Item 16, "Exhibits," of the Registrant's Registration Statement on Form S-1 (File No. 333-64855) filed with the Commission on November 6, 1998.

(C)

Incorporated by reference to exhibits filed in response to Item 16, "Exhibits," of the Registrant's Registration Statement on Form S-1 (File No. 333-64855) filed with the Commission on November 20, 1998.

(D)

Incorporated by reference to exhibits filed in response to Item 7, "Exhibits," of the Report on form 8-K filed by USA Networks, Inc. (File No. 000-20570) with the Commission on February 26, 1998.

(E)

Incorporated by reference to the Registrant's Report on Form 10-K filed with the Commission on March 31, 1999.

(F)

Incorporated by reference to exhibits filed in response to Item 16, "Exhibits," of the Registrant's Registration Statement on Form S-1 (File No. 333-81761) filed with the Commission on June 29, 1999.

(G)

Incorporated by reference to exhibits filed in response to Item 6, "Exhibits," of the Registrant's Report on Form 10-Q filed with the Commission on August 16, 1999.

(H)

Incorporated by reference to exhibits filed in response to Item 6, "Exhibits," of the Registrant's Report on Form 10-Q filed with the Commission on November 15, 1999.

(I)

Incorporated by reference to exhibits filed in response to Item 8, "Exhibits," of the Registrant's Registration Statement on Form S-8 (File No. 333-30794) filed with the Commission on February 18, 2000.

(J)

Incorporated by reference to exhibits filed in response to Item 16, "Exhibits," of the Registrant's Registration Statement on Form S-3 (File No. 333-30884) filed with the Commission on February 22, 2000.

(K)

Incorporated by reference to the Registrant's Report on Form 10-K filed with the Commission on March 23, 2000.

(L)

Incorporated by reference to exhibits filed in response to Item 6, "Exhibits," of the Registrant's Report on Form 10-Q filed with the Commission on May 15, 2000.

(M)

Incorporated by reference to exhibits filed in response to Item 16, "Exhibits," of the Registrant's Registration Statement on Form S-3 (File No. 333-39230) filed with the Commission on June 14, 2000.

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(N)

Incorporated by reference to exhibits filed in response to Item 8, "Exhibits," of the Registrant's Registration Statement on Form S-8 (File No. 333-41018) filed with the Commission on July 7, 2000.



(O)

Incorporated by reference to exhibits to the Registrant's Definitive Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 filed with the Commission on January 11, 2001.



(P)

Incorporated by reference to exhibits filed in response to Item 16, "Exhibits," of the Registrant's Registration Statement on Form S-3 (File No. 333-54304) filed with the Commission on January 25, 2001.



(Q)

Incorporated by reference to the Registrant's Report on Form 10-K filed with the Commission on April 2, 2001.



(R)

Incorporated by reference to the Registrant's Report on Form 10-Q filed with the Commission on May 15, 2001.



(S)

Incorporated by reference to the Registrant's Report on Form 10-Q filed with the Commission on November 14, 2001.

(b) Reports on Form 8-K:

(1)

On October 2, 2001, the Registrant filed a Current Report on Form 8-K relating to information on the Registrant's results since September 11, 2001.

(2)

On October 23, 2001, the Registrant filed a Current Report on Form 8-K relating to the release of the registrant's financial results for the quarter ended September 30, 2001.

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SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 29, 2002

POWER OF ATTORNEY

        Know All Men By These Presents, that each person whose signature appears below constitutes and appoints Bradley K. Serwin and Thomas J. McInerney, jointly and severally, his attorney-in-fact, each with the power of substitution for him in any and all capacities, to sign any amendments to this Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

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