Clear Channel Communications Inc.'s planned spinoff Wednesday of its entertainment division, under the new name Live Nation, will create a new company that promotes rock concerts by everyone from Madonna to Toby Keith.

Given the concert industry's track record in recent years, the new stock may be a tougher sell than a Starland Vocal Band comeback tour.

Live Nation is the dominant player in the glamorous but struggling world of live concerts. As the world's largest live-entertainment promoter, the Clear Channel unit last year staged more than 10,000 concerts, 12,000 theatrical performances and 600 motor-sports events for more than 61 million people. It owns or operates in 141 venues in the U.S. and Europe.

But Live Nation's value has also fallen by as much as 81 percent in the five years since Clear Channel Communications acquired its corporate predecessor, SFX Entertainment Inc., for nearly $3 billion. The media giant, based in San Antonio, wasn't able to execute its vision of creating a pop-culture juggernaut by using its thousands of billboards and radio stations to cross-promote concerts. And the concert business in recent years has been staggered by over-aggressive pricing and sky-high fees paid to artists.

The result is that Clear Channel Entertainment has been one of the least-profitable components of the $9.4 billion parent company, generating just $16 million net income in 2004 on $2.8 billion revenue. Live entertainment "is a much lower-margin business than the outdoor (advertising) and radio businesses," says a company spokesman.

Live Nation President and Chief Executive Michael Rapino declines to discuss financial specifics, due to federal "quiet period" restrictions on public statements leading up to new stock sales. But he's says he's aware of the issues Live Nation will face, and the company has been making plans to address its problems, cutting staff and overhead looking for new ways to make money off concerts, even after they're finished.

Shares in Live Nation have begun trading under the name CCE Spinco Inc. on a "when-issued" basis. In their first four days of trading on the New York Stock Exchange, they have fallen 70 cents, or 6 percent, to $10.80. When the spinoff takes place, Clear Channel investors will receive one share of Live Nation stock for every eight Clear Channel Communications shares they own; Clear Channel won't own any of Live Nation after the transaction.

Mr. Rapino's assignment is a tough one. The problem is that the concert-promotion business -- where Live Nation generates nearly 80 percent of its revenue -- is challenging and unpredictable. Big promoters depend on separate contracts with hundreds of individual bands, making revenue and profits volatile. The difference between triumph and disaster at the box office can come down to the last 1,000 to 2,000 tickets sold.

When ticket sales are bad, promoters rely on bar receipts and parking fees to subsidize the performer's fee, which typically features a substantial guaranteed minimum. Negotiating appropriate "artist guarantees," as these fees are known, is a dark art requiring the ability to predict the interest level of tens of thousands of fans months in advance. And when a tour ends, the revenue stream does, too.

"We don't produce our own product," says Alex Hodges, executive vice president of House of Blues Entertainment Inc., another large concert promoter. "The product is created by the bands themselves."

So the business can do poorly even when it seems to be doing well. The concert business set revenue records in 2004, thanks to high-profile tours by Prince, Metallica, Madonna and others, as well as pricey tickets. But in terms of profit, it was an especially bad year because attendance couldn't keep pace with rising prices and fees paid to performers. Clear Channel Entertainment, for instance, saw revenue from its concerts grow 6 percent, to $2.2 billion, in 2004; its operating income from concerts, however, fell 25 percent, to $82 million.

This year, by contrast, the industry is expected to show a modest dip in revenue, but concert promoters have cheered it as a more lucrative year, thanks to more selective deal-making and slightly lower ticket prices, which helped draw fans back to concerts.

That has left many observers skeptical of Live Nation's prospects. The most promising thing that Sanford C. Bernstein & Co. analyst Michael Nathanson can find to say about the spinoff is that Clear Channel Entertainment's value has plummeted so precipitously over the past five years that it will give the parent company a massive tax break.

Recent Securities and Exchange Commission filings by the company confirm that Clear Channel expects to realize a capital loss on the spinoff, thanks to the complex web of multiple holding companies being used to effect the transition to stand-alone status. The filings don't specify how big the company expects the loss to be, but Mr. Nathanson estimates that Clear Channel could declare as much as $2.5 billion in losses, potentially saving it more than $880 million in taxes; other analysts' estimates for the loss range as high as $2.7 billion. The filings stipulate that if Live Nation after the spinoff causes Clear Channel to miss out on its expected tax break, the newly created company will pay its former parent the amount it would have otherwise saved. A Live Nation spokesman calls that scenario unlikely.

Mr. Rapino has a multipronged plan to increase his company's value and allay critics. To begin with, he is in the process of cutting 400 jobs, or 10 percent of the company's work force. He is further seeking to streamline the company's operations by reducing its 14 lines of business to six, exiting operations like museum exhibitions, television production and music publishing. Live Nation also aims to generate income from events after they are over, by expanding on the company's small business that sells concert recordings.

Mr. Rapino also recognizes the need to establish a new identity for the company. It has already dumped the Clear Channel name -- unpopular among fans who have blamed the company's consolidation strategy for everything from rising ticket prices to undermining local promoters. Now it hopes to use the new LiveNation.com Web site to create a new, more consumer-friendly brand.

But even that could be a problem. The company was surprised to learn recently that a nearly identical Web address, LiveNation.net, is a long-running hardcore pornography site. A Live Nation spokesman says the company is aware of the other Live Nation, and is in talks to acquire its Web address.