Live Nation Entertainment Chairman Irving Azoff and major shareholder John Malone, chairman of the cable television and entertainment conglomerate Liberty Media Corp., are looking...

Live Nation Entertainment Chairman Irving Azoff and major shareholder John Malone, chairman of the cable television and entertainment conglomerate Liberty Media Corp., are looking at the possibly of taking Live Nation private.

The New York Post reported today, June 10, that the two, who combined own about 23 percent of the company’s stock, are in the preliminary stages of taking the public company private, a year and a half after Live Nation merged with Ticketmaster to become the world’s dominant live entertainment company. Live Nation’s stock, which trades under the symbol LYV, was up more than 6 percent today at 1:45 p.m. EDT at $10.92 per share following news of the possible move.

Prior to the merger, Live Nation was saddled with a lot of debt and, despite restructuring it, joining forces with Ticketmaster did not ease the debt burden, which currently hovers around $1.7 billion. The amount of debt the company carries has long been a concern for some investors, but quickly erasing that burden would not be easy because the company’s margins are low and it has to spend a lot of money upfront on its tours, some of which end up not selling well.

Taking the company private would help alleviate the pressure the company feels from investors, and give it room to operate and look for new alliances and opportunities.

In fact, the Post, quoting an unnamed source, reported that taking the company private is one of several options Live Nation is considering. “Yes, they’ve had discussions, but it’s more of a strategy that is being contemplated. Nothing is imminent.”

The company has been aggressive in trying to expand and turn things around following its difficult 2010, in which ticket sales were down due the weak economy. Earlier in the spring, the company flirted with the idea of trying to acquire a piece of Warner Music Group, and through its Ticketmaster division, Live Nation signed a partnership deal with online discounting giant Groupon.

Despite Live Nation’s recent moves, taking the company private presents some serious challenges. Financial analyst Ben Mogil, director of equity research in media and entertainment for investment bank Stifel Nicolaus & Company, questions whether taking the company private would even be possible.

“We see the debt at $1.7bn (and expected EBITDA of $446mn in 2011) as making it difficult for a go-private transaction,” Mogil wrote in a report to investors this morning, June 10. “The equity value on a fully diluted share count at $12 would be $2.2bn and the debt is $1.7bn for an Enterprise Value of $3.8bn, the company still does not generate material free cash flow to repay that; FCF this year will be $182mn by our estimate. Additionally, we still see Liberty Capital in the ‘getting comfortable with the business’ phase and therefore unlikely to make such a move at this time.”

According to the Post, some of the funding for taking the company private could come from private equity firm Thomas H. Lee Partners, which has worked with Azoff in the past. And, another financial partner would likely be needed to complete the transaction.

Malone, who tried to acquire as much as 35 percent of the Live Nation’s stock, clashed with former Chairman Barry Diller, which led to Diller’s resignation from Live Nation’s board.