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LEONARD, STREET AND DEINARD

150 South Fifth Street

Minneapolis, Minnesota 55402

May 27, 2005

Mr. Larry Spirgel

Assistant Director

Division of Corporation Finance

United States Securities and Exchange Commission

Washington, DC 20549

    Re:
    LodgeNet Entertainment Corporation

Form 10-K for the fiscal year ended December 31, 2004

Filed March 16, 2005

File No. 0-22334

     Dear Mr. Spirgel:

We represent LodgeNet Entertainment Corporation, a Delaware corporation (“LodgeNet” or the
“Company”) and have been authorized by them to respond to the Staff’s letter, dated May 3, 2005,
and the ten itemized comments contained therein (the “Staff Comment Letter”). We have set forth
each of the comments from the Staff’s Comment Letter, followed by the Company’s response. Please
note that LodgeNet’s first quarter 10-Q filing was due as we were reviewing the Staff’s comments.
Accordingly, certain modifications were made in LodgeNet’s Report on Form 10-Q for the Quarter
Ended March 31, 2005, which we believe are responsive to the Staff’s comments.

COMMENT 1

    1.
    Tell us the nature of derivative instruments totaling $ 5.8 million as reported in
the balance sheet but excluded from the above table. (Note: refers to Obligations and
Commitments as of December 31, 2004 (in thousands), page 23 of Form 10-K.)

RESPONSE TO COMMENT 1

    •
    We have been authorized to inform you of the following. The nature and
components of the derivative instruments totaling $5.8 million includes $2.4
million of unamortized balance of the deferred gain from the termination of a
$50.0 million interest cap agreement as disclosed in Note 2, under subsection
“Derivative Financial Instruments.” The Company believes that this item does not
belong on the Obligations and Commitments schedule because it is a deferred gain
and the Company does not have any liability or future obligation to pay. Also
included in derivative instruments are $3.4 million of mark-to-market valuation of
the interest rate swap agreements as of the balance sheet date. The swap
agreements consist of swap instruments having a notional value of $100 million,
of which $50 million expires in December 2005 and $50 million

    expires in
March 2006. These swap instruments are intended to convert the Company’s variable
interest rate bank debt to fixed interest rate debt. The swap agreements have been
designated as, and meet the criteria for, cash flow hedges. LodgeNet is required by
its bank Credit Facility to have a minimum of 50% of our term loan balance covered
under such interest rate swap arrangements. Upon review, the Company has determined
that such obligation should be included and the Company will incorporate this on
its Obligations and Commitments schedule in its future filings.

COMMENT 2

    2.
    Please disaggregate the components of “Other long-term obligations” and separate
operating leases from the “Other long-term liability” as captioned in the balance sheet.
Please present the cash payments due to Hilton Hotels on an undiscounted basis.

RESPONSE TO COMMENT 2

    •
    The Company has reviewed this matter and will comply with the Staff’s request
to disaggregate the components of “Other long-term obligations” and separated
operating leases from the “Other long-term liability”. The cash payments due to
Hilton Hotels was aggregated on an undiscounted basis will now be separated and
presented on the same basis. The Company will incorporate these changes into its
future filings.

COMMENT 3

    3.
    We note that you may have certain revenue arrangements, which consist of multiple
elements. Please clarify your disclosure to discuss the separate units of accounting in a
typical revenue arrangement and your allocation of consideration to each. Refer to EITF
00-21. (Note: refers to Critical Accounting Policies, page 37 of Form 10-K.).

RESPONSE TO COMMENT 3

    •
    We have been authorized to inform you of the following. LodgeNet’s primary
source of revenue is providing in-room, interactive television services to the
lodging industry, for which the hotel guest typically purchases on a per-view,
hourly or daily basis. These services include on-demand movies, on-demand games,
music and music video, Internet on television and television on-demand. LodgeNet
recognizes revenue from the sale of these services in the period the related
service is sold to the hotel guest and when collection is reasonably assured.
LodgeNet’s system in each hotel records the purchase of each individual service
and that information is retrieved from the hotel property nightly via a
communication system established by us. No future performance obligations exist on
a service that has been purchased by the guest. The prices related to our
services are established by the Company and are fixed and determinable prior to
delivery of the service. The Company has determined that this source of revenue
does not fall under the multiple deliverables guidance of EITF 00-21.

    LodgeNet also generates revenue from the sale of system equipment, and repair
service parts and labor. These sales are not sold under multiple element
arrangement sand are a very small part of LodgeNet’s revenue base. The Company
recognizes this revenue when the equipment is delivered or the service has been
performed. No future performance obligation exists on an equipment sale or on a
repair service that has been provided.

    The Company also generates revenue by providing high-speed Internet access through
the sale and installation of equipment and the sourcing of Internet access to
subscribing hotels. This revenue arrangement does fall under the guidance of EITF
00-21, par. 1. Revenue from the sale and installation of this equipment is
recognized when the equipment has been installed. The delivery and installation of
the equipment essentially occurs simultaneously. In addition, this equipment has
stand alone value to the customer as defined in par. 9a of EITF 00-21. Equipment
and installation prices are fixed and determinable prior to delivery and are based
on objective and reliable sales evidence from a stand alone basis, as defined in
par. 12 and par. 16 of EITF 00-21. The undelivered elements in these arrangements
are the ongoing maintenance service and internet access fees. LodgeNet provides to
subscribers ongoing maintenance, service and call center support contracts to
properties that have been installed by it and also to properties that have been
installed by other providers. In addition, LodgeNet provides the property with the
portal to access the Internet. The Company receives monthly service fees from such
subscribers for our maintenance services and Internet access. The price for these
services are fixed and determinable prior to delivery of the service. The fair
value of these services are known due to the Company having objective and reliable
evidence from contract renewal and stand alone sales, as defined par. 16 of EITF
00-21. Under the service agreement, which includes maintenance and Internet access, we recognize this revenue ratably over the term of the maintenance and service
contract, typically three-years.

COMMENT 4

    4.
    It appears that certain depreciation and amortization expenses are directly related
to property and equipment used in producing or generating revenue. Revise your
presentation to comply with SAB Topic 11.B by reclassifying the depreciation (and
amortization) applicable to cost of revenues or removing the caption gross profit and
indicating that cost of revenues excludes depreciation and amortization shown below.

(Note: refers to Consolidated Statements of Operations, page F-5 of Form 10-K)

RESPONSE TO COMMENT 4

    •
    LodgeNet has complied with the second alternative proposed in this comment and
revised its presentation to comply with SAB Topic 11.B by removing the caption
gross profit and indicating that cost of revenues excludes depreciation and
amortization, which we presented as a separate line item. We are submitting, as
Appendix A, the new presentation which the Company anticipates incorporating into
its future filings.

COMMENT 5

    5.
    Refer to the captions total direct costs (exclusive of other operating expenses shown
separately below) and gross profit (exclusive of depreciation shown separately below). It
appears that Guest pay operations constitute costs and expenses applicable to cost of
revenues. Please revise your presentation to clearly identify cost of revenue items in
the consolidated statements of operations. Refer to Rule 5-03(b)(2) of Regulation S-X.
It is also inappropriate to present gross profit exclusive of other cost of revenues such
as guest pay operations.

RESPONSE TO COMMENT 5

    •
    Similar to comment #4 above, the Company has complied with this comment and
revised its presentation to comply with 5-03(b)(2) of Regulation S-X by removing
the caption gross profit and indicating that cost of revenues excludes
depreciation and amortization shown below. We are submitting, as Appendix A, the
new presentation which the Company anticipates incorporating into its future
filings.

COMMENT 6

    6.
    Tell us how you account for the revenues and costs related to your agreement with
DirectTV. Refer to EITF 99-19.

(Note: refers to Note 2 – Summary of Significant Accounting Policies. Significant Vendors,
page F-10 of Form 10-K.).

RESPONSE TO COMMENT 6

    •
    We have been authorized to inform you of the following. The Company acquires
basic and premium television programming rights to market, solicit, and sell
DIRECTV programming to hotels pursuant to a multi-year agreement with DIRECTV,
which expires in January 2010. Depending on the programming package, LodgeNet
pays DIRECTV a flat rate per package, per hotel room, per month (for channels such
as Fox News, Cartoon Network, Discovery Channel and The History Channel) or a flat
rate per channel, per month (for channels such as ESPN). LodgeNet is the primary
obligors under this contract with DIRECTV, and are responsible for payment to
DIRECTV for contracted programming.

    The Company, in-turn, contracts with individual hotels to provide them basic and
premium programming. The Company acts as the principal in the transaction with the
hoteliers. LodgeNet markets the programming and establishes prices charged to each
hotel. LodgeNet installs Company-owned system equipment to receive the purchased
programming. Once the Company’s systems and programming packages are installed at
a hotel, LodgeNet pays DIRECTV a monthly fee based on the type of programming
packages installed. LodgeNet has the right to provide programming packages
free-of-charge to a hotel. LodgeNet bears all risk of loss related to collection,
delivery, or contract cancellation. It accounts for the revenues received from
each hotel for these services at the gross level. Based on the criteria in par. 3
of EITF 99-19, namely 1) acts as a principal in the transaction, 2) takes title to
the product, and 3) has risks and rewards of ownership, the Company has determined
that these conditions have been met. Therefore, LodgeNet accounts for the fees paid
to DIRECTV as a direct cost.

    The Company also receives a nominal amount of sales commission from DIRECTV on
certain programming packages as incentive for it to promote and implement the
delivery of DIRECTV programming to LodgeNet’s customers as well as act as a sales
representative of DIRECTV to solicit and take orders for certain DIRECTV
programming. LodgeNet accounts for the sales commission as revenue and classifies
the amounts as “Other” revenues. Sales commissions from DIRECTV represent less than
one-half of 1% of the Company’s total revenue.

COMMENT 7

    7.
    We note that you were obligated to pay Hilton a certain sum with a present value of $
5.8 million as consideration for “the right to provide Internet on television access and
television on-demand programming services to participating hotels and the right to
independently pursue and further develop interactive television content.” Tell us the
nature of the incremental economic benefits that you expect to receive in connection with
this payment. How did you determine the fair value and useful life of the underlying
asset? Are the Hilton Hotels the only current subscribers to your Internet access
services? Refer to paragraphs 9 and 11 of SFAS 142 and paragraph 28 of CONS 6.

(Note: refers to Note 7 – Intangible Assets, page F-15 of Form 10-K.)

RESPONSE TO COMMENT 7

    •
    We have been authorized to inform you of the following. In July of 2002,
LodgeNet acquired the right to provide television-based Internet access and
time-shifted TV programming services to participating hotels and the right to
independently pursue and further develop interactive television content throughout
the Company’s entire room base. These services were originally developed under a
joint venture with Hilton Hotels Corporation (Hilton). When LodgeNet and Hilton
agreed to dissolve the joint venture, the Company retained sole ownership of these
services and sole right to distribute them. As consideration, the Company agreed
to pay Hilton $8.0 million over a five-year period. The present value of these
payments, approximately $5.8 million, was recorded as an intangible on LodgeNet’s
consolidated balance sheet and is being amortized on a straight-line basis over
its estimated useful life of five years. The incremental economic benefits
include the additional revenue and cashflow generated by owning the right to
deploy the Internet on television product and the time-shifted TV programming
services to all of the Company’s contracted rooms, as opposed to being limited to
distribution solely to Hilton rooms.

    •
    American Appraisal Associates, Inc. performed a valuation of these acquired
rights. The results of the appraisal established and supported a fair value of
$5.8 million for the acquired rights to provide TV Internet and TV on Demand
throughout our current and future installed room base. The five-year useful life
was determined in consideration of paragraph of Statement of Financial Accounting
Standards No. 142 (FAS 142) and was based on the Company’s analysis of certain
factors, including the Company’s anticipation of technological changes associated
with increasing accessibility to the Internet by the traveler, the economic
viability of charging a hotel guest to access the Internet through the television,
and a finite market potential for the products acquired. Statement of Financial
Accounting Standards No. 142 (FAS 142) requires a determination between “finite”
verses “indefinite” useful life. In order to be considered having an indefinite
life, an asset must have the following characteristics a) perpetual rights without
substantial cost b) indefinite cashflow stream c) indefinite market. Based on
such criteria, the asset does not have an indefinite life.

    •
    The Hilton hotels are not the Company’s sole subscribers to its TV Internet
service. As of December 2004, the Company had approximately 329,000 TV Internet
rooms, of which Hilton accounted for approximately 87,000 rooms.

COMMENT 8

    8.
    We note your accounting for warrants issued to Hilton Hotel franchises. Tell us your
consideration of Issue 2 of EITF 01-9 during the last two years. Refer to Example 4 in
Exhibit 01-09B.

(Note: refers to Note 13 – Warrants, page F-21 of Form 10-K.)

RESPONSE TO COMMENT 8

    •
    We have been authorized to inform you of the following. LodgeNet has evaluated
the concepts within Issue 1 and Issue 2 of EITF 01-09 and believes that EITF 01-09
is not applicable to its business. Hilton is not responsible for any part of the
transaction with the guest with the exception of collecting, on the Company’s
behalf, the revenue generate by the sale of programming to the guest. Hilton is
not a reseller of the Company’s products or services to the hotel guest.

    LodgeNet is re