U.k.'s Sanctuary Music Seeks Investors Co. Offers Combination Of Businesses In Its Flotation

Iron Maiden and 'The Swiss Family Robinson' do not make obvious bedfellows. But unusual--and highly productive--pairings have always been the norm at Sanctuary Music, the U.K.-based recording, management, publishing, TV production, and touring services company about to float on the London stock exchange through a reverse takeover by Burlington Group.
Sanctuary founders Rod Smallwood and Andy Taylor formed the company in 1976. The pair, who originally met at Cambridge University, linked again after Smallwood scouted Iron Maiden in a pub and persuaded freshly qualified accountant Taylor to join him in managing the band.
Since then, Sanctuary-managed acts, which include Helloween, W.A.S.P., and Bruce Dickinson, have clocked total worldwide album sales of about 55 million.
But heavy metal is only half the story. According to Taylor, the company's TV production activities today account for some 50% of revenue, led by family-oriented dramas such as 'The Swiss Family Robinson' and adaptations of children's stories by English author Enid Blyton. This side of the business will be the destination for much of the 5.3 million pounds ($8.64 million) of working capital that the flotation is expected to raise.
Taylor firmly believes in a multi-media future and sees nothing unusual in Sanctuary's combination of businesses. 'The days of saying there's a visual industry and a music industry are gone,' he says. 'The further down the line we go, the more they become integrated.'
The Burlington deal, for which Sanctuary was due to seek shareholder approval Jan. 22, values the combined group at 23 million pounds ($37.5 million) and is itself the child of an unlikely marriage. Introduced to Sanctuary by stockbroker Charles Stanley, Burlington--formerly Gold & Base Metal Mines--has operated purely as a publicly traded investment company since its mines were seized by the Nigerian government.
Burlington is paying 14.6 million pounds ($23.8 million) for Sanctuary in a deal that values Smallwood and Taylor's stakes at 4.6 million pounds ($7.5 million) apiece. They will each control 20% of the combined group, with about the same proportion of the group's capital value in free float. Burlington will change its name to Sanctuary Group.
Capital raised by the Burlington takeover is also likely to benefit Sanctuary's ongoing traditional music activities, including its Sanctuary Music Productions offshoot, 40% of which was floated last year on London's Alternative Investments Market. Smallwood tells Billboard that he plans to expand the company's operations in the U.S., where it runs a New York office and has recently seen success with modern rock act Catherine Wheel. One priority will be to find a stateside deal for London-based gothic-rock combo Feline, which is signed to Chrysalis in the U.K. Another Sanctuary-represented act, metal band Entombed, is on tour in the U.S. and has a debut album pending on Zomba offshoot Music for Nations.
The company is gearing up for activities to promote a forthcoming Iron Maiden set, due March 23 on CMC/BMG in the U.S. and EMI elsewhere. Although it is the band's 11th album, the title, 'Virtual XI,' refers to association football, with which Maiden's members have long been connected. Sanctuary has assembled a squad of 15 players, including Maiden bass player Steve Harris--who once played as a junior for London's West Ham team--and a number of former England internationals. It's taking the squad on a European football tour that will promote the set.
Sanctuary will be joining an exclusive group of quoted music companies on the London stock exchange--significant players being just EMI, Capital Radio, and Chrysalis--and Taylor acknowledges that the music industry remains heavily underrepresented.
'The whole media industry has not been that attractive in the city,' he says. 'They have perceived it as being high-risk and unprofitable. The task has been convincing the city that we've eliminated the risk, and I hope that we've started to challenge the trend.'
Taylor believes that attempts by others to attract public capital have often failed because they were too closely identified with well-known but sometimes mercurial personalities.
Investors, he says, look for a solid track record and the professionalism of an operation. 'There can be properly run music companies,' he stresses. 'You've got to manage your creative people properly and show that you have a low-risk strategy. Unlike some others, we don't throw millions of pounds at an act and see what happens.'

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