Touring Industry Faces Turbulent Times

The dust refuses to settle from the rampant consolidation in the concert-touring industry, as evidenced by a turbulent summer that has seen a spate of lawsuits, major power shifts, seasoned veterans stepping back, and new players emerging.
As independent promoter Bill Reid, president of Rising Tide, puts it, "The live-entertainment business is going through a major internal revolution, and the final chapter hasn't been written yet."
Adding fuel to the flame, concert tickets aren't exactly flying out of the box-office window this summer. Aside from a handful of bullet-proof superstars like U2, Madonna, and Dave Matthews Band-and a few pleasant surprises like Sade, Tim McGraw, and James Taylor-it has been a hit-and-miss season, with an uncertain economy and ever-higher ticket prices converging with often negative results. Worldwide, concert grosses are off 12.5% from a year ago, and attendance is off an even more disconcerting 17%, according to numbers reported to Billboard sister publication Amusement Business.
Conversely, "our business is not down those amounts," notes Rodney Eckerman, president/co-CEO of music at Clear Channel Entertainment (CCE). "We've had a pretty healthy summer and a tremendous third quarter."
Even so, in the midst of the industry's busiest weeks, change has been constant. Power shifted dramatically at Northeastern independent promoter Metropolitan Entertainment Group (MEG), as dominant shareholder Covanta forced MEG founder John Scher to curtail his concert-promotion activities and step down as CEO. Pioneering-promoters-turned-CCE-executives Jack Boyle and Louis Messina
backed away from their full-time posts, Boyle becoming chairman emeritus and Messina resigning.
One observer notes, "Some people who have had great careers have had terrible exits."
Meanwhile, Anschutz Entertainment Group's (AEG) touring division, Concerts West, made a major play and landed the Britney Spears tour, beating out CCE. And in a development watched closely by the concert business at large, Denver independent promoter Nobody in Particular Presents (NIPP) filed a lawsuit against CCE, citing monopolistic business practices.
Finally, talk persists about the future of House of Blues Concerts (HOB), with rumors regarding potential buyers ranging from AEG and CCE to former Ticketmaster architect Fred Rosen. Every week, it seems there is a new development.
"Just when you thought things had settled down, you blink your eyes and everything's different," says independent promoter Seth Hurwitz of Washington, D.C.-based I.M.P. "We're all just waiting for everything to shake down. To me, it's all a house of cards that doesn't make economic sense, and it's just a matter of time until gravity pulls it down."
Some would say rapid change is simply a sign of the times in the concert business. "It has to do with the turbulence on Wall Street and corporate America coming into the concert business," says Steve Martin, director of the Agency Group in New York City. "They're looking at quarterly reports and the day-to-day, as opposed to the long-term view."
NEW WORLD ORDER?
As it currently stands, CCE (formerly SFX Entertainment) is far and away the king of the concert companies, owning scores of amphitheaters, promoting more than 20 national and international tours (including Madonna and U2), and notching some 70% of all concert box-office reports. Its parent company and namesake, top radio conglomerate Clear Channel, offers a formidable ally in radio and promotional clout.
Still, the Robert Sillerman-driven roll-up of independent promoters that created SFX/CCE prompts head-scratching among some industry watchers, even with CCE's huge volume of business. "Try to find one person who thinks the economics of this massive structure make economic sense. In some cases, people within the company will tell you privately it doesn't make sense," Hurwitz says. "If everyone agrees they paid too much for these promoters, everyone agrees they're paying too much for these tours, everyone agrees ticket sales are down, and everyone agrees ticket prices are too high, you can't look at all of this and say everything is going to work out. Life doesn't work like that."
Some think the departures of Boyle and Messina, both of whom told Billboard they left CCE on excellent terms, are only the beginning of a CCE exodus as contracts run out. "These are times of disenchantment among Clear Channel people," says one concert industry exec who wishes to remain nameless. "Nobody's having a good time over there."
Not so, says CCE's Eckerman, who says most key executives have long-term agreements with the company and are committed to its goals. "Obviously, we have a large pool of talented individuals at Clear Channel Entertainment, and as the concert industry evolves and continues to undergo enormous transition, you'll see positions and roles and responsibilities changing. You'll also see some people who want to pursue a different role in the industry. But we have a great mix of experienced veterans who are just as energized today as any time in the past."
WHITHER HOB?
A distant but highly active second-albeit one with an uncertain future-is HOB, which owns a bevy of large amphitheaters, promotes extensively across North America, and has an aggressive growth blueprint in place. But some speculate that HOB, which acquired what was formerly Universal Concerts for $190 million in 1999, may have serious financial problems and be ripe for acquisition, possibly by AEG.
Phone calls to HOB president Greg Trojan were not returned, but one high-ranking HOB executive tells Billboard that an acquisition by AEG is not imminent, and the exec does not consider it likely. If Clear Channel were to purchase HOB, potential Department of Justice concerns might loom even larger.
(For his part, Fred Rosen, out of the concert business since his 1998 buyout at Ticketmaster, tells Billboard, regarding talk of his involvement with HOB: "It's always flattering to think people want me back in the live-entertainment business, as it has become very dull. But at the moment, I'm not interested.")
Now AEG's Concerts West, once considered on the verge of being absorbed itself by CCE, appears ready to become a force with the Spears coup (Billboard, Sept. 1), but company officials are playing it close to the vest for now and did not return phone calls. For those outside the CCE system, AEG's moves are welcome news.
"For those of us who aren't getting anything from [CCE], it's great to see Concerts West making a go of it," says Jerry Mickelson, co-president of Jam Productions in Chicago. "I just hope they're not just sticking their toe in the water and this continues in a meaningful way."
Others don't read too much into Concerts West nailing down the Spears tour, saying the tour was CCE's to lose-and they lost it. "The big gorilla slipped on its own banana peel," one agent says of CCE. "Clear Channel didn't lose that deal over money. They lost it because of unhappiness in the 'N Sync camp, and 'N Sync and Britney Spears share the same management. It was a case of management not being happy, as opposed to a bidding war."
According to Eckerman, "Sometimes you lose. Competition is the core foundation of corporate America and fuels this economy, and the effects of competition benefit consumers."
STANDING STRONG
While the ranks of independent promoters were decimated by consolidation, those remaining seem to be steadfast in their resolve. Among the most active remaining independents are Jam Productions, New Orleans-based Beaver Productions, and Fantasma Productions out of West Palm Beach, Fla. All three have expanded well out of their home bases.
The independents are respectful of each others' territories, says Jon Stoll, president of Fantasma. "We all promote across the country, but I stay out of Chicago and New Orleans as much as I can. For years I left the Northeast alone, but now [with developments at Metropolitan], I may go up the coast. There are very few of us, and the only ones that will survive are the ones that are super aggressive, super creative, and willing to take risks and move into markets we believe are under-served."
Many think it is just a matter of time until MEG joins the ranks of the corporate promoters. With energy conglomerate Covanta owning 80% of its stock, MEG already is, to a degree (Billboard, Aug. 25). Company vet Keith Beccia, who currently maintains his senior VP title but is taking a point-man role in the company with MEG's Debra Rathwell (Covanta CEO Scott Mackin took Scher's CEO title in what appears to be a figurehead situation), says MEG will quickly become more active, particularly on a venue front.
"We are getting more aggressive in the touring business, and we're going full-speed ahead as to expansions," Beccia says, adding that the company has new amphitheater projects on tap. "There are two or three sites we're working on, and they're out of our [Northeastern U.S.] area."
MONOPOLY OR SYNERGY?
The power of CCE's radio backing, billed as "synergy" internally, has competing promoters crying foul. The NIPP lawsuit, which accuses Clear Channel of threatening to withhold airplay from acts that go with another promoter, among other offenses (Billboard, Aug. 25), may be the first of other suits to follow.
"We've received an overwhelmingly positive response," says Jesse Morreale, partner in NIPP. "We've gotten phone calls, e-mails, and letters from both within and out of the industry in support of what we're saying and doing. My only regret is that things even got to this point-we'd like to just do our business."
CCE's Eckerman says Denver has been and continues to be a highly competitive promoter market. "We are one of no less than five promoters in Denver, and around the country, there are competing promoters in every market. Each has their own real estate, long-term relationships, and press relationships. Clear Channel has significant market share in Denver, but it's evident by the shows [presented] by other promoters that we're not the only game in town. At the end of the day, the only thing anti-competitive in Denver is NIPP's lawsuit attempting to chill the free market in a tough business."
Jam's Mickelson says the charges alleged by NIPP aren't an isolated situation. "This exists across the country, and every record company knows it, and so does every manager that has been offered those deals. The Justice Department has been told this, and if they put some subpoenas out there, some guys are going to have to testify and tell the truth."
CCE's radio clout helps them pull in national tours. Mickelson says, "It's not just [offering] the extra airplay and extra promotion, it's also the inverse of that-less airplay and less promotion if they don't sell their tours to Clear Channel."
Stoll says he has run into a similar circumstance in Miami, where Fantasma has long promoted. "In Miami, [Clear Channel] controls the alternative rock, the top 40, and the AC/jazz station, and that's a problem for me. [CCE] promotions get a better rate and frequency than the shows I do, and the back announcing is dramatically different. If the concert company owns the radio station, obviously they're going to get a better play than I am, more promotions, more spins. How the Justice Department and the people at the [Federal Communications Commission] don't realize the collusion of the two to the direct impairment of anybody else is beyond me."
Booking agents have yet to enter this fray. "To a certain extent, this is more of a management fight than an agent fight," says the Agency Group's Martin. "And I imagine you'll find more and more managers talking among themselves and comparing notes."
This is one issue that apparently isn't going away. Martin says, "I think we'll continue to see the independent promoters fighting any kind of stonewalling of radio play tied to concert-date confirmations."
STILL BULLISH
Even with the constant change and serious issues facing the business, most everyone is optimistic that, given the right set of circumstances, touring will continue to thrive. "We're all in the same boat, no matter who you work for," Rising Tide's Reid says. "It's all about getting people out of their homes and into the concert seat, and once they're there to deliver an experience that encourages them to come back, buy the artists' records, and become a fan."
I.M.P.'s Hurwitz says there is "a lot of good business to be had," even for independents. "It's a classic case of 'hit it where they ain't.' There is a lot of stuff out there not gobbled up by the tour offers. The key is to keep your overhead low and not worry about the shows you didn't get. If you really believe this current scenario doesn't make sense, then you stay in the business until it runs its course."
Besides, promoters promote, Reid says, and only the opportunities have changed. "We try to create an engaging story so the audience feels the need and excitement about going to see an artist live, whether we do it through e-mails, radio, TV, posters, Web sites, or direct mail. Nobody who reads Billboard has not been to a show and been moved. We're not selling widgets here. We're selling a concert, an artist, a venue, a time in the customer's life that will never be duplicated. That's the magic of it, and that's why I'm bullish on the concert business."