Promoters speculate on future of CCE

NEW YORK -- Clear Channel Communications' announcement of plans to spin off its live entertainment unit has created a hotbed of industry speculation about what will come of the division.

While CCE has said that the live entertainment unit would remain a publicly traded company, many in the industry are gearing up for what could become a bidding war for the concert division, estimated to be worth $1.5 billion to $2 billion.

"It's hard to say exactly what is going to happen," John Scher, president of New York-based Metropolitan Entertainment, told AB. "The spin-off might remain a publicly traded company, but if Clear Channel does decide to sell as a whole or in pieces, there will be people interested."

Scher speculated that while the concert division is certainly profitable, what many in the industry have signed on with CCE because of the "real or perceived threat that an artists' radio play would suffer if they did not sign on for tour promotion."

"Will the business stay profitable if that is no longer an issue?," Scher said. "We will see."

Dave Lucas, former CEO and president of Clear Channel Music, who has formed his own company, Live 360, has already put together funding for a bid on the entire division, while AEG Live and House of Blues have also voiced interest in future bids.

"It would be fair to say that Jam Production are interested in looking at the assets and seeing if anything would work for us," Jerry Mickelson, co-founder of Chicago-based Jam Productions, told AB.

Jam Productions Ltd. won a $90 million judgment against Clear Channel after accusing the company of illegally interfering with a deal to promote dirt-track motorcycle racing.

CCE, which operates throughout North America, Europe, South America, Asia and Australia, had sales of $2.75 billion in 2004, when it ranked as the world's No. 1 concert promoter.

But will it be business as usual once the entertainment unit is spun off? That's another unknown element of the vague initiative announced last week, according to Mickelson. "No one knows what is going to happen yet. What is going to be the mission of the company going forward," he said. "Are they going to continue on their kill, crush and destroy objective or are they going to try to work with the industry and create a profitable property?"

According to the company, CCE's live entertainment revenue decreased 17% in the first quarter of 2005 that ended March 31, primarily as a result of a decline in ticket sales, which fell because of significantly fewer arena shows. In the comparable 2004 period, the company had large arena shows with acts such as Bette Midler and Britney Spears.

Brian Becker, CEO of CCE, is leaving his post and will form a joint venture company to pursue entertainment content opportunities through acquisition and development, according to Clear Channel. Clear Channel CFO Randall Mays is serving as interim CEO during the transition period.

Once the dust settles, operators in the concert industry are optimistic that all will be well. "There is hope out there that the business will be part of the solution," said Mickelson. "A lot of people out there still have a stake in concert promotion and want to make it work."