Deal creates one of industry's largest outfits
In a deal valued at $230 million and one that creates one of the industry’s largest promoters of live entertainment, SFX Broadcasting has acquired four of the nation’s leading promoters, including Bill Graham Presents, the Northern California firm bowed by the legendary impresario in 1965.
The three major promoters acquired by the broadcaster, which also includes St. Louis-based Contemporary Group and Concert/Southern Promotions, will operate under the aegis of SFX Entertainment, a newly formed company.
SFXE will be spun off by SFX in the wake of its broadcasting arm being acquired by Hicks, Muse, Tate & Furst and Capstar Broadcasting earlier this year for $1.1 billion.
The pacts follow SFX’s plan to consolidate under one roof many of the nation’s major promoters of live entertainment (Daily Variety, Dec. 6). The consortium will also give SFX financial clout and a presence capable of giving such established industry titans as Universal Concerts and the Nederlander Organization a run for their money.
The move is also a way of exploiting, on a national level, each of the company’s strengths while creating a one-stop shopping environment for touring acts. Sources said SFX is also examining the assets of Pace Concerts, which is on the block for more than $122 million (Daily Variety, Dec. 6).
“With this sweeping series of acquisitions, we will greatly increase our penetration into new markets for live entertainment,” said Robert Sillerman. founder and exec chairman of SFX Broadcasting. “With the addition of (the firms) we will significantly expand the reach of SFX Entertainment into new geographic areas of the country (and) add to the anchors we have already established.”
Last year SFX acquired New York-based promoters Delsener/Slater Enterprises, a top East Coast promoter, and Sunshine Promotions, a leader in the Midwest.
SFX will pay $65 million for Bill Graham Presents, one of the oldest producers and promoters of live entertainment in the country and a major player in the West. The company boasts annual revenues of north of $100 million.
Contemporary Group, the leading concert producer and promoter in St. Louis and in the surrounding areas of Missouri, Kansas, Nebraska and Oklahoma, will be acquired for $90 million. The firm grosses $102.6 million annually. The purchase solidifies SFX’s position in the Midwest, where its Sunshine outpost already has a strong presence in the Indiana, Ohio and Kentucky markets.
SFX will also pay $15 million for Concert/Southern Promotions, a key promoter in Atlanta and the Southeast.
To round out the buying spree, SFX will pay $70 million for Network Magazine Group and SJS Entertainment, a provider of research, programming and production services to the radio and record industry. Among its holdings is Album Network, a 20-year old music industry tip sheet.
SFX, which has entered into long-term contracts with key management of the companies, also significantly boosts its amphitheater capacity with the deal, as many of the promoters operate venues, such as Graham, which counts the Shoreline Amphitheater, the Fillmore and the Warfield Theater among its holdings.
Sillerman cited Contemporary’s “state-of-the-art ticketing service,” Concert/Southern’s “tremendous franchise in its Music Midtown Festival in Atlanta,” which he describes as “an easily transportable product which we are eager to roll out in other cities.” Concert/Southern will log $13.5 million in revenues in 1997.
Sillerman called the Graham outpost an “untapped resource (with a) vast archive of concert memorabilia, including posters, handbills, photographs and props. These are assets which can have great value for their use in marketing and promotion on a national scale,” he said.
SFX Broadcasting, whose interests have been in the ownership and operation of radio stations and in live entertainment, agreed last June to sell its 71 radio stations to a company formed by Hicks, Muse, and Capstar Broadcasting for $75 per share.
Prior to the completion of the Hicks, Muse sale, which is expected to close in the early part of next year, SFX Entertainment will be spun off to existing shareholders. The new public company will be managed by SFX’s current senior management.