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Scaling the wall

Clear Channel pacts to conquer China

NEW YORK — Clear Channel Communications is the latest showbiz heavyweight with a hankering for China, unveiling a 50-50 joint venture with state-run Beijing Gehua Cultural Development Group — the first of six deals in six Chinese cities the radio and live-event giant hopes to close by September.

Goal is to crack China for U.S. musical acts, sporting events and sponsorships while developing an effective infrastructure for local fare.

Entertainment deals to date with U.S. companies in China have concerned mostly television content and film. They’re complex pacts, and local partners often see most of the profits.

“They have gorgeous stadiums and theaters, but they don’t have the content,” Ed Cunningham, lead negotiator and senior VP of Clear Channel Entertainment, told Daily Variety.

The 50-year venture, called Gehua Clear Channel Entertainment & Sports, will be headquartered in Beijing, with additional offices in New York and London. Partners will split costs and profits equally. “They and we both have skin in the game,” he said.

Some 100 venues in the six cities are covered under the deal. More cities may be added later.

Cunningham said the venture is unique among media pacts because Clear Channel owns half — not a minority stake. Company can manage the business, although Chinese officials have the ultimate say on who and what hits their theaters.

In a 50-year deal, he said, “We can do long-term planning, rather than making an instant hit to please the partners.”

Top Western artists haven’t yet followed media companies in flocking to China, the world’s most populous nation, with 355 million people between the ages of 15 and 29.

Cher has expressed interest. Bon Jovi’s manager, Paul Korzillius, turned up at the press conference Clear Channel Entertainment held in Gotham Monday.

Monster truck shows

One staple of U.S. entertainment that Chinese officials have expressed interest in importing: monster trucking.

“It’s done well in Europe. It’s obviously been a success in the United States,” Cunningham said. “It’s never been in China, but there’s a lot of excitement.”

Company said the venture has a right of first refusal to mount live tours; promote artist management; provide food and beverage services; do merchandising; and handle staging, sound and lighting. It will also promote Chinese artists and acts internationally.

Cunningham said Clear Channel has no obligation to export or import any particular show.

Five-year effort

Deal has been germinating since 2000, when Cunningham was a lawyer in private practice visiting China as part of President Bush’s steering committee on the World Trade Organization.

He became a consultant for the city of Chung-Chau to develop a master plan for its sports and entertainment industry.

Several years later, he hooked up with Clear Channel. Consulting agreements with six cities morphed into joint-venture deals.

Cunningham’s team evaluated 16 cities to reach the current pacts.

He said the timing was just right. “Five years ago — even three years ago — this deal may not have been possible,” he explained. “Five years from now, we’d never get the deal we’ve got now.”

‘Significant’ costs

Financial details weren’t released, and Cunningham wouldn’t comment on cost, besides calling it “significant.” But he said low-hanging fruit like sponsorships and naming rights could start to funnel in cash fairly soon.

Asked if Clear Channel hopes to expand its China relationship into radio, he said, “Everybody would like to be in that space if the Chinese government is looking for partners.”

Clear Channel Entertainment owns 130 live-entertainment venues in North America, Europe and Australia. It promotes and produces live-music events as well as Broadway, West End and touring theatrical shows, museum exhibits and specialized sports and motor sports events.

Company also has an agency that represents athletes.

Beijing Gehua Cultural Development Group, a subsidiary of the Ministry of Culture, represents a package of local cultural enterprises. It builds and manages venues, organizes large arts and sports events and drives cross-cultural exchanges between China and foreign countries.

Shares of San Antonio-based Clear Channel Monday rose 1.4% to $33.86.

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