SFX Broadcasting is in negotiations to acquire Pace Entertainment, one of the leading promoters of concerts, legit and motor sport events. SFX, the radio conglom acquired in August by Dallas-based investment firm Hicks, Muse, Tate & Furst, will pay up $122 million for the transaction, according to sources.
If the deal closes, it will add to SFX’s ownership of several promoters in key markets across the country and strengthen SFX’s growing concerts arm.
The Houston-based Pace, whose assets include a one-third interest (with Sony and Blockbuster) in 14 concert venues and long-term management control of the houses, had also involved investment firm Wasserstein-Perella to locate companies with the requisite cash to purchase the operation.
Pace’s annual profits are estimated to be north of $18 million after taxes.
The sale is precipitated by the decision of the Becker family, which owns the company, to divest its interest in Pace. Alan Becker, CEO of Pace, is nearing retirement age, though his brothers Brian and Gary are also active in the business.
Leading the charge
SFX chairman Bob Sillerman — who is well-known on Wall Street for knowing when to get into an industry and, perhaps more importantly, when to get out — is leading the charge to purchase Pace. He bowed the 71-radio station SFX in 1993 and Hicks, Muse acquired it for $1.1 billion.
The move follows a yearlong attempt by Pace to locate an infusion of capital. The company had planned an initial public offering this year, but withdrew the plans and opted to seek a sale partially because Wall Street interest was deemed soft (Daily Variety, June 30).
Sources suggest Sillerman is also expected to acquire eventually the one-third interests of Sony and Blockbuster, the latter long expressing a desire to get out of the concert business.
SFX execs are in the midst of doing due diligence, checking Pace’s books and valuing its assets. Sources said arbitrageurs Apollo Group, which recently pacted with Telemundo and Sony, were also interested in Pace.
It is not clear how the sale will affect Pace Theatrical Group, led by Miles Wilkin, which pacted with Jujamcyn in July to fund touring legit productions.
Sillerman acquired N.Y.-based concert promotion firm Delsener/Slater a year ago as part of a strategy to increase SFX’s contemporary music presence. Wall Streeters suggested Sillerman would likely build up Pace’s asset base for an eventual sale rather than a long-term holding.
But concert industry insiders note that Sillerman already has stakes in several concert promoters. He is said to be in talks with several others to bring them into the fold as part of a move to consolidate promoters in the nation’s key markets under one roof. So a long-term hold seems more likely than a quick sale.
Sillerman would benefit by owning a chain of promoters and venues: It would give acts and their reps one-stop shopping, as SFX promoters would be able to book acts with one deal for all venues and top competing offers with its clout.
Among Pace’s holdings are the Blockbuster Pavilion in San Bernardino and its flagship venue, the Blockbuster-Sony Music Entertainment Centre in Camden, N.J. It also is one of the top promoters of motor sports and backs such family fare as the Rugrats live touring show through its New York-based theatrical group.
None of the parties involved would comment.