HOB singing the economic blues

Concert promoter trims staff, scraps label

NEW YORK — Concert promotion firm House of Blues will reduce its online production and distribution efforts, eliminate plans for a record label and lay off 39 people in a move to trim overhead as it faces a tough economic environment.

HOB’s facilities for recording live concerts digitally for Webcasts and other distribution outlets will be “significantly downsized,” and the company will turn its attention mainly to its core business of producing live concerts in clubs, sheds and arenas nationwide.

“Although we remain convinced that digital content capture and distribution, as well as content ownership through our own branded label, remain large opportunities for us, it’s clear that today’s capital markets won’t support investment in these areas,” said prexy and chief executive officer Greg Trojan.

Cuts at main office

The layoffs are centered in the company’s main offices in Hollywood and represent 18% of the workforce. Longtime record company exec Lou Mann, who was charged with overseeing the fledgling House of Blues label, is among those dismissed.

“I wish we were operating the label,” Trojan said, “but it would be irresponsible not to react to the realities of the current capital markets.”

At the same time, HOB said it will expand its efforts in a more promising (and less technologically ambitious) area of the Net: online ticket sales. Company has sold 40% of its amphitheater and arena tickets over the Web in 2001.

“What’s frustrating is that this is not a case in which the business has not been performing,” Trojan told Daily Variety. Trojan said HOB has invested less than $25 million in their online operations over the last six years, a number that is significantly less than many other entertainment-driven Web sites. HOB.com will continue to offer content, which Trojan noted, has assisted the site to develop as a provider of concert tickets.

Growth plans eased

HOB also plans to ease up on its expansion plans for its network of venues, seeking local-level debt financing and joint ventures to pay for venue projects rather than trying to finance major acquisitions via the already straining capital markets.

Industry sources suggested that the moves could make HOB itself a more attractive target for acquisition — the company has been seen as a possible suitor for Clear Channel in the past. But Trojan maintained that the restructuring “is not designed to get the stuff to a specific number” and that it puts the company “in a strong position to grow organically.”

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