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So how will this perennial winner once again become the smartest guy in the room? That is the $64 million question.

I.B. BAD: IRVING'S NEXT ADVENTURE

Pondering the Mega-Mogul's Next Move, Live Nation and the Shifting Live-Sector Landscape

DEALING WITH IT: Irving Azoff, perhaps the greatest dealmaker the music business has seen since the heydays of David Geffen and Clive Calder, is in play, and all eyes are on him as he plots his next move. For now, it would appear that he has limited wiggle room, bound in by a non-compete clause, stipulated as a condition of his resignation from Live Nation, that is confusing to practically everyone who’s attempted to read it in the viewable SEC filing containing the exit agreement.

 

But most believe that the balance will tilt in Azoff’s favor. It’s clear that he managed to escape with his core acts, including the Eagles, Van Halen, Christina Aguilera, Steely Dan and Lindsey Buckingham, as well as such joint-venture acts as Earth, Wind & Fire, Jennifer Hudson, 30 Seconds to Mars and Bush—comprising an artist roster that boasts enough collective firepower to most likely enable Azoff to retain his crown as the most profitable manager in the business. Additionally, he was given promising Voice winner Cassadee Pope by his good friend Lucian Grainge.

 

Another seeming positive is that many lawyers believe non-compete clauses are unenforceable in California. There’s also no question that Azoff is allowed to be in the record and publishing businesses, as well as certain non-music areas. So how will this perennial winner once again become the smartest guy in the room? That is the $64 million question.

 

Live Nation, meanwhile, is now in the control of John Malone’s Liberty Media, under the direct oversight of Michael Rapino—making Rapino effectively the leading exec in the live sector. With his Live Nation holdings and control of Sirius XM, which he bought last year for $6 billion, Malone is now a major player in the music space. He earned his billions by getting into businesses that were monopolies or near-monopolies, notably cable TV, and these latest moves are consistent with his pattern. Most believe Liberty really wanted Ticketmaster, a virtual monopoly in its sector. Malone is viewed as possessing Mensa-level intelligence by peers and rivals, with a PHD in physics, and he’s developed a reputation as a no-bullshit businessman. But he’s a music-business novice, as is Greg Maffei, who runs Liberty’s day-to-day business. Could this turn out to be yet another case of a deep-pocketed outsider showing the music people how to run their business? If Malone and Maffei allow Rapino to do his job unimpeded, they’ll stand a strong chance to succeed. If not, it could be Guy Hands, the sequel.

 

Some well-informed observers expect Malone to make further moves in the music sector. Malone and Maffei could conceivably make a move on the concert division of AEG, which would create yet another monopoly. Such a scenario would, of course, be dependent on the blessing of the DOJ, along with some concerted political lobbying. It would also depend on the willingness, on the part of the entity that purchases AEG as a whole, to sell off AEG Live and related assets. Liberty could be a buyer, as could Azoff, in conjunction with another financial or strategic partner. Multinational sports-media-management giant IMG,which is also on the block, could be another acquisition target of Liberty and/or Azoff, as well as Todd Boehly of Guggenheim Partners (who most recently purchased the Dodgers) Live Nation board member James Dolan’s MSG, or some combination of the above.

 

With so many major players and moving parts in the mix, the repercussions of the Live Nation/Ticketmaster/Front Line/Irving Azoff/Liberty free-for-all will likely play out over the next year or more. The outcome will depend not only on how deeply Liberty gets involved in the direction of the company, but also how Rapino deals with the managers and their acts. Does he have the interest or wherewithal to handle the vast Front Line stable as well as running the core concert and ticketing businesses? If not, who will oversee the FL stable of managers and artists? In addition, could Front Line be sold off to another interested party?

 

In the short term, at least, Rapino appears to be a big winner in this game of musical chairs. He gets managerial control of LN and now needs to develop a viable strategy for its growth. He’ll also need to dispose of certain assets-- LN owns a number of ancient amphitheaters that are a drain on Rapino’s cash flow. What will he do with these venues? He could also become a buyer of complementary assets from the AEG disposal of assets. In any case, Rapino has become extremely important to Liberty and its plans.

 

On the subject of acquisitive entities, if there were any lingering doubts about Len Blavatnik and Stephen Cooper’s intentions to remain in the frontline business, they were put to rest in late December, when WMG brought in Sony heavyweight Rob Wiesenthal as COO. The move sets up a faceoff with the Sony-BMG and Chris Blackwell-Simon Fuller alliances and several financial bidders for Parlophone and other assets to be sold off by Universal in the coming months.

 

NAMES IN THE RUMOR MILL: Tim Leiweke, Ari Emanuel, Troy Carter, Irv Gotti, Jeffrey Azoff, Mark Shimmel

 

 

 

 

 

 

 

 

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