The Pacific Northwest's music industry is bracing for a jolt. For months rumors have percolated about corporate giant SFX Entertainment purchasing Universal Concerts, the company that books and promotes shows at KeyArena and the Paramount Theater, and which owns and operates the Gorge
A spokesperson for the New Yorkbased SFX wouldn't confirm or deny a buyout, but did tell Seattle Weekly that a relevant announcement will be made in early June.
If SFX buys Universal, which is a division of the Seagram Co.'s Universal Music Group, it would give entertainment mogul Robert F.X. Sillerman a virtual monopoly over the country's live-music business. His SFX would add Universal's seven North American amphitheaters to its 83 venues, and would give it a stronghold on the West Coast. (Last year, SFX bought San Franciscobased Bill Graham Presents [BGP], one of Universal's most formidable competitors in the Northwest.)
Sillerman made his fortune in the radio business, then sold his stations two years ago and set out to stake a claim in the $1.4 billion-a-year concert industry. He's subsequently branched out into sports management, and he's started to hover over the theater industry as well. In recent weeks, he's been in a spending mood, announcing five acquisitions on May 6, including the buyout of New England's top promotion company, Blackstone Entertainment, and SFX last week spent $110 million to purchase troubled Broadway theater company Livent.
A deal for Universal would streamline his concert business, moving it closer to a one-stop that controls everything from booking and managing a tour to running a concert venue to selling the T-shirts and hot dogs. Such an arrangement could also raise the question of antitrust violations, which insiders say could thwart the rumored deal.
While concertgoers care more about seeing their favorite band than which company is running the show, music-biz insiders say SFX's rumored deal would have at least three high-impact results that consumers would notice.
Where do we go now?
First, it would spark a dilemma over Seattle's outdoor venues. Before Sillerman went on his $1 billion spending spree a little more than a year ago, buying up major concert promoters in New York, Boston, Houston, and other metropolitan areas, a then-autonomous BGP had already begun building a 20,000-capacity amphitheater with the Muckleshoot Indian tribe, with the express intent of dissuading concertgoers from driving the three hours to the Gorge Amphitheater.
BGP/SFX's Northwest representative Tracy Buie says the White River amphitheater near Enumclaw, only one hour from Seattle, will open next year. The Gorge meanwhile continues to attract sellout crowds of 20,000, and it recently won the trade magazine Pollstar's "Best Large Outdoor Venue" award for the fourth year running. What would SFX do with two 20,000-capacity outdoor theaters in Washington? With the Gorge's self-contained camping and on-site vending operation, it's gotta look juicy to SFX. But the environmental adjustments that have tied up the White River project have already required such a sizable investment that BGP/SFX would be loathe to abandon it.
Eddie, can you hear me?
Following the example of high-tech conglomerates like Microsoft, publicly owned SFX has risen to dominance by buying up its competitors, or in cases where a deal is out of the question, striking up a partnership with its rival. Such was the case last year when SFX gave up its fight to control the ticket game and signed an exclusive deal with Ticketmaster.
Since January, Ticketmaster has been the sole ticketing outlet for all SFX events (including lucrative touring Broadway shows, which SFX brought under its wing by purchasing Houston's Pace Theatrical, the company that brings musicals to Seattle's Paramount and Moore theaters). It's a cozy arrangement for the two industry giants, but insiders scoff at Ticketmaster and SFX's assurances that their combined operation will bring lower prices. These skeptics note that SFX's MO is to book entire tours, as they did with this summer's Bob Dylan and Paul Simon jaunt, and promise extravagant compensation to the artists. Guess who pays?
"The ticket prices are extraordinarily high," says Frank Riley, an agent at the talent-booking agency Monterey Peninsula, which works with well-known artists like Aerosmith and up-and-comers like Josh Rouse. "SFX pays premiums to artists, then raises the prices."
The deal with Ticketmaster proves mutually beneficial because of the profitable service charges—one of the catalysts for Pearl Jam's complaints with the ticket company a few years back. If Eddie Vedder thought the fees that Ticketmaster added to the face value of a ticket were unfair during the pre-SFX era, he ain't seen nothin' yet.
According to SFX foe David Leiken, who owns the Portland promotion company Double Tee and the ticketing agency Fastixx, both of which operate in Seattle, SFX and Ticketmaster have already drawn up an agreement that could double service charges by 2002. A $10 ticket that currently carries an extra $2 fee would then cost $14 (minus extra fees for processing and handling).
Potentially the most chilling effect of SFX's uncontested campaign is what it could do to local music scenes. Sillerman has built his company on the age-old notion that cutting out the middle man makes for tidier profits. But passing the resultant savings on to consumers isn't likely for a company that has to please Wall Street investors. But it makes for good PR, as consumers can be told that they'll benefit in the form of "reduced ticket prices at some of our venues," as one recent SFX press release put it.
Regardless of whether prices go up or down under SFX, the company's tactics have decidedly mixed effects on a local level. SFX has retained most of the employees when it's purchased a company. But it usually proceeds to lure corporate sponsors by offering for sale the name on an established venue. In Boston, where SFX last month completed its buyout of Blackstone Entertainment, the well-known Great Woods Center for the Performing Arts will become the Tweeter Center, adopting the name of a stereo company that ponied up for a sponsorship.
More threatening is the side effect to SFX's cornering the market on the largest and most profitable venues and shows. Relatively small local promoters such as Leiken's Double Tee and Monqui Presents rely on the occasional windfall from a big concert to fund club performances and to book emerging artists who may not draw enough of a crowd to even pay the bills. Already, Monqui's Mike Quinn says, the changing nature of the concert industry has made it harder for small businesses to make a profit. His company recently closed one of the Northwest's most recognized rock venues, Portland's 1,000-capacity La-Luna, in part because the few remaining regional promoters have to scramble for cash like kids playing musical chairs.
Monterey Peninsula's Riley predicts that LaLuna will be the first of many to succumb, because, he says, SFX has subverted the trickle-down theory. "The real ramification is that when you take away the money generated from promoters, it's not sent back into the clubs," he says. "It's gonna affect the local scene."