Clear Channel Entertainment gone

[AxlGunner]

We all know the (controversial) role of Clear Channel Entertainment in GNR's last ill-fated tour. Well, it looks like CCE is being dismantled. Things weren't going so well for them. The CEO Brian Becker (who is one of my company's clients) will be stepping down. Do you think this has any impact on GNR's ability to tour in the states in the future?

Here's an article:

Clear Channel to Dismantle Media Empire

By Sarah Mcbride
29 April 2005
The Wall Street Journal


IN THE LATEST example of a media company deconstructing an empire built during the late 1990s, radio giant Clear Channel Communications Inc. today plans to announce a spinoff of its entertainment division and an initial public offering of 10% of its outdoor-advertising unit.

The moves are an acknowledgment of the difficulties Clear Channel, which is set to announce its first-quarter earnings today, faced in trying to build an entertainment juggernaut whose radio and concert operations fed off each other. Clear Channel thought its combination of assets would create a powerful, across-the-board platform for advertising sales on its billboards, at concert and sports venues and on its 1,200 radio stations.

Instead, the combination irked music fans, record labels and artists, who complained that Clear Channel used its might to punish artists who didn't play by its rules and contributed to the sharp rise in ticket prices at venues it controls. Clear Channel has denied such allegations, but it has never been able to shoo-away the notion that it had too much leverage in too many corners of the music world.

In addition to the structural moves, Clear Channel also is set to announce a special one-time dividend of $3 per share and a 50% increase in its annual dividend. In all, the company is trying to unlock the value of a giant media empire whose fortunes have tumbled in recent years. At 4 p.m. yesterday on the New York Stock Exchange, the company's shares were trading at $32 a share, 26% off their 52-week high of $43.44 and far below the $80-plus share price back in 2000.

"Our job . . . is to create the environment for these businesses to grow as fast as they can, and that's what this realignment does," said Mark Mays, Clear Channel's chief executive and son of company founder Lowry Mays. The move "properly capitalizes them, and highlights the value of them."

Clear Channel is following a media-industry trend of deconsolidation that has picked up steam recently. Last month, Viacom Inc., another company that had bulked up during the late 1990s, said it was considering splitting its cable and film assets from its radio and television interests. Clear Channel's changes also come at a time when the company's core radio business, like the rest of the industry, faces big challenges. In February, Viacom and Clear Channel both took multibillion-dollar write-downs related to their radio operations, in part due to changes in how intangible assets such as radio licenses can be valued.

Clear Channel moved into the concert business five years ago, when the industry was undergoing a rapid transformation. SFX Entertainment, a company controlled by entrepreneur Robert F.X. Sillerman, had rolled up many of the local concert promoters who long controlled individual markets. Clear Channel bought SFX Entertainment in 2000 and touted the synergy it would derive from having a live-entertainment business in the fold.

Clear Channel figured its radio stations and billboards could shill upcoming concerts, and performers would gravitate to its venues for the extra marketing. The radio stations would push concert offerings in each market, and the concert and sports arenas could promote the radio stations.

But Clear Channel didn't get the anticipated boost. Instead, its empire opened Clear Channel up to charges of monopolization and went on to become a public-relations disaster. Music fans -- already angry at the radio consolidation they believed had sucked the personality out of local stations and put too much control in the hands of a few big chains -- now latched onto the fact that the nation's largest radio owner now was also the nation's largest concert promoter. Rising concert ticket prices, to pay for larger artist guarantees, added to their disdain.

Mr. Mays said he believes the complaints stemmed from a vocal minority and insisted most of the public feels favorably toward the company.

Competitors complained that Clear Channel was trying to squeeze them out, and some sued. Just last month, a federal jury in Chicago awarded JamSports & Entertainment $90 million in damages following in a lawsuit Jam filed over unfair practices concerning the promotion of motorcycle dirt-bike races. Clear Channel is appealing the verdict. Meanwhile, the Justice Department is looking into Clear Channel's radio and concert business activities in two separate investigations. Clear Channel says it is confident the Justice Department won't find any wrongdoing.

Clear Channel's entertainment business, including concerts, has proved to be the company's biggest laggard over the past year or two. While revenue has grown slightly, expenses have ballooned, leading to a squeeze on profit margins.

Even before the planned spinoff, Clear Channel was trying to reverse problems in the concert unit. Coming off last year's concert season, considered one of the worst in years, Clear Channel has been taking steps to pay smaller upfront fees to artists. And it has revived the names of the local promoters whose businesses were bought up by SFX -- meaning concertgoers no longer see the Clear Channel name in advertising.

The company plans to distribute one share of Clear Channel Entertainment for every share of Clear Channel Inc. The new company's board will be composed of a majority of independent directors, not overlapping with directors of Clear Channel Inc. The Mays family, which currently owns 6% to 7% of Clear Channel's shares, will hold a proportionate amount of stock in the new company.

Clear Channel hopes to accomplish the spinoff by year end. Meanwhile, Brian Becker, chief executive of the entertainment division, will step down. Mr. Mays will serve as interim chief executive. The company says it plans to pay a one-time special dividend of $3 per share when the restructuring is complete. And it plans to increase its annual dividend by 50%, to 75 cents a share from 50 cents a share.

 
 

[gilld1]

Thank God Almighty for this!!  This is the best news I've heard in quite some time.  CC has killed the radio, ruined live shows by charging outrageous amounts, and they were a mouth piece for the Bush Regime.  I am sure that some Conservitive assholes are real upset about losing their propaganda machine. 

[Intercourse]

It really doesn't matter who is at the helm of the concert promotion industry, this will go down to who is prepared to take the financial risk on GNR.

CC still have the lions share of control over that entire industry. They have recently brought in sweeping changes to how concert are being organised to try to get more bums on seats. Numbers were down 40% last year because ticket prices were too high. Big acts have in recent years demanded to be paid up front for their gig, regardless of tickets sold. This practice has all but ended  because it pushed ticket prices too high and nobody showed but the band still got their pay.

I understand Axl also wanted large sums up front before he'd play..he'll have to knock that one on the head until he can prove (like Motley Crue recently did) that he can sell out sheds.

This will still be an uphill battle for Axl. If he starts a la VR and go small, create a huge buzz and then blow big he could be ok but I reckon he's back to 2000-5000 organised by his own management until he proves himself to be dependable..
peace,
Intercourse.

[pilferk]

It's not just a good thing for GnR, it's a good thing for artists, in general, and, I daresay, concert goers and music buyers/listeners.  It means not needing to worry about pissing off someone who could, potentially, could ruin your career and blackball you from making a living....and it probably means "fairer" concert ticket prices.

And don't buy a LOT of the CC explanation for WHY they're doing this.  They're doing it because the governement investigations are NOT going their way...and they know it.  This is a proactive first step BEFORE the govt stepped in and forced them to "dismantle".  At least this way, they get to do it on their terms.

It's true, profit and revenue are down for some of CC's divisions, and the "synergy" they touted never really occurred (as, if you look back to when SFX was bought, many in the industry predicted).  But, as anyone who worked (or works) for CC will tell you...that place really is/was run like "The Evil Empire" that many people portray it to be.  And, despite Lowry's assertion that he believes most consumers view their brand favorably...the truth is....he's outright lying.  You need to look no further than the fact that CC Entertainment quietly disappeared, in many markets, on ANY concert tickets and were replaced with the name of a local promoter.  You don't do that unless there is a stigma associated with the brand.....and there was good reason for it.  Too many acts/artists are giving the same story....and that story, which is being painted in very vivid colors to the government, is one of unfair business practices, monopolistic tactics, and outright illegalities that they got away with because, essentially, they were a 900 lb gorilla run amok with complete control of all aspects of an industry. 

This isn't just good news, it's great news.

[ppbebe]

We all know the (controversial) role of Clear Channel Entertainment in GNR's last ill-fated tour. Well, it looks like CCE is being dismantled. Things weren't going so well for them. The CEO Brian Becker (who is one of my company's clients) will be stepping down. Do you think this has any impact on GNR's ability to tour in the states in the future?

Yes. I hope this clears the way for Chinese Democracy.   Cheers for sharing.  Very interesting.

Instead, the combination irked music fans, record labels and artists, who complained that Clear Channel used its might to punish artists who didn't play by its rules and contributed to the sharp rise in ticket prices at venues it controls. Clear Channel has denied such allegations, but it has never been able to shoo-away the notion that it had too much leverage in too many corners of the music world.

I still suspect Chinese Democracy might have started in 2002 like they said and is concluding now.
Then, we will have the most beautiful May.

[Jessica]

axl could buy their 10%shares so that way, he'd have his word on the directive board...

[Chief]

this is awesome news...  thanks for posting. hopefully this will help everyone!!!