Scher Talks Non-Compete

UPDATE: Veteran promoter John Scher won a big legal round in his ongoing battle with Clear Channel Entertainment when a judge lifted all restrictions on his ability to compete with the concert giant. While litigation of a contested non-compete agreement is ongoing, Scher is at least back in the promoting business.

Clear Channel asked U.S. District Judge Dickinson Debevoise to extend the four-year non-compete agreement Scher made in 2001 with now-bankrupt Covanta Energy, which bought his Metropolitan Entertainment business before selling its assets to rival promoter Mitch Slater. Slater’s business was eventually acquired by Clear Channel, including Scher’s non-compete.

The conglomerate argued that the non-compete should be extended another four years because Scher violated its provisions by actively promoting concerts. It claims Scher’s work with Metropolitan Talent Presents, a company that is reportedly wholly owned by former A&M Records exec Al Cafaro, constituted a breach.

While the judge ruled that the significant issues surrounding the non-compete’s validity would need to be argued in a full trial setting, he said it was in the public interest to let the agreement expire as scheduled March 15th.

A spokeswoman for Clear Channel interpreted the judge’s order as a victory.

“The court ruled our agreement with John Scher was valid and that damages for Scher’s violations, if they have occurred, should be determined at trial,” Susan Elmore told the Newark Star-Ledger. “We welcome fair and equitable competition but we also believe that people should honor what they agree to do.”

“New Jersey policy strongly favors competition,” Debevoise wrote in his order. “Both performing artists and the general public would benefit from the competition that would develop if Scher were to re-enter the promotion field.”

The case has been complicated by previous agreements with Covanta, and then with Slater, and by previous judges’ rulings over the last three and a half years.

One key to Debevoise’s ruling is a settlement Scher reached with bankrupt Covanta, formerly Ogden Entertainment, in which the company admitted it had breached its August 2001 non-compete with Scher by failing to make payments to him as agreed.

“They threw everything but the kitchen sink at me,” Scher told Pollstar. “One of our claims against Clear Channel was not only what their predecessors have done, but that they are essentially a monopoly and it’s not in the public interest to keep competitors out. It’s a big, hot-button issue.”

Scher also accused Slater of failing to pay on the non-compete when he acquired it in his purchase of Metropolitan Entertainment from Covanta. When Clear Channel eventually acquired Slater’s company, the dispute continued.

According to Scher, the legal logjam appeared to loosen, though it couldn’t be settled, when CCE Global Music President Michael Rapino took the division’s reins.

“We tried to settle a number of times, but [one of Rapino’s predecessors] had threatened to spend $2 million in litigation [on Scher’s breach of contract complaint], so we knew that wasn’t going to go anywhere,” Scher explained. “The litigation was winding its way through the court system and there were a lot of depositions, interrogatories and a lot of discovery. We tried to settle on a number of occasions and never were able to.

“Michael, relatively early after he was appointed, did a very nice thing,” Scher continued. “He picked up the phone and called me.

“Michael and I, and (CCE chief operating officer) Miles Wilkin, had a lot of good conversations through the latter part of last year. We tried very hard to settle. We continued to try to settle our claims against them and, actually, in February of this year, I would say we agreed about 95 percent on terms.

“For one reason or another, those discussions did not result in resolving the issue. They still made a decision at that time to try to extend my non-compete, and you see the result of that,” Scher said.

Scher expressed optimism that the remaining issues can be resolved before the ongoing litigation goes before a jury.

“We would very much like to settle if we can resolve things amicably. … I am cautiously optimistic that a Clear Channel that is now headed by Michael Rapino and Miles Wilkin can bridge that last 5 percent and settle it sooner rather than later. If they can’t, it will be unfortunate but again, I’m cautiously optimistic that we can,” Scher said.

In the meantime, Scher and Cafaro intend to weigh their options.

“We don’t have billions of dollars invested. It’s just my partner and me,” Scher said. “We’re going to try to go back into the producing business instead of just being a promoter. In the producing business, certainly one of the elements of that is promoting the show.

“Our agenda is to survey the marketplace, work as exclusively as we can with agents, artist managers and artists, who view the full role of a concert producer as being involved with development. I’ll slowly integrate myself back into what’s an existing company. I have to bring myself back into the mainstream of the concert industry. I haven’t had a chance to do it yet.”

And even though he’s not out of the legal woods with Clear Channel yet, Scher insists that he looks to the company and Rapino to strengthen the industry.

“In any business, market leaders really are the ones who can make significant change. As I re-enter the concert business in a clearly different role than I had for years, I’m hopeful that many of the things that [Rapino] has said he’s going to try to do as a market leader will be accomplished. It will make a much healthier market.

“That said, I still have significant issues with Clear Channel that we’re hoping we can get settled.”