Madonna Nation

Madonna is on the cusp of signing that $120 million-range, all-inclusive package with Live Nation, according to various news reports, marking a unique, if not dynamic, shift in the industry paradigm.

The deal, one of the worst-kept secrets in the biz, has been rumored for months and obviously includes the assumption that Madonna – barring a sports injury or other debilitating event – will remain an active and desirable touring attraction for a long time. Nothing says she won’t: her touring career is trending upward, with the last tour out-grossing all others at $195 million.

The deal also assumes she will sell lots of recorded music. The 49-year-old is expected to receive a signing bonus of $18 million plus a $17 million advance for each of three albums, according to a source close to the matter.

The deal would give Live Nation rights to sell Madonna merchandise and license her name. Revenues would be split between Madonna and Live Nation.

Madonna is wrapping a contract with Warner Music Group, but the company was said to have tried to keep her in its court by pursuing a possible partnership with Ticketmaster.

Meanwhile, at Live Nation, Madonna is already in a "circle of trust," having built a solid history with the company’s global music chairman, Arthur Fogel, who toured the "Confessions" tour and is currently promoting The Police. Likewise, a Live Nation office is the old stomping grounds of Maverick Records.

The first to hear the news, from unnamed sources, was the Wall Street Journal late on October 10th. The market reacted negatively the next morning, and Live Nation’s share price dropped about a dollar from $23.34.

Standard & Poor didn’t help the matter. It gave Live Nation props for looking into a new business model but, "despite the potential merits of a link with the pop icon, we see risks for the concert promotion giant wading into uncharted territory, and yet to show sustainable profit.

"Also, it is unclear how Live Nation plans to boost its infrastructure, as talks with IAC’s Ticketmaster seem to stall."

Company CEO Michael Rapino has made it clear his company wants to build relationships with artists beyond a summer tour and recently made good on that gesture by inking a deal with Maroon 5 where the act not only toured under the Live Nation banner this year but is expected to do the same in 2008.

There was also Live Nation’s negotiation with The Firm, where LN is on a quasi-board of directors of Korn and has a vested interest in making sure the band does well on and off the stage.

The ratings service maintained its "sell" rating from October 5th, when it said Live Nation’s credit profile hadn’t improved as expected, as the company "has been in a rebuilding and acquisition period that we believe will continue for the next several years." S&P also reported it doesn’t anticipate any great improvements leverage-wise because of Live Nation’s continued investment in its Artist Nation division and the expansion of its venue and services platform.

The Madonna news came quickly after the announcement that she has new management in Guy Oseary, the cofounder of her former imprint Maverick Records. Maverick Management is based on Maple Drive in Beverly Hills, Calif., and also lists Lenny Kravitz as a client. Angela Becker is also listed as a manager.

Oseary has worked with Madonna since he was a teenager. He is also the executive producer of the late night show "Last Call With Carson Daly." Up until the mid-’90s, Madonna was managed by Freddy DeMann, another co-founder of Maverick, and then by Caresse Henry for 13 years before the two announced a mutual split in 2004.

Lost in the shuffle is the revelation that WMG pursued a deal with Ticketmaster. It is just one more twist in a relationship that includes everyone from Barry Diller to Irving Azoff.

WMG is a minority owner in Front Line, which in turn is majority-owned by IAC/InterActiveCorp, which in turn owns Ticketmaster. The record company run by Edgar Bronfman Jr. would have been pursuing a deal that bridged recorded music, the largest ticketing company in the world and the most powerful artist management company in the world.

Going full circle, when all things were said and done in the Madonna deal, S&P gave WMG a "buy" in the end.

"As for Warner Music, despite potential headline risk with departure of arguably the company’s leading artist, we think [the] decision ultimately reflects financial prudence, particularly given reported terms of [the] pop star’s unprecedented pending deal with concert promoter. Also, Warner Music would retain rights to Madonna’s albums catalog dating back 20 years."