Cohl’s Tale

Randall Mays returns to the chairman’s seat and Arthur Fogel steps up to take over Live Nation Artists in the wake of the June 20th announcement that Michael Cohl has left Live Nation after a reported dispute with CEO Michael Rapino and the board over the company’s direction.

The split between Cohl and Rapino had been rumored for weeks, with some reports saying Cohl had already quit and others saying the longtime colleagues were working to patch up their differences.

The bickering appeared to play out in the media with reports out of the U.K. that The Rolling Stones – long associated with Cohl – were within days of signing a deal for its back catalog with Live Nation. The band quickly and very publicly shot down that story.

But ultimately, Cohl is not entirely out of the picture. He resigned as chairman of the board of Live Nation as well as head of Live Nation Artists and is now a "consultant" to Live Nation for the duration of his contract, which was amended to create the consultancy and a four-year service contract, followed by a four-year non-compete agreement.

In a Securities and Exchange Commission filing, it was revealed that Cohl, or at least his KSC Consulting company, receives a $4.5 million lump sum as a parting gift. Under the non-compete and conditions of his service contract still in effect, Cohl can’t take The Rolling Stones to a competing promoter should they mount another tour before the contract expires.

Sources familiar with the situation told Pollstar that Cohl and Rapino came to loggerheads over how aggressively to pursue 360 deals given the financial uncertainty of the current economy and investor reaction after Madonna’s 10-year deal was announced in August.

Live Nation shares lost about half their value in the months after that announcement, though the stock price appeared to fare much better after rap superstar and one-time impresario Jay-Z struck his own 360 deal.

Rapino, no doubt with an eye on investors, reportedly wanted to slow the pace of dealmaking while Cohl wanted to charge full steam ahead to sign as many as 15 additional acts to Live Nation Artists.

The two have a long history and Cohl is often cited as a mentor to Rapino when both were based in Toronto. In the end, it appears the student bested the teacher when Rapino won the support of LN’s board of directors.

Rapino insists the feud’s resolution does not signal a backtrack on Live Nation’s 360 strategy. Fogel takes over Live Nation Artists, but a representative declined to comment on speculation that a restructuring of the unit is in the works.

"Live Nation’s strategy and execution remain on track as we are committed to acquiring the additional artists’ rights beyond the concert tour, including unified rights deals with select artists," Rapino said. "At the same time, we continue to take a disciplined financial approach and are focused on expanding cash flow and margins and increasing value for shareholders. We will continue to build out our integrated model as we selectively look to add more artists that can feed our core concert pipe."

Of Cohl, Rapino said, "Michael’s contributions to the formation of Live Nation Artists have been immeasurable. With his vision and guidance we have signed historic deals with Jay-Z and Madonna, whose ‘Sticky & Sweet’ tour is currently selling tickets at a record-breaking pace around the world. We are also nearing completion of our proposed long-term agreement with U2.

"The foundation of Live Nation Artists is firmly established and I thank Michael for agreeing to stay with the company as a consultant."

It remains to be seen how investors will react to Cohl’s departure in the long run. When Cohl’s "transitioning" was announced June 20th, Live Nation’s stock price tumbled 9.8 percent to $11.73 from $13 with more than 2.7 million shares traded, short-circuiting what had been a steady rebound in recent months. Share price reached $15.60 as recently as May 29th.

The price continued to sink, although not steeply, in the following days, closing at $10.61 June 26th amid the worst June the stock market has seen since the Great Depression.