Transformers 2008. That was a headline in Pollstar’s 2007 Year End Business Analysis where we predicted that this would be a year of major transformational business deals.
“And then there is Irving Azoff,” we also noted, “who is quietly amassing talent behind the sandbags at Front Line, with an end game that is still not entirely clear.”
Unlike the record business, the real power in the live entertainment world has always flowed from the artist. If you had the major talent in your corner, you were important whether you were a promoter, manager or agent. That fact is underscored even more with the rapidly declining influence of the major record companies as we once knew them.
Everyone agrees that there’s a new paradigm coming. The problem has been that no one has known what that paradigm would look like.
Irving’s strategy with Barry Diller and Ticketmaster is still not crystal clear but the music industry is starting to get a clue as to what’s ahead. It will take a while to shake out because this deal has more wrinkles to it than a sharpei. (Click here to read our coverage of the announcement.)
Ticketmaster has endured a succession of negative media hits in recent months as its largest client, Live Nation, moves to launch its own competing ticket service in 2009. The recently announced Live Nation deals with SMG and CIE helped portray TM as something of a slowly sinking ship. TM even announced Oct. 22 that it was laying off 5 percent of its global staffing – about 300 of its 6,000 employees.
Now, with Azoff taking over the helm at Ticketmaster, no one is talking about the demise of, rightly or wrongly, what the public considers the most reviled brand name in the entertainment business. We suspect that Ticketmaster and its corporate culture may be the first thing transformed by putting Azoff at the top of the pyramid.
The deal, which sources say crashed together virtually overnight, marries the world’s most powerful artist management company to the world’s largest ticketing company and its enormous customer database.
It is said to represent well more than 100 major artists, but a full list of the acts under the Front Line umbrella is not available.
Front Line itself is a holding company with varying levels of ownership in dozens of previously independent artist management companies.
Front Line is not even listed in the Pollstar artist management database, although the artists and individual managers are listed under their respective operating entities.
There are plenty of other pieces to the puzzle that make this a fascinating business move for TM.
Take, for instance, the second largest promotion company in the world, AEG Live. When billionaire Philip Anschutz decided to add a live entertainment division to his empire at the beginning of this century and put the highly capable Tim Leiweke at its helm, they brought in Azoff to help launch the company. Irving eventually cut his ties – at least on paper – from AEG but certainly a close working relationship remains.
The Anschutz empire has remained a loyal TM client and AEG Live President Randy Phillips told Pollstar: “Simply put, it’s a brilliant strategic move by Ticketmaster.”
AEG remains independent of the TM deal but, simply put, it keeps AEG happy.
Without a big record company behind him, Azoff has proven his artists can still sell CDs in today’s retail environment. He has built relationships with Wal-Mart and Best Buy, using the big box merchandisers to launch such projects as Eagles’ Long Road Out of Eden and Guns N’ Roses’ forthcoming Chinese Democracy.
And then there’s the silent partner in all of this: James Dolan. The Cablevision CEO had to sign off on the deal because Cablevision has a 10 percent stake in Front Line. Cablevision owns Madison Square Garden and its entertainment arm, run by Jay Marciano.
Relationships between Dolan’s empire and Ticketmaster have been strained, as evidenced by a recent Cablevision stockholders meeting. Dolan was asked if his company, which had ended its contract with TM, would consider Live Nation as a ticketing service. Instead of reiterating a bond between Cablevision and Ticketmaster, Dolan said he’d entertain the idea of a Live Nation ticketing service.
But Dolan is also an Azoff client. Not only does he run one of the most powerful companies in the U.S., he’s a guitarist and frontman in his own blues band, J.D. & The Straight Shot, and Irving advises Dolan on his musical endeavors.
So the Azoff deal will likely keep MSG Entertainment in the TM fold. There, of course, is immediate speculation on what the next big move will be. Does TM make a deal with MSG and/or AEG and move into the facility management business? Does the company expand on its Emma initiative in China and develop a global concert promotion arm? There is still much to be sorted out.
The potential for conflicts of interest are enormous but if anyone can overcome them it is Azoff, who many years ago ran his own merchandising and management companies at the same time he was running MCA Records and its MCA Concerts division.
Azoff has always placed loyalty to his artists above everything else. If Live Nation or any other entity offered a Front Line client a more impressive financial deal, there is little doubt that Azoff would advise his clients to take it. The disadvantage to outsiders, however, is that he would always get the last shot at matching the deal. And something tells us that the artists themselves, who make up the real assets of Front Line companies, are somehow sharing in the upside from the TM deal.
Chances are this deal was made first and the specifics of its model will be fleshed out later. Ticketmaster’s former CEO, Sean Moriarty, will still be a part of the structure but his new role is unclear. Moriarty had an interesting quote, though, when Live Nation recently announced its deal with SMG. He pooh-poohed it and hinted that maybe it was a good idea for TM to go into the facility management business.
The deal putting Azoff atop TM doesn’t necessarily mean Front Line artists will avoid Live Nation-run venues, but it does mean that Live Nation and/or Live Nation Ticketing will need to at the very least give Front Line artists the best deal imaginable.
And Irving has a very good imagination.