Live Nation to Buy House of Blues for $350 Million

The concert promoter extends its reach with the $350-million acquisition of its rival.

By Charles Duhigg, Times Staff Writer

July 6, 2006
LOS ANGELES TIMES

The concert industry contracted further Wednesday when the country’s largest promoter, Live Nation Inc., agreed to pay $350 million to acquire its closest competitor, House of Blues Entertainment Inc.

The deal would add House of Blues’ eight amphitheaters and 10 clubs — including the famed location on Sunset Boulevard — to the 153 venues managed by Live Nation, which spun off in December from radio giant Clear Channel Communications Inc.

Live Nation would also gain exclusive booking rights to about five additional venues. Both companies are based in Los Angeles.

The acquisition, expected to close by year’s end, would effectively reduce the once-crowded live-music industry to two significant competitors: Live Nation, which sold almost 30 million concert tickets in 2005, and another Los Angeles company, AEG Live, which sold slightly more than 6 million tickets last year. In 2005, the privately held House of Blues sold about 7 million tickets, according to trade magazine Pollstar.

“This gives Live Nation the missing pieces to form an amphitheater network that is genuinely nationwide,” said Gary Bongiovanni, Pollstar’s editor in chief. “It will also allow artists to work with one promoter to set up a national tour.”

Some industry insiders see Live Nation’s purchase as evidence of the company’s ambitions to extend beyond concert promotion and to take full control of ticket sales, bypassing intermediaries such as Ticketmaster.

“This deal gives Live Nation the mass heft it needs to challenge Ticketmaster, T-shirt merchandisers, all sorts of ancillary businesses,” said Jim Guerinot, an artist manager whose clients include Gwen Stefani and Nine Inch Nails. “By becoming this big, Live Nation can become a company that participates in every part of the live music economy.”

But competitors believe that such power could be bad for the industry.

“Live Nation will force artists into exclusive deals that will steal musicians’ abilities to direct their own careers,” said Randy Phillips, chief executive of AEG Live. “This marks the end of all of the small, independent promoters who have been the entrepreneurs of this industry.”

Guerinot and other managers disagree. “There will always be plenty of independent clubs for bands to play,” he said. “This doesn’t give promoters any more power over us.”

The concert business, once dominated by promoters with unorthodox business practices, has suffered lately from declining attendance and increasing ticket prices. Those shifts began in the 1990s, when publicly traded companies began buying concert venues and promoters began focusing on big-name acts more likely to sell out stadiums.

House of Blues, founded in 1992 by a group that included actor Dan Aykroyd, attempted to straddle the changing concert business by signing superstar acts to perform in 20,000-seat amphitheaters and less-established musicians to appear at 1,000-seat clubs.

The strategy had mixed results. The company tried to sell its concert division in 2004 but pulled it from the market when bids came in below the $120 million that management had sought. Still, House of Blues expanded in recent years, announcing plans to open clubs in Dallas, Houston and Seattle.

Shares of Live Nation fell 10 cents Wednesday to $20.87.

*

Three companies dominate the world of concert promotions.

Number of concert tickets sold worldwide in 2005
(in millions of tickets)
Live Nation*: 29.6
House of Blues: 6.9
Anschutz Entertainment Group: 6.3

*Formerly Clear Channel Entertainment

Source: Pollstar

A letter from Arthur subscriber Kris Thompson:

TV On the Radio opened for their friends The Yeah
Yeah Yeahs this past Thursday at a WFNX-sponsored
concert at City Hall Plaza in Boston.

I assume that it was uncomfortable for WFNX to
have one of their event sponsors held up to such
hostile razzing. WFNX is owned by the (alt.newsweekly)
Boston Phoenix, who made this mention of it in their
review of the event by Matt Ashare:

“…The sun had started to set, the heat of the day has lost its grip on the city, and thousands – 10, 12, 15 thousand — were filing peacefully into City Hall Plaza long before the headlining Yeah Yeah Yeahs were due to take the stage. All the makings of a perfect rock and roll evening were in place …

“And then TV on the Radio had to go and ruin the good vibes by ending their set with a salvo against the Marines, who had signed on as one of the event’s sponsors. Now this is no place for a political rant, but it’s worth noting — no, it’s crucial to understand, lest we fully repeat the mistakes of Viet Nam — that the Marines, Army reserves, and Navy and Air Force pilots currently fighting George Bush’s wars in the Middle East are doing just that, carrying out plans handed down by their commander in chief and doing their best not to get the asses blown to hell in the process. Soldiers take orders: they don’t make policy. To blame them for the mess in Iraq is to tacitly let the bureaucrats and politicians really responsible for the debacle off the hook. And both Adebimpe and Sitek know better: just check out ‘Dry Drunk Emperor’ a free MP3 they recorded before signing their own deal with Interscope.”

Umm, OK. This doesn’t explain to me, though, why it
was a good idea in the first place for WFNX/Phoenix to
want the Marines to be present and recruiting at their
“cool” “alternative” event. TVOTR were not “blaming
the soldiers” for anything — they were blaming the
recruiters for being there to ensnare more young
people in the morass that that Mr. Ashare admits is
not our war in the first place.

August 14, 2006 – Reuters

WASHINGTON – Allegations of wrongdoing by U.S. military recruiters jumped by 50 percent from 2004 to 2005, and criminal violations such as sexual harassment and falsifying documents more than doubled, a congressional agency said on Monday.

The Government Accountability Office, Congress’ investigative agency, said the full extent of violations by military recruiters is unknown because the Defense Department does not have an oversight system.

While the GAO said available information likely underestimated the problem, it showed that allegations of recruiter wrongdoing increased to 6,600 cases in fiscal year 2005 from 4,400 a year earlier.

Substantiated cases rose to almost 630 cases from 400, and criminal violations jumped to 70 from about 30, it said.

The report said the military’s roughly 20,000 recruiters have been under pressure to meet recruiting goals while a fairly strong economy has sustained a competitive job market and the death toll in the Iraq war has been rising.

“Determined to find ways to succeed in a challenging recruiting environment, some recruiters reportedly have resorted to overly aggressive tactics, such as coercion and harassment,” the GAO report said.

That can hurt recruiting by damaging relationships with parents, teachers, coaches and others who have influence on potential applicants, the report said. It also can waste tax dollars if ineligible applicants are recruited and begin basic training, but do not enter military service, it said.

The report faulted the Defense Department for not establishing an “oversight framework” that requires reports on recruiter violations and sets criteria for characterizing the irregularities.

It also said the Army, Navy and Air Force measure recruiter performance primarily by the number of recruits who enlist and report to basic training, rather than the number who complete basic training.

The Marine Corps uses basic training attrition rates to evaluate recruiters, which the GAO said may deter its recruiters from committing violations.

US Army seen reaching recruiting goal despite war

Thu Aug 10, 2006 4:50 PM ET

WASHINGTON (Reuters) – The U.S. Army, which fell short in recruiting last year, made its 14th straight monthly goal in July and is expected to hit its 2006 target despite the Iraq war making recruiting harder, officials said on Thursday.

Jeff Spara, in charge of Army recruiting policy, denied the Army has been making its recruiting goals by taking lower-quality volunteers who previously might have been rejected, as some experts contend.

“It looks very good right now,” Spara said of the active-duty Army reaching its goal of 80,000 new soldiers in fiscal 2006, which ends September 30. It fell about 7,000 recruits short of the same numerical goal in fiscal 2005.

Spara said it was “too close to call” whether the Army’s part-time components, the National Guard and Reserve, will reach their 2006 targets. Both missed their July quotas and fell short last year.

The Army provides the bulk of U.S. ground forces in Iraq. Spara said the war continues to complicate recruiting, with parents and other influential adults more likely than in the past to counsel potential recruits against volunteering.

The Army sent 10,890 recruits into boot camp in July, exceeding its biggest goal of the year of 10,450 and pushing it 4 percent above its year-to-date goal. The Army has landed 62,505 recruits through July, and needs 17,495 more in the final two months of fiscal 2006 to meet its goal.

The Army National Guard missed its July goal by 25 percent and stood 1 percent behind its year-to-date goal. The Army Reserve missed its July goal by 13 percent and also was 1 percent behind its year-to-date goal.

The Marine Corps, Navy and Air Force made their July recruiting goals. The part-time Navy Reserve missed, and trailed its year-to-date goal by 16 percent.

Spara attributed the Army’s success to several steps taken to boost recruiting, including monetary enlistment incentives, raising the enlistment age limit to a person’s 42nd birthday, adding recruiters, and relaxing a ban on certain types of tattoos.

“They’re taking in less-qualified people,” said Lawrence Korb, an assistant secretary of defense under President Ronald Reagan. “Now, what they (Army leaders) will argue is that they are still above the minimum standards.”

But Korb, an analyst with the Center for American Progress, said when the Army brings in more people who do not meet its highest standards, it increases the chances of misconduct in the ranks and of having a less-capable force.

Spara defended the quality of the new recruits, saying, “You know, it’s a question of whether you want a bagel or you want angel food cake. They’re both bread.”

The U.S. military moved to an all-volunteer force in 1973, during the tumult of the Vietnam War era.

Some analysts have said if the military cannot attract enough recruits, the United States might have to consider reinstating the draft.

WHAT ARTHUR MAGAZINE IS DOING ABOUT IT:

“So Much Fire to Roast Human Flesh”

a benefit album curated by Josephine Foster

“All profits from sales of this compilation will be distributed to specific counter-military recruitment and pacifist organizations and programs. We hope to assist them in their efforts promoting peace and non-militarism in the United States.

—Josephine Foster

Track listing:

THE CHERRY BLOSSOMS – “Dragonfly” (live)
FEATHERS – “Dust”
MICHAEL HURLEY – “A Little Bit of Love for You”
MEG BAIRD – “Western Red Lily (Nunavut Diamond Dream)”
ANDREW BAR – “Don’t Trust That Man”
GOATGIRL – “President Combed His Hair”
DEVENDRA BANHART – “I Know Some Souls” (demo)
KATH BLOOM – “Baby Let It Come Down On Me”
CHARLIE NOTHING – “Fuck You and Your Stupid Wars”
DIANE CLUCK – “A Phoenix and Doves”
JOHN ALLINGHAM & ANN TILEY – “Big War”
JOSEPHINE FOSTER – “Would You Pave the Road?”
ANGELS OF LIGHT – “Destroyer”
RACHEL MASON – “The War Clerk’s Lament”
PAJO – “War Is Dead”
MV & EE – “Powderfinger”
KATHLEEN BAIRD – “Prayer for Silence”
LAY ALL OVER IT – “A Place”

Cover artwork by Fred Tomaselli

Available now. $12US/14Can/17World postpaid.

If you would like to order a copy:

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Arthur editor Jay Babcock, “Invasion” DVD mastermind Sir Will Swofford, and IRA COHEN