The Telecommunications Act of 1996 overhauled and amended the Communications Act of 1934. This new regulation (or deregulation) was enacted to encourage competition among the businesses involved in a variety of industries. The goal was to deregulate the communications industry in order to induce more competition. At the same time new regulations were put in place to discourage companies from becoming monopolies. One thing the act did not change was the stipulation that a parent company could still not own both a newspaper and a broadcasting station in a single market.
Big and Bigger
Not being a lawyer, I’m not quite sure how companies get around this regulation, but I assume it has to do with the single-market stipulation. As there are only about 10 corporations that control the media, it would make sense that there are major companies that own both television stations and newspapers. Some of these corporations include Gannet, Hearst, News Corp, CNN, Time Warner and The Washington Post. CBS, while not owning any newspapers, does own television stations and 125 radio stations putting it second to only Clear Channel’s radio station ownership.
Robert F. X. Sillerman, owner and founder of SFX, started acquiring radio stations in the 1980s through the 1990s. With the Telecommunications act of 1996, SFX went on a buying spree and increased its portfolio to 70 stations in 20 different markets. In the same year, SFX added to its acquisitions concert promoters and concert venues and by 1997, it expanded its concert promotions to include top promoters such as Bill Graham Presents in San Francisco and Contemporary Group of St. Louis. They also bought top venues and management companies including concert and sports management. Another notch in their belt was inking a deal with Ticketmaster and tour management company Magicworks Entertainment.
Through the 1990s, SFX kept acquiring entertainment and sports management as well as promoters and venues, thereby making them the front-runner in concert promotions. In 2000, Clear Channel bought SFX, and by 2005, the company was spun off as Live Nation, a mega-entertainment conglomerate that owned managers, promoters and venues around the world.
Besides being a global concern and managing about 500 artists worldwide, 2019 saw Live Nation Entertainment agreeing to acquire a controlling interest in OCESA Entretenimiento, a leading promoter in Latin America and owner of Ticketmaster Mexico. An interesting note? In 2014, Clear Channel Communications was rebranded as iHeart Media, which obviously leads us to the tie-in between Live Nation and iHeart. Another media conglomerate, Liberty Media, has shares in both iHeart and Live Nation, and just recently, Saudi Arabia’s sovereign wealth fund invested $500 million dollars into Live Nation. This is not a big reveal of clandestine behavior as all of this information is readily available by doing a quick search of the internet.
It’s hard to keep up with all the ministrations of these large conglomerates, but suffice it to say that there are very few, if any, of us in the entertainment field that are not affected by these huge corporations — and Live Nation is the big dog in the field of entertainment. When the pandemic surfaced and our industry ground to a halt, those of us in the field of live events were left standing with our proverbial you-know-what in our hands, including Live Nation who, despite being a huge conglomerate, was not spared the loss of work and revenue from the pandemic. To be fair, other large promotion and management companies suffered great losses as well and, as we know, everybody is scrambling to figure out new revenue streams in what we are referring to as the “new normal.”
That Certain Memo
Recently, in order to preserve its capital, Live Nation issued a memo describing a new protocol for promotion of bands. Rather than reprinting the memo in total, I will give a quick synopsis of the memo, which basically states: the artists will receive less in terms of a guarantee; be responsible for their own insurance in case of cancellation due to force majeure; must agree to be filmed for future streaming purposes; will only receive 25% of the lessoned guarantee if the concert is cancelled due to poor ticket sales; and must pay the promoter double the guarantee should the artist cancel in breach of the contract. Lastly, if the promoter is not able to utilize the full capacity of the venue, “either because of orders of the venue or any governmental entity,” they can terminate the agreement and hold the artist responsible for any money previously paid to them.
This memo is troubling in a few ways. In the not-so-distant past, the promoter was responsible for such items as event insurance to cover losses in case the show could not go on either due to sickness or force majeure. Now, besides giving the artist less of a guarantee, the financial burden of the protective insurance is placed upon the artist. The promoter was also responsible for making sure that tickets were sold and the show made money. A guarantee for a band was usually about 50% of what they considered their value. The guarantee was given in good faith by the promoter against any revenue that would come in for the event. If the event drew a large crowd, there would be a settlement at the end of the night and, after the promoter’s expenses, the remaining money would be split 80/20, with 20% going to the promoter. If the venue was undersold and the promoter lost money, the artist still kept their guarantee. As the cost of touring is already high for individual artists, any loss of guarantee or incurred cost can be financially devastating. Many artists now have 360 deals with record companies who share in their touring income. Having to split the already-shared merchandise 30%/70% with a promoter makes for a deeper cut into the artist’s revenue.
Having once been involved with concert promotion, I have the utmost respect for any successful promoter. Being a promoter was and is a difficult proposition, and for a variety of reasons, many a fledgling promoter would go bust after one or two shows. Therefore, it’s understandable for promoters to hedge their bets during these trying times, but once the new protocols are in place, it will be difficult reverting back to the old set of rules. The new rules of engagement set out in this memo may help Live Nation and other promoters stay viable, but at the expense of the band. Major acts might not be affected as much as the up-and-comers who may lose the financial ability to tour, but it will affect their bottom line, and this cost will most likely be passed on to the consumer.
What’s Next
It’s difficult to predict how these changes will ultimately affect the bottom line of the touring audio industry, but it would follow that if the band’s revenues are cut, then there will be less to go around. Understandably, this is a difficult period and this is a business decision, but it does seem that here is more trickling down of the hard times than occurs during the best of times. After all, only four months into this shutdown, memos are being issued regarding cutbacks and shifting responsibilities. In the last 14 years, Live Nation increased their revenue yearly, and by 2020, they topped $11 billion dollars, which is about four times what they generated in 2006. Correct me if I’m wrong, but I do not remember a memo being sent during that time frame that increased guarantees and gave back more to the bands.
