In consolidating industries, a natural response is scaling up in order to bring more services and capabilities to the table. That’s certainly what we’re seeing with a recent raft of merger and acquisition activity, with Comcast’s purchase of Time-Warner Cable and AT&T’s move on DirecTV — just the biggest of what’s shaping up to be the busiest deal-making season since 2008, with a reported $2.2 trillion in deals done so far this year globally, a 67-percent increase from the same period last year.
But M&A isn’t the only way to do that. Expanding a company’s reach organically, from within, is certainly harder than simply throwing money at a prized target to grow a customer base or add new services. But it also often offers a firmer foundation for the new attachments, and doesn’t bring the very real distractions of melding corporate cultures and meshing alien IT and accounting systems. (This frequent flyer is already dreading the imminent mashup between American Airlines and US Airways.)
The VER Approach
That’s the path that Video Equipment Rentals (VER) took when the company went into the touring sound sector over the course of the last two years. The company had already established itself as a leading provider of large-scale video and lighting systems for a number of markets, including live touring. Adding touring audio capability would let it offer a true one-stop for tour clients, letting them acquire sound, video and lights as a single package — or in any combination thereof. The decision came at propitious time: By 2012 it had become clear that touring had established itself as the primary revenue source for most of the music industry, which had by then watched recorded-music sales drop by more than half in a decade. But it also came at a time when the tour sound business had more players than ever, a pool that is still growing. So adding touring audio is hardly a slam-dunk. However, it also seemed to fit a larger pattern of growth for VER, which in that same time period had expanded physically, adding inventory and storage in many of its cities, including moving to larger quarters in Dallas, San Diego and Orlando, and — with the opening of VER Denver — has grown to 26 locations.
“It really follows how VER has always grown, from within,” observes Ralph Mastrangelo, VER’s director of tour sound, who VER founder and CEO Vince Dundee brought on in 2012 with a mandate to make the company competitive in tour sound. “VER started out renting camcorders to wedding photographers years ago and grew into dry-hire of huge projection screens and LED, then large lighting rigs. Then came corporate audio — combo packs of RF and speakers on sticks,” he recounts. “It many ways, going to tour sound was the next logical step. It was the last piece of the puzzle.”
Bringing on Mastrangelo to do it was also logical. After proving adept at mixing FOH for artists ranging from rockers Cinderella and Yngwie Malmsteen to stone-country warblers Dwight Yoakam and Tracy Lawrence in the late 1980s and early 1990s, Mastrangelo made the leap to the executive side of the business, helping John McBride —whom he credits profusely as a career mentor — build his MD Sound in Nashville and staying with it, through its acquisition by Clair Brothers in 1995, for 21 years as senior director of sales.
Mastrangelo says that during the initial conversation with Dundee, he laid out every reason he could think of for VER not to make the move, testing the depth of commitment. “I wasn’t trying to scare Vince off, but I was trying to point out that VER had a very secure place in the markets it was already in, and that rock music looks sexy from a distance, but that tour sound is incredibly competitive, and the deals are tighter then ever,” he explains. However, he also pointed out the positives: more artists than ever are touring, and they’re touring regularly rather than following the model of the Spinal Tap era, when bands went on the road grudgingly and only after lengthy stints in the recording studio. “The country-music concept of touring 40 weeks a year has now migrated to rock, and everyone’s doing at least 80 to 100 dates a year,” he says. Even if the margins are being squeezed, the new landscape of concert touring offers increased volume and consistency. After a weekend of consideration, and five days after his first son was born, Mastrangelo told Dundee, “Let’s do this.”
Building from Scratch
Building a touring audio division from scratch is no mean feat; doing so in a crowded, highly competitive environment is even more difficult. One major challenge they encountered was the reluctance on the part of several major sound system manufacturers to sell new equipment to VER’s tour-sound start up. Mastrangelo takes that with equanimity, understanding that speaker choices are fundamental differentiators for SR providers, and that manufacturers have to tread carefully.
Ultimately, VER put together touring rigs with components including JBL’s VTX system, Meyer’s LEO and LYON arrays, and d&b’s J and V series enclosures, in some cases secured through secondary sources. Much of the rest of what is now VER Tour Sound is bespoke, including custom-built distros, racks and splitters. The division, which operates autonomously, is staffed by colleagues Mastrangelo met along the way, including a few former Clair hands. “Not poached,” he declares, sensitive to the fact that he’s now the competition to the company where he spent half his working life.
A core piece of the new division’s strategy is based on ergonomics — designing truck packs that fit as perfectly as possible into 32-inch-high cases. The criticality of the form factor impacted equipment choices as well as the decision to build much of their own infrastructure and rental products. “We went to five different case manufacturers before we found one that could hit our mark,” he says. The preciseness of the fit translates into more efficient loading and transport, which increase cost effectiveness, which is crucial in touring sound’s current economic environment. “Being able to do this is a luxury you get when you build from the ground up,” Mastrangelo says.
It also let things happen quickly. VER Tour Sound had its first shows out the door three months after it launched, in early 2013. Currently, their rigs are on the road with OneRepublic, Bassnectar, Journey and Dream Theater, among others, and clients are using a mix of VER’s menu of services; Journey, for instance, is using sound only, while Bassnectar is traveling with VER’s sound and video. Others, like Jay-Z and Eminem, remain video and lighting clients, but now that sound is in the picture, what’s on the table for them and others may change.
Mastrangelo says that the one-stop shop idea has a lot of allure in an industry that watches its costs as closely as touring has to. It puts VER into the most rarefied of categories, with a hat-trick’s worth of key services. It’s an advantage that Mastrangelo hopes to press in coming years, and the sooner the better in this atmosphere of consolidation. “It’s really where the whole business is headed eventually,” he says of being able to offer touring sound, video and lights. “Sooner or later.”
