Clear Channel dumps concert business

In case you missed it over the weekend, the monolith Clear Channel has spun off its concerts division and has put up a portion of its billboard business for sale.

On Friday, Clear Channel Communications announced that it is giving up ownership of Houston-based Clear Channel Entertainment, spinning it off as a separate publicly traded company no longer owned by Clear Channel. Also, Chief Executive Brian Becker has stepped down.

The San Antonio-based parent company, which also reported Friday that its profit fell by more than half in the first quarter as its plan to shorten ads and commercial breaks during programs dragged down revenue, said it was also launching an IPO for 10 percent of Clear Channel Outdoor.

The Express News has a pretty good overview of Clear Channel's recent stock woes and other issues. What I found interesting in this piece was the criticism of the concert business by Louis Messina, co-founder of Pace Concerts, which was eventually gobbled up by the Clear Channel empire.

"In my opinion, Clear Channel paid way too much money for SFX Entertainment," said Louis Messina, owner of the Houston-based national concert promoter the Messina Group and, with Allen Becker, the co-founder of Pace Concerts.

Pace Concerts was purchased by SFX, which, in turn, was acquired by Clear Channel.

"Brian Becker did a great job for what he was handed, and no one could have done better," Messina said of Allen Becker's son.

Having paid a steep price for SFX, Clear Channel needed to grow the business, but it went about it the wrong way, Messina said.

It tried to control the business, and it backfired, because the concert business is built around the artist, he said.

"The bigger you get as a company, the more dependent you are on the artist," and the artists knew it, and they held out for "premium plus" performance fees, Messina said.

Steep fees were passed on to concertgoers, and consumers eventually "stayed away in droves," he said.

I'm actually not so sure about that last bit. When tickets for big-name-act shows are selling out immediately and then turning up for resale at much higher prices, one could quite reasonably argue that they were too cheap to begin with. Then again, maybe that's the exception.

Though the article notes that the concert business overall has been in a slump since 9/11, I don't really have a feel for whether the problem here was poor ticket sales at concerts or poor management of same. I know that I haven't been terribly impressed with the performance calendars lately, and I can't say I recall a whole lot of decent promotion of worthy concerts on Clear Channel stations back when I was listening to them more regularly (have I mentioned lately how much I love KACC, even when its signal is lousy?), so I'm sure there's plenty of fault to go around. However you slice it, they sure didn't get the most out of their vaunted vertical integration of radio stations and concert venues.

On a somewhat related note, Jim Henley points to this article about the decline in alternate-rock radio:

In the last four months, radio executives have switched the formats of four modern-rock, or alternative, stations in big media markets, including WHFS in Washington-Baltimore area, WPLY in Philadelphia and the year-old KRQI in Seattle. Earlier this month WXRK in New York discarded most newer songs in favor of a playlist laden with rock stars from the 80's and 90's.

Music executives say the lack of true stars today is partly the reason. Since rap-rock acts like Kid Rock and Limp Bizkit retreated from the scene, none of the heralded bands from recent rock movements, be it garage-rock (the Strokes, the Vines) or emo (Dashboard Confessional, Thursday), connected with radio listeners or CD buyers the way their predecessors did.

This sudden exit of so many marquee stations has not only renewed the perennial debate about the relative health of rock as a musical genre, but it also indicates that the alternative format, once the darling of radio a decade ago, is now taking perhaps the heaviest fire in the radio industry's battle to retain listeners in the face of Internet and satellite radio competition. Many rock stations may be in for another blow when the shock jock Howard Stern departs for Sirius Satellite Radio next year.

I can't help but think there's a connection here to Clear Channel's concert woes. How can you expect to do well in the live-entertainment business if you're not growing and nurturing new acts that people will want to pay money to see and hear in person? Whoever takes over that business from CC has his work cut out for him, that's for sure.

Posted by Charles Kuffner on May 02, 2005 to Music | TrackBack