After years of consolidation, the concert industry contracted further Wednesday when Live Nation Inc., the nation’s largest concert promoter, agreed to pay $350 million to acquire its biggest competitor, House of Blues Entertainment Inc.
The deal will add House of Blues’ 18 clubs and amphitheaters–including the Chicago House of Blues at 329 N. Dearborn St.– to the 153 venues managed by Live Nation, which last December was spun off from radio giant Clear Channel Communications Inc.
Additionally, Live Nation will gain exclusive booking rights to approximately five additional venues. Both companies are based in Los Angeles.
The deal will effectively reduce the once-crowded live music industry to two significant competitors: Live Nation, which in 2005 sold almost 30 million concert tickets, and AEG Live, which last year sold slightly more than 6 million tickets. In 2005 privately-held House of Blues sold about 7 million tickets, according to the 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.”
Live Nation was already a major player in the Chicago concert scene.
In the coming week, for example, the company is booking shows at The Vic Theatre, Double Door, Congress Theatre and at other Chicago and suburban venues.
Live Nation’s purchase is seen by some as evidence of the company’s ambitions to extend beyond concert promotion into ticket sales and other businesses now dominated by other companies.
“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 singer Gwen Stefani and the band 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 think such power is 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,” said Guerinot. “This doesn’t give promoters any more power over us.”
In Chicago, Live Nation competes against Jam Productions. Live Nation’s former parent, Clear Channel, was involved in a closely watched federal lawsuit brought by Jam that involved a contract to promote dirt track motorcycle racing.
A jury found that Clear Channel interfered with a Jam agreement, but that verdict was overturned and a new trial was ordered.
Once dominated by wild promoters and unorthodox business practices, the concert business 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.
The House of Blues, founded in 1992 by a group that included actor Dan Aykroyd, attempted to straddle the changing concert business by signing both 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 concerts division in 2004, but pulled it from the market when bids came in below the $120 million management sought.
However, House of Blues has expanded in recent years, announcing plans to open clubs in Dallas, Houston and Seattle.
Shares of Live Nation closed Wednesday on the New York Stock Exchange at $20.87, down 10 cents from the previous day.
