Live Nation’s 360 Deals Are Making Some Higher-Ups A Bit Dizzy
The music business has looked on with fascination in recent months as Live Nation spent huge sums to attract not just Madonna and Jay-Z, but also Irish rockers U2 and teen sensations the Jonas Brothers; the latter two deals give the company fewer rights, and so are presumably less lucrative.
The strategy has been rough on Live Nation’s stock price, which has fallen more than 44% since its first big deal, with Madonna, which was announced in October. But “360 deals,” as such all-encompassing arrangements are called, are becoming increasingly common as the music industry attempts to overcome its woes….
The combination of businesses is risky, however, in part because profit margins in concert promotion are perilously thin, and a bad tour could undercut the overall value of a package deal.
For record companies, such deals have usually been with unproven bands whose rights they can buy cheaply. But Live Nation, under Mr. Cohl — its largest individual shareholder and head of its Live Nation Artists unit — has been pushing the strategy’s limits.
People close to Live Nation say the company hasn’t veered from its commitment to the 360 strategy, despite disagreements over how many of the deals to strike. Live Nation has held talks for a similar deal with South American rocker Shakira, according to several people involved, though no agreement has been reached.
The battle that has played out in recent weeks was complicated by Mr. Cohl’s threat to take with him stars he says he brought to Live Nation over the years, including the Rolling Stones and U2. In the ensuing discussions, Mr. Cohl was reminded that his employment contract would bar him from competing with Live Nation for eight years if he left.
Something tells me that this isn’t going to be won or lost by either of the executives making a passionate case for or against their position, but by stock price.