SFX in Talks to Purchase Concerts West, Sources Say

Concert conglomerate SFX is negotiating to purchase all or part of nascent Los Angeles promoter Concerts West from billionaire Philip Anschutz, according to sources familiar with the talks.

A deal would solidify SFX’s dominance of the $1.6-billion concert industry, essentially removing its only well-financed competitor and clearing the way for purchases of smaller rivals.

The possible deal would mark an unusual reversal for Anschutz, who entered the concert business just seven months ago with the acquisition of Concerts West.

Anschutz, whose investments include the Los Angeles Kings hockey team and a minority stake in the Los Angeles Lakers NBA franchise, is pushing to expand his footprint in Europe with control of sports teams and arenas. Increasing his business there could be difficult without dealing with SFX, which has acquired many of Europe’s biggest concert promotion firms.

Last week, Anschutz signed a deal to acquire 40 acres in downtown Berlin, where he plans to develop a new arena. There is speculation he also will try to take over the Globe arena in Stockholm, where he has a deal to purchase a 25% stake in a Swedish hockey team.

Anschutz executives said no deal has been struck with SFX.

“I’ve had conversations with the SFX people for over a year, and we’ve continued to discuss a wide variety of potential relationships,” said Timothy J. Leiweke, president of Anschutz Entertainment Group, the billionaire’s sports and concert subsidiary. “What has been a priority for us and them is Europe. That continues to be a topic of conversation.

“At the current time, we don’t have any agreement in principle with SFX regarding a merger or any other type of business” relationship, Leiweke said. “That’s not to say something isn’t going to happen with SFX because we happen to be a good fit. . . . We’re not a quick spin company, but the other side of this is: If there’s an opportunity to have a relationship with SFX that encompasses our European vision, that’s important to us. But the rumors [of a deal] are much more substantial than the actual conversations to date.”

SFX has transformed the concert business by buying dozens of amphitheaters and regional concert promotion firms and combining them into a giant powerhouse. When major acts such as the Backstreet Boys plan a nationwide tour, SFX can buy the rights to handle the entire run, replacing the tradition in which regional promoters bid against each other for control of individual concert dates.

Anschutz’s entrance into the business last December signaled that another company might be able to compete for national tours.

Since lining up with Anschutz, Concerts West, run by veteran promoters John Meglen and Paul Gongaware, secured control of potential money-makers such as a tour by dancer Michael Flatley and a tour by rock act Rob Zombie. It also completed a deal to promote Celine Dion’s three-year stand in Las Vegas that the company hopes will gross more than $300 million. But Concerts West lost out to SFX in the competition to promote tours by such acts as Madonna and Sade.

SFX also will handle other major summer tours by acts such as ‘N Sync, Janet Jackson and Destiny’s Child. It isn’t clear how profitable those events will be for the conglomerate, which is owned by radio giant Clear Channel Communications.

The nation’s other major promoter, House of Blues, has discussed a possible sale to SFX. But the two sides were unable to agree on a price, according to sources familiar with the negotiations.

House of Blues had been planning to partner with New York’s Metropolitan Entertainment Group, one of the regional promoters not absorbed by SFX. But sources said House of Blues didn’t have the cash needed to complete the pact.

If SFX buys Concerts West, analysts said, SFX would be in a position to force Metropolitan chief John Scher to sell or to raise cash to buy out his current partner, Ogden Corp., which is exiting the business. Scher downplayed the idea that SFX would be the only possible buyer. “We continue to have very interesting dialogues with a number of people,” he said. “I don’t think our future depends on any one company.”