Ex-Ticketmaster CEO More Than Amused by State Fairs
After one big success and one big failure, Fredric Rosen thinks he has found a new way to milk profits: state and county fairs.
Rosen took the wraps off his latest Los Angeles-based venture Friday -- a company poised to be the nation’s dominant operator of midways and carnivals.
North American Midway Entertainment plans to provide food, games and rides at 142 events annually, including 12 of the top 50 fairs in the United States and Canada.
Rosen is a well-known entrepreneur who in the 1980s and ‘90s cornered the market on the sale of entertainment tickets through Ticketmaster Corp. The highly lucrative business was later sold to a company run by Hollywood-turned-Internet mogul Barry Diller.
From there, Rosen tried to corral technology trade shows under the Key3Media Group Inc. banner. But that effort faltered, and Key3Media plunged into bankruptcy.
Now, the 60-year-old Rosen is eyeing opportunity in the 150 million people who attend fairs across North America every year.
“More people go to the state fair than go to an NFL team’s home games,” said Rosen, pointing to the 1 million-plus who passed through the Los Angeles County Fair and the 840,000 who attended the Indiana State Fair this year. “Carnivals draw in a wider demographic, a broad cross section of the population.”
With those kind of numbers, Rosen and other executives believe that fairs have the potential to be about much more than simply cotton candy and pony rides. They see them as an untapped outlet for promoting movies, TV shows and myriad other products.
Professionalizing and consolidating the carnival business, Wall Street sources say, could make North American Midway an attractive acquisition target for a media company looking to reach the nation’s masses.
Rosen was circumspect about his plans, saying only that “we think there’s a good opportunity in putting these things together as the media world becomes more fragmented.”
North American Midway would result from the proposed merger of three companies: Conklin Holdings Inc. of Canada, the continent’s largest carnival operator, and smaller rivals Farrow Amusement Co. and Thebault-Blomsness Inc. The transaction is expected to be completed by the end of the year. Terms weren’t disclosed; industry revenues are difficult to assess because the carnival business is splintered among so many small operators.
However, sources said, Rosen and Cypress Group, a New York-based private equity investor, would pay less than $100 million to assemble North American Midway. Rosen would serve as chairman and chief executive.
“This is the vanguard of a trend,” said James Zoltak, editor of Amusement Business, a Los Angeles-based trade publication. “This is the biggest carnival consolidation, and it’s not good news for small mom-and-pops who will now be going up against a behemoth when bidding for contracts with the fairs.”
Zoltak said he expected the North American Midway transaction to spur more mergers. Other major private equity players could even be drawn into the industry, according to Wall Street sources.
Zoltak noted that the carnival business had been beset by soaring insurance costs, cutthroat competition and strong-arm tactics by state and county fairs that were “low-balling” carnival operators.
Yet Rosen seems unfazed, convinced that North American Midway’s size would be a huge advantage not only in dealing with fair officials but also in marketing to the public.
“This is something you can put together and brand,” he said. “It’s Americana. It’s G-rated. It’s all about family entertainment.”
