House of Blues Sold to Live Nation

The concert industry contracted further Wednesday when the country’s largest promoter, Live Nation Inc., agreed to pay $350 million to acquire its closest competitor, House of Blues Entertainment Inc.

The deal would add House of Blues’ eight amphitheaters and 10 clubs -- including the famed location on Sunset Boulevard -- to the 153 venues managed by Live Nation, which spun off in December from radio giant Clear Channel Communications Inc.

Live Nation would also gain exclusive booking rights to about five additional venues. Both companies are based in Los Angeles.

The acquisition, expected to close by year’s end, would effectively reduce the once-crowded live-music industry to two significant competitors: Live Nation, which sold almost 30 million concert tickets in 2005, and another Los Angeles company, AEG Live, which sold slightly more than 6 million tickets last year. In 2005, the privately held House of Blues sold about 7 million tickets, according to 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.”

Some industry insiders see Live Nation’s purchase as evidence of the company’s ambitions to extend beyond concert promotion and to take full control of ticket sales, bypassing intermediaries such as Ticketmaster.

“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 Gwen Stefani and 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 believe that such power could be 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,” he said. “This doesn’t give promoters any more power over us.”

The concert business, once dominated by promoters with unorthodox business practices, 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.

House of Blues, founded in 1992 by a group that included actor Dan Aykroyd, attempted to straddle the changing concert business by signing 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 concert division in 2004 but pulled it from the market when bids came in below the $120 million that management had sought. Still, House of Blues expanded in recent years, announcing plans to open clubs in Dallas, Houston and Seattle.

Shares of Live Nation fell 10 cents Wednesday to $20.87.

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Top three

Three companies dominate the world of concert promotions.

Number of concert tickets sold worldwide in 2005

(in millions of tickets)

Live Nation*: 29.6

House of Blues: 6.9

Anschutz Entertainment Group: 6.3

*Formerly Clear Channel Entertainment

Source: Pollstar