Concert-Business Veteran to Head LiveStyle, formerly known as SFX
Randy Phillips aims for turnaround by moving beyond electronic dance music
By HANNAH KARP
Dec. 7, 2016 5:33 a.m. ET
At 62 years old, concert-business veteran Randy Phillips admits he may well be “too old to be the biggest [electronic dance music] promoter in the world.” But he is doing his best to get up to speed, girding himself to attend one of the concert events he will now oversee, where performers bombard the audience with hundreds of gallons of Day-Glo paint throughout the show.
“I have an aversion to getting paint thrown on me,” Mr. Phillips said recently.
Mr. Phillips is starting as chief executive this week at LiveStyle Inc., the dance-festival conglomerate formerly known as SFX Entertainment, which filed for bankruptcy in February. In recent months he has been crafting a strategy to expand the business that includes going easier on the signature electronic dance music, or EDM, at some of its events—in part, because drug-overdose deaths at some EDM festivals have brought unwelcome attention to the genre and made it unpalatable to corporate sponsors.
“I have a plan to take [New York festival] Mysteryland in Bethel Woods and broaden out the genre and give it a little bit of a Coachella feel,” Mr. Phillips said, referring to the influential California desert festival he oversaw as chief executive of Anschutz Entertainment Group’s concert promotion arm, AEG Live, until 2013.
Though some events will keep their electronic focus, “the EDM thing is tough for a sponsor,” he said.
Broadening the company’s musical appeal is just one element of Mr. Phillips’s turnaround plan, which he hopes will increase earnings before interest, taxes, depreciation and amortization to $50 million from $18 million in three years. He also wants to give corporate sponsors subtler ways to promote their products to festival goers, rather than simply allowing them to slap their names around the festival grounds. And he aims to expand overseas in markets such as Asia and Latin America, given that the music-festival market in the U.S. has become “very crowded.”
He is restructuring management, too, splitting up the founders of the company’s Dutch promotion unit ID&T—which SFX bought for $130 million—and giving each of the three partners his own festival to run, while allowing them to buy stakes in LiveStyle at a favorable valuation—moves aimed at encouraging growth.
Meeting with ID&T’s founders at one of their homes in Amsterdam this fall, Mr. Phillips said he told them, “I’m one of you,” but warned them that “I also know how to run this business without you.”
SFX Entertainment made its debut as a public company in 2013 led by entertainment mogul Robert F.X. Sillerman, now 68 years old, who had started snapping up EDM-focused festival promoters and other EDM specialty shops the year prior.
He’d successfully pulled off similar roll-ups in the past, selling a conglomerate of radio stations to Capstar Broadcasting Partners Inc. for $2.1 billion, and consolidating concert promoters into a company he sold in 2000 to Clear Channel Communications Inc. for $4.4 billion. Clear Channel’s live-event business was eventually spun off into what is nowLive Nation Entertainment Inc.
The strategy flopped in the dance-music business, though. SFX’s stock steadily plummeted to 7 cents in February from its IPO price of $13 a share. Though attendance remained healthy at many of the company’s flagship events, Mr. Sillerman failed to create the additional value he had thought might come from pulling fan bases together for advertisers on a single online platform. “Disco” Donnie Estopinal, who’d sold his promotion company to SFX for $9 million, said that explaining the financial turmoil drained his time, hurt his relationships with booking agents and prevented him from launching new projects.
SFX lost $144 million on $249 million revenue for the nine months ended September 2015, and filed for bankruptcy in February.
Taking control of the company, lenders Allianz SE and Axar Capital Management LP tapped Mr. Phillips to consult on a restructuring plan and then offered him the top job.
“We believe that LiveStyle will evolve into one of the world’s leading live-entertainment platforms,” said Andrew Axelrod, a managing partner at Axar, noting the increasing demand for “exclusive, immersive” experiences.
Mr. Phillips had run AEG Live for 13 years, expanding its festivals, orchestrating Las Vegas residencies for artists such as Prince, Santana and Shania Twain and producing behind-the-scenes documentaries for AEG clients such as “This Is It,” which tracks the last days of the late pop star Michael Jackson as Mr. Phillips helped him prepare for his tour.
As Mr. Phillips sorted through SFX’s financial mess, he said it was clear that its festivals were still valuable, but he believes Mr. Sillerman seriously overpaid for them. Mr. Sillerman couldn’t be reached for comment.
“My biggest regret is that I was at a job at AEG and didn’t have anything to sell them,” Mr. Phillips said.
He said that most of SFX’s existing festival sponsors are staying on board, and that he wants to keep some of the more successful festivals focused on EDM, such as New York’s Electric Zoo. But broadening the music at other events will bring in new fans and additional sponsors, he said.
One downside of Mr. Sillerman’s exit from SFX: promoters will no longer be able to blame him for poor results.
“I said guys, what are you gonna do next year?” Mr. Phillips said.
Write to Hannah Karp at firstname.lastname@example.org