SFX Entertainment Inc. Backgrounder
Eastan Croson
Southern Methodist University

Abstract SFX Entertainment Inc. is the largest producer of live events and entertainment that are focused primarily on the electronic music culture (“EMC”). This company has excelled in presenting leading EMC festivals and events such as Tomorrowland, Sensation, Q-Dance, Stereosonic, Electric Zoo, Decibel, Nature One, MayDay, Ruhr-in-Love, Life in Color and TomorrowWorld; many of which have over a decade of history, passionate fans and vivid social communities. This company views EMC as a global generational movement being driven by a growing community of avid millennial generation followers. SFX states their mission as enabling the movement by providing the best live experience to fans, music discovery and by connecting other fans and events. Through continuing investments in their festivals and events, adding new creative aspects and expanding into new-unexplored markets, the company has become a major player in the production of electronic dance music (“EDM”) festivals and events. The company plans to continue its growth as well as launching new and exciting events for the EMC community.
Keywords: SFX Entertainment Inc., EMC, EDM, music, festivals, events

SFX Entertainment Inc. Backgrounder
Company History
SFX Broadcasting was founded by Robert F.X. Sillerman in 1992, and spurred the consolidation of the radio business after Sillerman bought 120 radio stations under the company’s name. SFX Entertainment then became a spin off from SFX Broadcasting; bring with it the consolidation of the live entertainment industry (Waddell & Verna, 1998). Soon after in 1996, Sillerman bought New York concert promoter Delsener-Slater Enterprises followed by several acquisitions of entities such as sports agency Falk Associates Management Enterprises, New England concert promotion company Don Law Co. along with its ticketing arm, Next Ticketing, the Oakdale Theatre, an 80 percent interest in Event Merchandising Inc., and purchased a Southern California-based concert promoter, Avalon Attractions. The grand total was about $750 million after purchasing these companies that further added to a business already rich in promoters and venues (Waddell & Verna, 1998). By 1998, the concert business had been completely consolidated, bearing little to no resemblance to the business created in the ‘60s and ‘70s, which was run mostly by independent entrepreneurs (Waddell, 2008). In 1999, SFX Entertainment had spent relatively $1 billion on acquisitions over the course of two years, and dominated the summer tour market in the U.S. When that year’s summer season came around the company had close to 20 tours underway, grossing $100 million. This was the first time an environment such as this had existed in the touring industry (Waddell, 1999).
In 2000, Sillerman decided to sell SFX Entertainment to Clear Channel for $4.4 billion and five years later Clear Channel turned SFX into the concert and venue titan known as Live Nation (Absher, 2000). Under the terms of the Clear Channel acquisition the Class A shareholders were to receive 0.6 Clear Channel shares for each SFX share, while the Class B shareholders were to receive one Clear Channel share for every share held. SFX Entertainment agreed to settle the shareholder litigation for $34.5 million. Under the settlement, Class A shareholders received an additional $34.5 million in cash and/or Clear Channel shares, minus all lawyer fees (Jones, 2000). Sillerman went on to co-produce the Broadway mega-hit “The Producers” in 2001, established CKX in 2004 and resigned as the CEO in 2010. That same year he founded his first technology play, Function(x) which was renamed Viggle in 2012.
The maverick mogul at the age of 64 wasn’t done building his empire just yet, and quickly turned his attention to the rapidly growing music industry of EDM in 2012. Giant EDM events such as Electric Daisy Carnival and Ultra Music Festival were bringing young people in by the thousands and made up to $30 million or more in one weekend (Mason, 2012). Sillerman saw a new opportunity to build a music empire by solving the problem of underfunding and extreme stress facing independent promoters supporting the recent explosion of EDM in America, just as he had done with the concert business over a decade ago. On June 6, 2012 James “Disco Donnie Estopinal Jr. announced the sale of Disco Donnie Presents to Sillerman during the EDM Biz Conference in Las Vegas, marking the successful re-launch of SFX Entertainment Inc. “I understand everyone’s concerns,” Estopinal said. “I really weighed it out. I didn’t want to do something that was bad for the world. But the way that everything was growing, I couldn’t keep up anymore. I needed some kind of financial support.”
Sillerman let Estopinal come up with the master plan for the future of SFX Entertainment, which was committed to expanding Disco Donnie Presents and other promoter festivals funneling into new festivals and other areas such as publicity, clubs, clothing, and labels. Soon after Sillerman acquired the promoter Life in Color known for being “the world’s largest paint party.” Just a month after making the deal with Sillerman, Estopinal partnered up with the independent online ticketing company, Eventbrite that fulfilled SFX’s need for an inexpensive ticketing solution. Kerri Mason said in the article “Empire State of Mind” for Billboard Magazine that Sillerman could be more “Dark Knight than Grim Reaper” for EDM (Mason, 2012). Sillerman continued on with his plan to aid SFX’s individual entities by improving offerings, and providing them with access to his significant liquid funds. Sillerman saw EDM as being more powerful than just a genre of music, and his new company having more meaning than just being a conglomerate. “This is simplistically about those kinds of entertainment entities that serve a generation that was born wired and connected, and has an insatiable appetite to stay connected,” said Sillerman. “This is a tsunami. It’s not a tsunami that you want to harness. There are some people that may try to do that and they’ll fail. It’s a tsunami that you want to let run its course and be a part of it” (Mason, 2012).
In 2013 six more acquisitions were made by SFX, continuing Sillerman’s consolidation of EDM-focused companies. One of the latest being a joint venture with the wildly successful Dutch promoter ID&T, said to be a $20 million deal for the North American rights to their festival brands. Soon followed the acquisition of two Miami nightlife companies, Miami Marketing Group and Opium Group which control Hukka Entertainment, produce Hangout Festival as well as other large events, and the New Orleans’ festival Voodoo Experience.
SFX set up a different kind of dominant presence within the festival market made strong by preexisting brands already known and trusted by the EDC consumers. ID&T’s CEO Duncan Stutterheim’s primary motivation in teaming up with SFX was to bring their events to North America, and he lacked the adequate financials to fund an expansion such as this. Among ID&T’s well-developed event brand is the 8-year-old Tomorrowland, which is the largest dance music event in the world (Mason, 2013). In September of 2013, ID&T and SFX brought TomorrowWorld to the U.S. and hosted the festival successfully wowing fans and critics alike with high-quality production and talent. Just before the debut of TomorrowWorld, the companies announced that they would be bringing ID&T’s famous Mysteryland to Bethel Woods, New York, the same location as the notorious Woodstock Festival held at in 1969, over Memorial Weekend in 2014 (Pharms, 2013). In that same month SFX unveiled its estimated terms of the planned initial offering of 16.7 million shares expect to be priced in an estimated range between $11 and $13 per each share. The company has applied to be listed on the Nasdaq Global Market under the symbol SFXE (Stynes, 2013).
Company Information and Environment
SFX Entertainment Inc. is the company’s official name and has the physical address of 430 Park Avenue New York, New York 10022. The phone number given for SFX Entertainment is (646)-561-6400. SFX Entertainment Inc.’s CEO and Chairman is Robert F. X. Sillerman. The company was re-launched in July of 2011 and was incorporated in Delaware by June 2012. For the year ending December 31, 2012, SFX generated $48.5 million in revenue from music sales with a gross margin of 31.1 percent and for three months ending in March 31, 2013 SFX generated $12.3 million in revenue from music sales with a gross margin of 29.6 percent. The Primary Standard Industrial Classification Code for SFX is 7990 and the I.R.S. Employer Identification No. is 90-0860047 (Commission, 2013). Ten of SFX Entertainment’s competitors would be companies such as Insomniac, Ultra Music Festival, Live Nation, AEG, MCP Presents, Highland Entertainment, Outlook Festival, MAMA & Company, Advanced Music S. L., and Veld Music Festival (Mason, 2012).
Company Importance
SFX Entertainment Inc. is quickly and effectively consolidating the EDM industry — becoming a major player with in the EMC community over the past two years. Robert F. X. Sillerman’s experience and strategy give the company an edge on the more independent companies and since Sillerman has the greater good of the EMC community at heart it seems as though the industry is welcoming him with open arms. Sillerman also has past experience in consolidating the tour industry, and his current strategy and tactics aimed towards EDM have already been very effective for SFX. This is mostly because of Sillerman allowed the companies acquired by SFX Entertainment operate as they had before, but now these companies have access to more resources enabling them to better their services and the over experience for those involved in the EMC community. SFX also has a significant amount of assets invested in the EMC community including Beatport, Disco Donnie Presents, ID&T Holding B.V., i-Motion GmbH Events & Communication “i-Motion”, Life in Color, Made Event, LLC and EZ Festivals LLC, MMG Nightlife LLC “MMG”, and Totem OneLove Group Pty Ltd and Totem Industries Pty Ltd.
SFX Entertainment also has several competitive advantages such as having a history of creativity and innovation, their events and festivals are artistic, interactive, performance and visual elements accompanied by music all brought together to create an incredible fan experience, active year-around relationships with the large and growing EMC, early access to emerging talent and trends and having an experience management team (Commission, 2013).
Growth Strategy and Future Plans
SFX Entertainment plans to grow and expand their business by enhancing the fan experience, bringing their festivals into new markets and expand current offerings, foster deeper engagement with the EMC, and acquire and integrate leading live even and online properties. SFX Entertainment believes that the EMC community will continue to grow along with their ability to increase the number of festivals and events they host. SFX also plans to grow their music and video retailing efforts in the future. They also believe that they can grow the EMC community’s festival attendance. They also believe that their liability insurance will provide sufficient protection for them in the future. SFX Entertainment also believes in their ability to grow their online properties (Mason, 2012). SFX and ID&T also plan to bring Mysteryland to the U.S. and to have the second annual TomorrowWorld next year as well.
Conclusion
SFX Entertainment Inc. appears to be one of the up and coming conglomerates within the EDM industry. With Sillerman’s investments working together with the leadership of acquisition companies, SFX Entertainment’s future looks extremely promising — especially considering how well the company has done within the last two years. Giving independent promoters another chance to chase their dreams and also to become successful, Sillerman appears to be well on his way to building another empire with in the music industry. The company’s focus stays centered on the greater good of the EMC, which is a very important characteristic to consider when looking at potential employers. SFX Entertainment is a passionate, determined, and innovative company who has already been able to set the bar high for other producers of live events and festivals within the EDM industry.

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