Jim Carroll: Music moguls eyeing up Wall Street can sometimes hit a bum note

The stock exchange is always a weird place for musicians to find themselves. Over the years, some acts have gone head-to-head with the bulls and the bears, but it’s never quite created harmonious sounds all round.

In 1997, David Bowie earned $55 million selling securitisation bonds to punters, who then hoped to recoup their investment from a share of the future royalties earned by such classics as Space Oddity, Heroes and Changes.

He was followed into that market by Ashford & Simpson (who earned $25 million), James Brown ($30 million), Joan Jett (can you name any song besides I Love Rock'n' Roll?), Iron Maiden ($30 million), Dusty Springfield ($10 million) and others.

A good payday for the acts, but the punters who bought those bonds didn’t have as much luck. A few years after the Bowie bonds were issued, for example, Moody’s downgraded their value and described them as “low quality speculative junk bonds, highly speculative in their ability to meet interest and principal obligations”.

It’s not just heritage acts like Bowie who’ve got into bed with Wall Street. SFX Entertainment is a dance music giant, a company that has been living high on the hog on the back of the current EDM boom with events and festivals such as Tomorrowland, Electric Zoo, Rock In Rio and other popular blue-chip brands.

It’s led by Bob Sillerman, the colourful promoter and music business entrepreneur who founded radio and live music entity Clear Channel, which went on to become Live Nation. Since SFX went public in October 2013, the company’s share price has fluctuated from a dizzy high of $13 on launch day (with Afrojack ringing the opening bell at the Nasdaq) to a more humble low of $3.13 last month.

Now comes news that Sillerman wants to take the company private again and is willing to pay $4.75 a share to do so. That’s a decent profit for anyone who bought the shares at their current low, but there are many investors who’ll be nursing losses at that price point and who may feel the founder is looking to get his company back on the cheap.

While SFX is loss-making, it does have healthy annual revenues and its events attract sponsors and brands keen to target hard-to-reach millennials. Some observers believe internal management changes are required to steady the ship and get it rolling again.

Others, though, question the long-term viability of SFX. A briefing note from one analyst talked about EDM being “a fad” in decline, with “high-profile deaths and injuries due to illicit drug use” hampering growth and increased competition causing oversupply.

It makes you wonder just why Sillerman wants the thing back.

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ETC

Shannonside B-girls, this is for you. Ahead of this year’s Make A Move community hip-hop festival in Limerick, hip-hop activist Amy True will be hosting a girls-only workshop in rapping, DJing and hip-hop dancing at the Learning Hub from March 31st to April 2nd. Email learninghublimerick@gmail.com.