LOS ANGELES (CelebrityAccess MediaWire) — As the music industry tries to adjust to rapidly shifting trends in the music business, Live Nation has been at the forefront with innovative approaches to dealmaking in the live entertainment business. Being at the fore however, means that strategies are often unproven and as a consequence, a deep rift appears to have developed between Live Nation CEO Michael Rapino and the firm's chairman, Michael Cohl.
In recent months, Live Nation has made headlines with their huge "360" deals — exclusive arrangements encompasing tour promotion, recording and merch deals — $120 million for Madonna, $150 million for Jay-Z and similar, but less extensive deals with other major artists such as U2, and the Jonas Brothers. These deals have yet to turn a major profit for the promoter however and according to the Wall Street Journal, CEO Michael Rapino is looking to put the brakes on further deal-making to allow time to evaluate the results of the firm's current efforts. Conversely, Cohl is reportedly looking to strike while the iron is hot and write similar pacts with as many as 15 additional major artists such as South American singer Shakira.
This difference in strategy has, according to the WSJ, led to a full-blown feud between the two execs with Cohl at one point, threatening to leave the company entirely, buying back his former firm, Concert Productions International and taking with him the artists he's brought to Live Nation. The WSJ reports that the board intervened however and managed to convince the pair to resume negotiations and Cohl has reportedly recanted on his threats to leave for the present at least.
Actually carrying through with his threats to depart would be particularly challenging for Cohl, who is currently Live Nation's largest shareholder. Cohl sold his former firm, CPI to Live Nation in 2006 for $123 million in Live Nation stock and $10 million in cash. Cohl's employment agreement with LN stipulates an 8 year, non-compete claus which would make striking out on his own difficult. Furthermore, sources close to the matter told the WSJ that Cohl has no contractual basis for repurchasing CPI from Live Nation.
Finally, Cohl's stake in Live Nation has already suffered from investor uncertainty and a bear market with the value of his holdings dwindling to $94 million at close on Wednesday so even if he could prize his former firm and artists free from LN, his departure would likely lead to an even deeper hit as investors looked for less contentious alternatives. – CelebrityAccess Staff Writers
