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DEAG rebounds as UK business boosts Q3 earnings

Berlin-based Deutsche Entertainment Group AG (DEAG) has reported a 126% increase in sales for Q3 2021, thanks largely to the performance of its UK business.

After the first six months of the year were severely impacted by the pandemic, sales in the third quarter soared from €4 million to €16.7m, while EBITDA rose by 617% from €600,000 to €4.3m.

The upturn is mostly attributed to the UK, DEAG’s operating most important market outside Germany, where concerts are already taking place again at full capacity. Its Kilimanjaro Live subsidiary has organised sold-out concerts and tours by the likes of Gorillaz in the region. The first events have also been held in Germany.

Sales revenues amounted to €24.1m whereas, in the nine-month period in 2020 when the first quarter was only slightly affected by the pandemic, revenues were €39.1m.

DEAG and the entire live entertainment industry are finally gaining momentum again

“DEAG and the entire live entertainment industry are finally gaining momentum again after well over a year without concerts and events,” says company CEO Peter Schwenkow. “We look forward to offering our visitors hundreds of concerts and events in the months to come and expect to achieve a significant increase in earnings in the fourth quarter.

“In the meantime, the situation with the epidemic in Europe is leading to a daily reassessment of the current situation in all national markets. We are adequately protected against possible risks arising for us from the currently rising corona figures by extensive measures taken by the respective country governments and our insurance coverage. Our very robust financial position and a uniquely high event density for 2022 show our excellent positioning for growth in the coming year.”

The group also credits its ticketing platforms, the companies acquired in 2021 as part of DEAG’s acquisition and integration strategy, together with the provision of new services, for the improved performance. In addition, it mentions the enormous cost-cutting programme in the group as well as inflows from subsidy programmes, which DEAG has taken advantage of in all national markets, and its continued full insurance coverage.

DEAG, which reports strong advance sales for events in 2022, has expanded its successful Christmas Garden format to 18 locations – eight of them in other European countries – in the 2021/2022 season. New additions in Germany include Cologne, Frankfurt/Main and Hanover, as well as internationally in Paris, Barcelona and Windsor Park in London.

“Based on these, the significant revival in the UK and growth impulses from the companies acquired in 2021, DEAG expects another significant increase in earnings with high visibility in the fourth quarter of 2021,” concludes the report.

Last week, Munich-based live entertainment giant CTS Eventim posted “encouraging” financial results for Q3 2021, powered by improved ticket sales.


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Schwenkow predicts open-air shows this summer

Concert promoters should be able to stage outdoor events, as well as smaller indoor shows, this summer, DEAG’s Peter Schwenkow has predicted.

“When we have around 80% of people who have been vaccinated, by June or July, we should be able to hold smaller and open-air events,” Schwenkow, CEO of the German promoter, told yesterday’s Tagesspiegel.

Schwenkow also said that organisers should be free to restrict entry to events to those who have already had the coronavirus vaccine, or who can produce a negative Covid-19 test at the door, reports the DPA news agency.

“Why not let 2,000 people into the [Berlin] Philharmonie when they have all been tested and vaccinated? Organisationally and technically, this is not a problem,” he continued. “The question is whether you can find an official who would approve it.”

“Why not let 2,000 people into the Berlin Philharmonie when they have all been tested and vaccinated?”

Speaking to IQ last month, Schwenkow said he sees 2021 as a year of largely domestic touring and smaller shows, with a full return to normality in summer 2022 through a combination of vaccines and rapid testing.

“It’s a miracle that they could develop the vaccine in under 12 months,” he said, “but the miracle is there. By end of the year, everybody who wants to be will be vaccinated.

“We have been wishing since March that someone could help us out of this, and now they can. Of course, speedy testing and vaccinations are easier for 5,000 people than 80,000, so while the former I think will be possible by winter [2021] we’ll have to wait until summer 2022 to have the full 80,000 people at our Nature One festival, for example.”

He echoed this prediction in the Tagesspiegel interview, saying it would be at least April or May 2022 before international artists – especially Americans – will be touring Germany, presenting a unique opportunity for “local entertainers”.


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DEAG heralds open-air concert success

German live entertainment giant DEAG has had a successful summer season so far, profiting from recent European investments.

DEAG sold 110,000 tickets for open-air events Sion Sous Les Étoiles in Switzerland, Scotland’s Belladrum Tartan Heart Festival and Germany’s Nature One in Germany. All events were sold out.

DEAG made three promoter acquisitions last month, most recently taking a majority stake in Sion Sous Les Étoiles (Sion under the stars) promoter Live Music Production, along with sister company Live Music Entertainment.

A few weeks before, the powerhouse bought into Livestyle’s German subsidiary I-Motion, the promoter of rave event Nature One.

“We are not only contributing to strengthening our profitability, but also providing growth impetus in our ticketing business”

DEAG increased its shareholding in German ticketer MyTicket, which provided the ticketing for Kilimanjaro-promoted Belladrum, in January.

“We are supplementing our organic growth by expanding our own successful entertainment formats with very selective M&A activities,” comments DEAG chief executive Peter Schwenkow.

“All three open-air events are great proof of how successful we are. We are not only contributing to strengthening our profitability, but also providing growth impetus in our ticketing business. Via MyTicket we sell tickets for all our events, as well as third-party content.”

DEAG has also recently taken a majority stake in Stuttgart-based promoter C2 Concerts.


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DEAG takes control of Christian Doll’s C2 Concerts

Deutsche Entertainment AG (DEAG) has revealed the first of its in-the-works European investments, today (3 June) announcing the acquisition of a majority stake in Stuttgart-based C2 Concerts.

The stake in C2 Concerts, a musical producer, tour operator and local promoter in southwest Germany, rounds off DEAG’s regional coverage in the country. The live entertainment company also has representation in Berlin, Hamburg, Munich, North Rhine-Westphalia and Frankfurt/Main.

The move marks the continuation of DEAG’s “buy-and-build” strategy. In its recent Q1 financial report, the German promoter alluded to the C2 acquisition as one of a number of ongoing investments expected to generate sales growth in its core markets of Germany, England and Switzerland.

Founded by Christian Doll and Christian Ludewig in 2010, C2 Concerts has expanded from its origins as a mainly local outfit to become a national tour operator. The company achieved turnover of €7 million in 2018, selling around 400,000 tickets for 200 events. By acquiring a stake in the concert promoter, DEAG aims to boost the ticketing side of its business via MyTicket, which the live entertainment company fully acquired in January.

DEAG has worked with C2 Concerts for a number of years. In 2018, the promoters launched the Christmas Garden in Stuttgart, attracting over 125,000 visitors. The format will be rolled out at two further locations in southwest Germany over the coming years.

“With DEAG, we are looking forward to intensifying our cooperation with a first-class partner in the live entertainment business. Both sides will benefit from this”

Due to past collaboration, the DEAG management board expects rapid integration of C2 Concerts into its group.

“The even closer cooperation with C2 Concerts in the future will give us the opportunity to continue growing profitably with an extended value-added chain,” says DEAG chief executive Peter Schwenkow.

As well as securing the company’s regional presence, Schwenkow also notes that the C2 Concerts investment offers “significant synergy potential in the live entertainment and ticketing business.”

“With DEAG, we are looking forward to intensifying our cooperation with a first-class partner in the live entertainment business,” comments C2 Concerts managing director and co-founder Doll. “Both sides will benefit from this.”

The DEAG executive board believes that, as part of the DEAG Group, C2 Concerts can realistically expect medium-term sales growth to over €10m.


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Quadruple Deutsche: Four decades of DEAG

At one point in our interview – after taking us through four decades of live events history and entrepreneurship on the highest level – Peter Schwenkow pauses and says: “Which brings us to the answer to a question you have yet to ask: Why are you still doing this?”

Frankly, it had never occurred to IQ to ask why he’s still doing this. The promoter recently expanded the company’s presence in the UK market by buying Flying Music, its turnover is more than €108 million in the last three quarters and it’s back in profit after a turbulent 2016.

He’s recently had hit tours with Disney on Ice, Ed Sheeran, Aerosmith, Iron Maiden and Kiss, and has 2.2 million tickets already sold for 2018. Now, aged 64, he seems to still have the same joy for the business he discovered more than 40 years ago.

“It must have been 1974 or ’75. After completing my school exams in Hamburg, I was working as a tour manager for Karsten Jahnke. Because I had my own car and a driver’s licence, I was the one picking up artists like Ulrich Roski or Mike Krüger from the airport, and driving them around northern Germany and Hamburg,” Schwenkow remembers.

One person had a bigger impact on him than anyone else had at that point: writer and performer Hanns Dieter Hüsch, one of Germany’s most distinguished left-wing intellectuals and cabaret artists. Schwenkow, who had a politically conservative upbringing, remembers the countless hours of conversation he had with Hüsch. “He was around 50–60 years old, I was 20. We used to have wonderful arguments about politics, and eventually developed a friendship. This led me to think: ‘If it is possible to meet such interesting, exciting, powerfully eloquent and intelligent people in this business, I want to be a part of it.’”

It was the mid 1970s, and the business looked very different to today. “One lamp on the left, one on the right, five Marshalls in the back and something that started to resemble a PA,” Schwenkow recalls. “If an artist wasn’t able to perform – because it was still sex, drugs and rock’n’roll in the 1970s – they simply didn’t.”

“If an artist wasn’t able to perform – because it was still sex, drugs and rock’n’roll in the 1970s – they simply didn’t”

After leaving school, Schwenkow studied advertising and communication science in Berlin, and worked part-time for the city’s biggest promoter at the time, Konzertdirektion Jänicke, starting out as technical director. He went on to do the promotion and different other jobs for Jänicke, working mostly from home. His boss had promised him his own office once he could afford a bigger space, and even offered to make him a junior partner.

In 1978, Jänicke moved into a huge new villa. “When I had my first appointment with him there, he was sitting in an office that seemed as large as a football field,” Schwenkow remembers. “There was only one desk in it, so I said: ‘Mr Jänicke, now that we’ve got these new facilities, where is my desk going to be?’ And he replied that we had to talk about that again. That’s when I realised that he had used me for the past two years.”

So Schwenkow called his old friend Jochen Zanke, whom he met while working for two other legends of the game: Horst Lippmann and Fritz Rau, where Zanke was tour manager. “I said: ‘Jochen, I think we should start our own thing and prove to this old man that you can be competitive, even with less resources.’

“So on 15 June 1978, the industrial management assistant Jochen Zanke, and the student Peter Schwenkow, founded Concert Concept.”

Forty years of development
From those early beginnings, DEAG’s 40-year history can be more or less subdivided into four decades that defined the business in different ways. “For the first 10–11 years, from 1978 to 1989, Concert Concept established itself as the biggest promoter in Berlin,” says Schwenkow, who adds that the exclusive takeover of Berlin’s Waldbühne (22,290-cap.) in 1981 was “one of the most important factors for our growth,” as it gave him control over the most exclusive address for open-air events in the city. He kept renewing the lease contract, running the show at Waldbühne for 27 years to come.

In 1984, Schwenkow created the Berliner Sommernachtstraum, which attracted some 400,000 people to a gigantic firework display by Austrian artist André Heller in front of the city’s Reichstag. At the time, the city was still divided by the Berlin wall, and the concert provoked unrest in East Berlin from those on the other side, who were disappointed they couldn’t see the spectacle too.

In 1988, Schwenkow lined up Pink Floyd, Genesis, and Eurythmics to perform. … A year later, on 9 November 1989, the wall fell

Three years later, he promoted the legendary Concert for Berlin with David Bowie and Michael Jackson, right next to the wall. It’s a concert that’s gone down as a key moment in the history of that city. Bowie told Performing Songwriter in 2003: “They’d backed up the stage to the wall itself so that the wall was acting as our backdrop. We kind of heard that a few of the East Berliners might actually get the chance to hear the thing but we didn’t realise in what numbers they would. And there were thousands on the other side that had come close to the wall.

“So it was like a double concert where the wall was the division. And we would hear them cheering and singing along from the other side. God, even now I get choked up. It was breaking my heart. I’d never done anything like that in my life, and I guess I never will again.”

In 1988, Schwenkow lined up Pink Floyd, Genesis, and Eurythmics to perform. Many young people in East Germany tried to get close to the wall to hear the concert. At one point during sound check, Pink Floyd turned their PA system around to point eastwards, and blasted out The Wall. The concerts provoked further violence between young people and the police in East Berlin, but the end was nigh for the country’s division. A year later, on 9 November 1989, the wall fell – and the number of potential concertgoers doubled over night.


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DEAG’s 2017 “going according to plan”

Deutsche Entertainment AG (DEAG) CEO Peter Schwenkow says he is happy with the German promoter’s start to the year, despite slight decreases in revenue and profit and a falling share price.

The value of DEAG’s sales in the first quarter (Q1) of 2017 was €19.5 million, down from €31.3m in Q1 2016, with gross profit and earnings before taxes and interest (EBIT) also both declining, to €6.1m (from €6.7m) and €200,000 (from €300,000), respectively.

Its share price has also fallen more than 15% in the last month alone, from €2.91 on 2 May to €2.47 today.

Despite this, Schwenkow says sales and EBIT in Q1 were “above expectations”, saying the Euro 2016 football championships “resulted in higher sales in Q1 and Q4 2016”.

According to the company’s latest financial results, its core promotion and ticketing businesses remain “very profitable”, with gross profit margin rising to 31.4% compared to 21.7% in Q1 2016.

“For us, 2017 has been going according to plan,” comments company founder Schwenkow. “Our activities in the UK in particular and in the domestic market have developed quite positively across the board.

“For us, 2017 has been going according to plan”

“In view of the good start to the second quarter and the well-filled event pipeline, DEAG will also be offering high-calibre, high-turnover and high-margin events in the quarters to come. These include, among others, the open air event Matapaloz at Hockenheimring that is likely to attract 70,000 visitors, top acts such as Iron Maiden, Anna Netrebko and Aerosmith and the German tour of The Rolling Stones, which is already sold-out.

“The Family Entertainment division will continue the strong growth of the previous quarters. The very successful, in-house Christmas Gardens are also being extended to other locations due to the positive response. For 2017 DEAG expects around 830,000 visitors at seven locations. In addition, the company’s own ticket sales through the online sales platform MyTicket will contribute to the sustained improvement in profitability.”

Schwenkow also reiterates DEAG’s intention to acquire another British promoter, saying the company is in “advanced negotiations” to add a third business to its UK stable (it partially owns Kilimanjaro Live and classical music promoter Raymond Gubbay Ltd). Sources tell IQ the company in question is a regional pop promoter.

DEAG was rebuked by German financial watchdog FREP earlier this month for “substantially overstating” its recent financial success.


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DEAG ‘substantially overstated’ financial success

Deutsche Entertainment AG (DEAG) has been criticised by Germany’s Financial Reporting Enforcement Panel (FREP) for allegedly misrepresenting its financial strength in its 2014 full-year and 2015 half-year fiscal reports.

According to German business weekly WirtschaftsWoche, FREP took issue with DEAG’s 2014 financial report describing “very good presales” for its three new festivals, Rock im Revier, Rockavaria and Rock in Vienna – when, in fact, less than a month before the festivals were due to kick off, “not even half of their costs were covered by ticket sales”.

The launch of the new festivals led to a €17.8m million loss in 2015, which on Friday was revised retroactively to -€26.2m as a result of FREP’s investigation. Only Rock in Vienna remains following the cancellations of Rock im Revier and Rockavaria.

According to its 2016 annual report, which followed the release of preliminary figures on 13 April, DEAG was expecting losses relating to the three festivals, but was found by FREP to have failed to take into account the effect a €26.2m loss could have on the health of the company. “For the rock festivals held for the first time in May and June 2015, an expected loss was already becoming apparent as of the reporting date on 31 December 2014, for which a risk provision was made for onerous contracts,” it reads.

FREP took issue with DEAG’s 2014 financial report describing “very good presales” for its three new festivals

“FREP has determined that on the basis of the scenarios assumed by DEAG, and against the background of the possible risk to the survival of the company presented in the group management report, no adequate risk provision was made.”

FREP also ruled that DEAG had, at €7.9m, “substantially overstated” the value of the Jahrhunderthalle Frankfurt convention centre, in which it agreed in March 2016 to sell its 49% stake.

WirtschaftsWoche further reports that DEAG CEO Peter Schwenkow (pictured) is the target of a lawsuit by the Handelsblatt publishing house over an alleged false affidavit in connection with an unspecific “interim injunction”.

In a statement provided to MusikWoche, a DEAG spokesperson denies the allegations, saying: “Contrary to the assertion of Wirtschaftswoche, the public prosecutor has already closed its case [against DEAG].”


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Schwenkow signals further UK expansion for DEAG

Deutsche Entertainment AG (DEAG), the parent company of Kilimanjaro Live and classical music promoter Raymond Gubbay Ltd, has signalled its intention to acquire further UK subsidiaries to bolster its presence in a market that remains “highly attractive” despite Britain’s vote in June to leave the European Union.

In its financial results for the first half of 2016 (H1), Peter LH Schwenkow, chairman of the German concert/festival promoter and ticket agent, praised “better-than-expected” growth from its British subsidiaries and said, “despite ‘Brexit’, the English market remains highly attractive to DEAG”, adding that he is “examining opportunistic acquisition opportunities” in the UK.

Schwenkow (pictured) says he expects “continued dynamic growth” in the UK in 2017, chiefly from “six major rock tours [currently] in preparation”.

“The English market remains highly attractive to DEAG, which is why the company is examining opportunistic acquisition opportunities there”

The Berlin-based company also revealed that its myticket.de business (which also operates in the UK as myticket.co.uk) will be entering a third European country “in the near future”. DEAG’s ticketing arm was a key driver of growth in Q1 2016, when it returned to profit following a loss of €23 million in 2015, mostly attributable to its investment in a number of new festivals in Germany and Austria.

Despite an H1 loss of €3.8 million (“in line with expectations due to seasonal effects”) DEAG is confident of finishing 2016 on a high, predicting earnings before interest and tax (EBIT) of €3–5m from a “very well-filled event pipeline and exceptionally strong fourth quarter”.


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