SFX Entertainment founder Robert Sillerman dies, 71
Robert FX Sillerman, the founder of SFX Entertainment, died of respiratory illness on Sunday (24 November), at the age of 71, Billboard confirmed.
Sillerman first founded concert promoter SFX Entertainment in the 1990s, paving the way for the modern-day consolidation of the business by acquiring promotion companies including Delsener/Slater Enterprises, Sunshine Promotions, Bill Graham Presents, Cellar Door Concerts and Avalon Attractions.
The original iteration of SFX was sold to Clear Channel in 2000 for US$4.4 billion, and later spun off to become what is now known as Live Nation.
In 2012, Sillerman refounded the company as an electronic dance music (EDM) festival promoter, rolling up promoters including React Presents in the US and ID&T, Made Events and Alda Events in Europe, as well as Florida-based venue operator MMG Nightlife in the US.
SFX 2.0 filed for bankruptcy in early 2016, rebranding as LiveStyle under the leadership of Randy Phillips later that year.
Following SFX’s demise, Sillerman was embroiled in a number of lawsuits. In July, he paid $179,000 to the US Securities and Exchange Commission, in a fraud case relating to his post-SFX online publishing business Function(x).
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Australia’s new Festival X to debut this year
Festival X, the new Australian touring festival co-founded by Richie McNeill’s Hardware, ex-Stereosonic promoter Onelove and Live Nation Australasia, is set to launch in three cities this November.
The festival, announced last August but ultimately postponed until 2019, fills a slot left in the Australian festival calendar by dance music event Stereosonic, co-founded by McNeill and Onelove’s Frank Cotela, which at its peak could shift nearly 300,000 tickets across five shows.
In its first year, Festival X will visit open-air venues in Brisbane (RNA Showgrounds, 29 November), Sydney (Sydney Showgrounds, 30 November) and Melbourne (Melbourne Showgrounds, 1 December), “showcasing the best artists from across the world and within Australia to fans right across the Eastern seaboard”.
Headliners are Calvin Harris, Armin van Buuren and Lil Pump, with other performers including Steve Aoki, Blueface and Alison Wonderland.
Hardware Corp founder McNeill comments: “As they say, good things come to those who wait. We’re super excited to be working with Onelove again and the Live Nation team to put together an incredible mix of music in the electronic, pop and urban realms. There are so many amazing artists right now and some amazing creatives we have been working with.
“Something very special is happening here and we’re super-excited about it.”
Adds Cotela: “As we kick off the summer festival season in Australia once more, we hope to create an event that showcases entertainment on the scale we’re known internationally for, with massive artists, epic event production and a focus firmly on fun.
“We’re super excited to be working with Onelove again and the Live Nation team”
“Australia’s most successful electronic music promoters teaming up with the world’s largest touring company can only mean a great day for everyone. Festival X is looking ‘xtra-large’ and we can’t wait.”
Festival X represents McNeill and Cotela’s first collaboration with a major multinational since Totem Onelove Group, owned by the now-defunct SFX Entertainment, was placed into bankruptcy in May 2016. At the time, Onelove was owed US$10.7 million by SFX.
Stereosonic was effectively axed in 2015, after the 2016 edition of the festival was put on indefinite hiatus following SFX’s bankruptcy.
The new festival is organised by Onelove Music Group, a separate entity not connected with SFX.
Formed as a collaboration between industry leaders and teams behind some of Australia’s leading festivals,
Roger Field, CEO of Live Nation Australasia, says: “Festival X is set to wow Australian fans with the best local and international talent, while showcasing a new and exciting festival experience. X is the ultimate pre-summer party fans have been waiting for and deserve. Australia, get ready…”
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Robert Sillerman fined $179,000 for investment fraud
Robert Sillerman has been charged with fraud by the US Securities and Exchange Commission (SEC), which has ordered the former SFX Entertainment CEO to pay a fine of US$179,000, as well as barring him permanently from serving as the director or officer of a business.
The SEC’s complaint, filed on 28 June, relates Sillerman’s post-SFX online publishing business, Function(x), which was quietly wound up last year after Sillerman was forced into bankruptcy by a creditor, Chicago promoter React Presents, which was owed $10 million in acquisition costs.
SFX filed for bankruptcy in February 2016 with debts of almost half a billion dollars, run up in a bid to rapidly consolidate the dance music sector (aping the roll-up of rock promoters in the early 2000s by the original SFX – now Live Nation).
Function(x) – an online news outfit specialising in clickable ‘viral’ content – ran into trouble in 2017, furloughed three quarters of its employees that September after finding itself unable to pay their wages. The lay-offs came after the company was delisted from the Nasdaq stock exchange after failing to meet the deadline for filing its quarterly report, and amid reports of unauthorised withdrawals to Sillerman from the company’s bank accounts.
Following the collapse of Function(x), the SEC (h/t Billboard) has charged Sillerman with “orchestrating an offering fraud” and “diverting offering proceeds to repay loans he had previously made to the company”.
The complaint elaborates: “Function(x), Inc., formerly an online publishing and entertainment business, incurred significant losses during the first quarter of 2017. To raise capital and fund its operations, Function(x) completed a public securities offering in February 2017, which brought in $4.8 million from investors. The complaint alleges that Sillerman fraudulently diverted $500,000 of the offering proceeds to repay certain loans he had made to Function(x).
“To induce investments in this offering, Sillerman falsely claimed that two celebrities had agreed to invest in the company”
“Then, in April and May 2017, Sillerman allegedly led efforts to raise additional money for Function(x) through a private securities offering. The SEC’s complaint alleges that to induce investments in this offering, Sillerman falsely claimed that two celebrities had agreed to invest in the company.
“The SEC further alleges that Sillerman created phony [sic] subscription documents, with forged signatures, purportedly from the two celebrities. Function(x) publicly announced that the offering had raised $10 million, which would be used for working capital and corporate expansion.
“In reality, however, the complaint alleges that Function(x) raised only half that amount and that Sillerman diverted all of the proceeds to his personal bank accounts, as further repayment of loans he had made to Function(x). Throughout his fraudulent scheme, Sillerman also allegedly ignored Function(x)’s internal accounting controls and failed to obtain approval to use offering proceeds to repay his loans.”
According to the SEC, Sillerman has agreed to pay the fine, as well as to a permanent “director-and-office bar”, pursuant to the resolution of his ongoing bankruptcy process.
The commission opened its investigation into Function(x) in November 2018, after the company was struck off the securities register for failing to file financial reports.
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AMF appoints new director of business development
LiveStyle president Gary Richards has announced the appointment of Taylor Stevens as West Coast director of business development to the company’s LA-based concert and festival promoter All My Friends (AMF).
Stevens joins with experience in the electronic music space, running his own concert promotion and production company, the CLCTV (formerly Collective Efforts Events).
Founded in 2017, the CLCTV has put on multiple events on the West Coast and Hawaii. Past events include the Feels Music and Art Festival in San Luis Obispo, California, Electric Palms Music Festival, in Honolulu, Hawaii and Avila Beach Party, also in San Luis Obispo.
In his new position, Stevens will manage and expand the AMF and LiveStyle brands, as well as rolling several CLCTV events into the LiveStyle portfolio of properties. He will be based in the company’s Beverly Hills office and report to LiveStyle president Richards.
“Taylor has an undeniable passion for the scene and creating exciting events”
“Taylor has an undeniable passion for the scene and creating exciting events. We look forward to him working on behalf of our brands and events, and for us to expand upon the events he is bringing to the LiveStyle family,” says Richards.
“LiveStyle has become a force in the industry and I am happy to be a part of the team. I am very excited to work with and learn from Gary, Chuck (Ciongoli, executive vice president) and Randy (Phillips, chief executive) as we explore new and exciting projects from small to big in the west,” comments Stevens.
“Gary has built a number of successful brands over the course of his career and I look forward to having a hand in the growth of AMF and the other LiveStyle properties,” adds Stevens.
LiveStyle formed in September 2016 from the remains of dance music behemoth SFX Entertainment and is the world’s largest promoter of electronic music festivals. LiveStyle produces and promotes a number of festivals including Electric Zoo (US), Spring Awakening (US), Mysteryland (the Netherlands), Awakenings (the Netherlands) and Tomorrowland Brazil.
The company also owns key operating entities across the United States and Europe such as b2s, Disco Donnie Presents, I-Motion and Made Event, as well as DJ e-commerce platform, Beatport.
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Function(x) furloughs 75% of its employees
Three quarters of staff at Function(x), the troubled online business founded by former SFX Entertainment CEO Robert Sillerman, have been effectively laid off, with the company telling investors it lacks the funds to pay them.
In its most recent 8-K filing with the US Securities and Exchange Commission (SEC), Function(x) reveals it has been operating with a skeleton staff since 15 September, when 22 of its 31 employees were put on indefinite furlough owing to a lack of “sufficient available funds to continue their employment at this time”.
A furlough – a term chiefly used in the US – is a temporary leave of absence imposed on employees by a company, especially one facing unfavourable economic circumstances.
“Any such decision by the company will depend, in part, on whether adequate funding can be obtained”
In Function(x)’s case, the business says it is “considering whether it will offer any or all of the furloughed employees re-employment” – a decision dependent, “in part, on whether adequate funding can be obtained, and there is no such assurance that may happen”.
Function(x), which specialises in ‘viral’ online content, has been in a downward spiral since early summer, culminating in its delisting from the Nasdaq stock exchange after failing to file an up-to-date current report. In June, auditors for the company resigned after discovering alleged “insufficiently authorised cash disbursements” to Sillerman from its bank accounts.
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Hard founder Gary Richards named LiveStyle pres
Hard Events founder Gary Richards has been appointed president, North America, of LiveStyle, joining Randy Phillips at SFX MkII following his departure from Live Nation early last month.
In the newly created role, Richards – for a decade the driving force behind the Hard festival brand (Hard Summer, Holy Ship!, Hard Australia), and arguably the most famous promoter in electronic dance music – will oversee LiveStyle’s US festival operations, including Electric Zoo, its flagship event in New York.
“When Chuck Ciongoli and I took over the former SFX, the global leader in electronic music festivals and the parent company of Beatport, we rebranded it LiveStyle to signal that a new vibrant business was emerging debt free with some of the greatest assets in the live entertainment industry,” says LiveStyle CEO Randy Phillips, who joined the company last November. “To complete our executive suite, we wanted to bring some real authenticity to the management of LiveStyle, and no single candidate to be the president of North America fulfils this role better than Gary Richards, of Hard and Holy Ship! fame.
“In fact, this is a delayed goal for me, since I tried to make a deal with Gary ten years ago while I was running AEG Live. Not only is he an accomplished working DJ (DJ Destructo), he is a very astute businessman with an affinity to his fellow artists. With Gary on board, LiveStyle is prepared for creative and strategic growth in the years ahead.”
Richards adds: “Randy Phillips has been a trailblazer in the music and entertainment industry for as long as I can remember. Having known Randy personally for many years, I’m excited that the stars have aligned and I’m able to build a new platform for live music with him. I look forward to coming on board as president of LiveStyle and have a much larger role to play in the music community.
“This is a delayed goal for me, since I tried to make a deal with Gary ten years ago while I was running AEG Live”
“Their portfolio of brands, such as React, Made Event/Electric Zoo, DDP and Beatport to name a few, is an incredible place to start from and build. In addition, I plan to create new festival concepts and cruises at LiveStyle. We will continue on the path that I created with the Hard and Holy Ship! brands.”
Richards told Variety in April there had been “positive and negative” aspects to Hard’s relationship with Live Nation, by which it was acquired in 2012. “I think that Hard has grown by leaps and bounds and Live Nation has given me a platform to expand monetarily in things I wouldn’t have been able to do if I was funding everything,” he said. “But, then again, there are other forces at play here that are running the electronic scene in different directions [to] me, and they kind of battle with me and that part of it’s not fun – and it’s unnecessary.”
He also reportedly had a fierce rivalry with Insomniac founder Pasquale Rotella, whose company was bought by Live Nation the following year.
LiveStyle Inc., formed last September from the ashes of Robert Sillerman’s SFX Entertainment, is the world’s largest promoter of electronic music festivals.
Sillerman, who led SFX into a messy bankruptcy in February 2016, is now CEO of online news company Function(x), which was recently delisted from the Nasdaq stock exchange amid allegations of alleged unauthorised withdrawals of company funds by Sillerman.
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Sillerman auditor resigns over “illegal” withdrawals
Accountancy firm BDO USA, LLP, formerly auditor for Robert Sillerman’s troubled Function(x) web business, has resigned amid allegations of “insufficiently authorised cash disbursements” to Sillerman from company bank accounts.
In a 21 June letter to Function(x)’s CFO, Michelle Lanken, and general counsel, Tom McLean, BDO said it had, through a phone conversation on 12 May, been made “aware of information indicating that an ‘illegal act’ […] may have occurred”.
It continues: “BDO stated that information provided to it at the time of the phone conversation […] included insufficiently authorised cash disbursements from a [Function(x)] bank account, unexplained deposits into the same registrant bank account and possible repayment to the registrant’s chairman of the board, chief executive officer and controlling shareholder [Sillerman] in excess of the amount owed to him under his line of credit to the registrant.”
The letter says the “possible payments” include a US$500,000 cash withdrawal by Sillerman in March 2017, “done without proper approval from the board”, and, more seriously, a total of $6.1m “released from a [Function(x)] bank account into an account held by the CEO at the same financial institution”.
The findings mirror similar allegations levelled at Sillerman in the final months of SFX Entertainment
At BDO’s request, it and Function(x) hired a third-party law firm to investigate the missing money, as well as alleged irregularities relating to a recent series-G stock offering. It concluded that there were “likely illegal acts committed by the CEO and the registrant [Function(x)]”, including “false and misleading statements in connection with the series-G offering”.
The findings mirror similar allegations levelled at Sillerman in the final months of SFX Entertainment, when he was accused of making “misleading statements” designed to boost the ailing business’s attractiveness to investors.
He denies any “wilful” wrongdoing, saying he was “misinformed as to the amounts outstanding on loans the CEO had made to the company” and paid Function(x) back as soon as he realised the error.
Function(x), which specialises in ‘viral’ online content, was last week delisted from the Nasdaq stock exchange after failing to file an up-to-date current report.
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Sillerman upbeat as Function(x) is delisted
As threatened at the beginning of June, former SFX Entertainment CEO Robert Sillerman’s new online news business, Function(x), has been delisted from the Nasdaq stock exchange, with trading in its stock suspended from opening of business today.
The business has yet to file an up-to-date quarterly report (10-Q) – which under Nasdaq rules constitutes a “public information failure” – and said in a recent filing it anticipates defaulting on US$3 million promissory note, in a scenario reminiscent of the financial problems that plagued the final months of SFX, which collapsed under a mountain of debt last February.
In a new 8-K filing, Function(x) – which has been rapidly buying up much of the online ‘viral content’ (clickbait) market – says it will continue trading stocks ‘over the counter’, or off-exchange, without the supervision of the Nasdaq.
“The company came to the conclusion that the overhang of uncertainty, and the continuing expense related to these issues, were an unnecessary cost and distraction as we execute on our vision,” says Sillerman. “Nothing has changed in our stated goals to become the preeminent digital media publisher.
“Nothing has changed in our stated goals to become the preeminent digital media publisher”
“We intend to file our 10-Q in the near term, and follow all necessary steps to both be a responsible and productive public company and accelerate our growth trajectory.”
Simply Wall St, a website which provides market advice to investors, isn’t so confident: It suggests Function(x) has a “concerning amount of debt” and may be at risk of succumbing to its debt load. According to the site, Function(x)’s operating cashflow remains at around -100% of its debt, with a debt-to-equity ratio of 279.8%.
“Clearly, Function(x) has a concerning amount of debt on its balance sheet,” writes Simply Wall St’s Arjun Bhatia. “Additionally, the company fails to impress in terms of generating strong enough operating cashflows and earnings to cover annual interest expenses. Thus, for now, I don’t find it a financially sound company.”
Function(x)’s stocks have fallen in value by almost 50% in last 30 days, from a high of $0.70 on 26 May to $0.39 today.
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Indebted iHeartMedia ‘may not last 12 months’
iHeartMedia Inc., the troubled US radio giant which gave birth to Live Nation, has told investors it may not make it through another year.
In its most recent current report filing with the Securities and Exchange Commission (h/t MBW), iHeartMedia vice-president Lauren Dean wrote that the company’s Q1 2017 financial results are likely to include a note casting “substantial doubt as to our ability to continue as a going concern for a period of 12 months”.
Despite preliminary results indicating an operating income of US$114.06 million in the first quarter (revenue was $1.33 billion), iHeartMedia’s debt load continues to grow, fast approaching the $20bn mark. Compounding matters, Reuters reports a group of the company’s lenders have signed a cooperation agreement opposing any attempt at debt restructuring.
The company’s Q1 2017 financial results will include a note casting “substantial doubt as to our ability to continue as a going concern”
iHeartMedia is the US’s largest radio broadcaster, with more than 250m monthly listeners, and, through its Clear Channel Outdoor subsidiary, one of the world’s largest billboard advertising companies. In a previous life, as Clear Channel Communications, it was also once the parent company of the Robert Sillerman’s original SFX Entertainment (not to confused with the ill-fated EDM-focused SFX 2.0), which it spun off in 2005 to form Live Nation.
It still promotes several music festivals, including iHeartRadio Music Festival and iHeartCountry Festival.
Much of the San Antonio, Texas-based company’s current financial difficulties stem from 2008, when private-equity firms Bain Capital and Thomas H. Lee Partners took Clear Channel private in $24bn leveraged buy-out.
It lost its senior VP of music, Darren Pfeffer, to Madison Square Garden Company earlier this month.
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A2Live targets ‘Asian dominance’ under new MD
Former SFX Entertainment exec Eric Reithler-Barros has been named managing director and chief commercial officer of Chinese EDM behemoth A2Live.
The Shanghai-based company, founded by Eric Zho, is best known for promoting China’s largest dance music festival, the 35,000-cap. Storm in Shanghai, as well as several spin-off events. It also organises individual headline shows, and includes brand partnerships, artist management (A2Artist), booking (Strobe Light Talent) and streaming music (DianYinTai) divisions, with a record label in the works.
Reithler-Barros (pictured) is charged with “driving Asian expansion” in his new role, heading up all of the above divisions and serving as a key player in A2Live’s bid to achieve “Asian ecosystem dominance”.
As vice-president of global partnerships at SFX, Reithler-Barros was instrumental in securing several major worldwide deals, including lucrative partnerships with Viagogo and Mastercard. (Both have since fallen apart amid much post-bankruptcy bickering.)
“It’s no secret that China represents the largest and most nascent market potential for dance music culture in the world”
“We are thrilled to welcome a double threat [who] has not only two decades of functional experience in media and international business development, but also nearly three decades inside the world of electronic dance music,” comments Zho. “His rare combination of talents and specialised knowledge will add tremendous velocity to expansion of our core businesses while developing innovative new products and services to complement them”.
Reithler-Barros adds: “It’s no secret that China represents the largest and most nascent market potential for dance music culture in the world. Nothing could be more exciting than to engage it from multiple new angles, hand in hand with the talented staff and board of this visionary company.”
Jerry Gold, Reithler-Barros’s erstwhile colleague at SFX, last week joined live music streaming company LiveXLive.
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