hollywood billionaire

Chapter 205 Expansion and Aggressive Advancement

Han Yi's first strategic vision at the board meeting didn't surprise anyone in the room.

Perhaps most of the junior partners and assistant brokers downstairs have never heard of Han Capital's bold and sophisticated layout in the music field, but the directors sitting in this conference room know it well.

Just to give a simple example, 63% of UTA’s signed music clients in the last quarter came from the newly established Han Music Group.

Inside and outside the United Artists Agency, Han Yi has established a very clear public image for himself - a Chinese billionaire who is keen on investing in the music industry.

Therefore, the owners of UTA's board of directors have long expected that Han Yi will propose at the quarterly meeting to use his $1.9 million investment in the company to expand the music field.

The question is how much to spend, when to spend and on whom.

Before Han Yi spoke, the members of the board of directors each had an answer in their hearts.

Whether to spend money to attack a certain music superstar and raise the ceiling of UTA's music field, or to acquire a brokerage company specializing in music talents to broaden and deepen UTA's customer pool, or...directly guide UTA into a new field Whether it is the acquisition of a record company or an offline performance company, it can develop an affiliated music business other than brokerage to achieve diversified development.

Today, Han Yi revealed the answer to the mystery.

He chose the safest way to play.

The acquisition of the Circle Talent Agency, which has been closely cooperating with the United Artists Agency, and has gotten closer and closer in the past one or two years.

The boutique acting agency was founded in 1998 by Kevin Kimble and Steve Gordon. At the end of the 90s, two rookies in the music industry were still the pocket organizers of the Drum & Bass party in Philadelphia. It was not until a DJ, Dieselboy, asked him to help plan a round of tour, that they stumbled into the music management business by mistake.

In no time, the duo had amassed an exclusive roster of 75 artists and established themselves as a CTA on the East Coast.

Circle Talent Agency, which started from electronic music, is born with electronic blood. Today, almost 100% of their client list is composed of electronic music producers and famous DJs. Kaskade, Carnage, Excision, and of course Han Yi's two most promising stars of tomorrow, Marshmello, and Illenium.

With 40 employees and 200 artists, last year, Circle Talent Agency took over an astonishing 12000 performance contracts.This year's EDC, a total of 78 artists from CTA participated, accounting for 35% of the total number of guests at the music festival, much more than any other brokerage company.

In short, the current CTA has at least stood in the first echelon of the North American electronic music industry.

However, due to limitations in personnel and scale, what Circle can really operate independently is actually the business of nightclubs, warehouse parties and electronic music festivals. As for the work of music business, live performance marketing or digital marketing, it has to rely on the big four. The deep and extensive network of performing arts brokerage companies.

It just so happens that the big tree with the best relationship with CTA is UTA.In the past few years, UTA and CTA have carried out all-round cooperation, especially after The Agency Group was acquired by UTA, and Neil Warnock became the director of UTA's music department, the relationship between the two parties became more intimate.In fact, former The Agency Group execs JJ Cassirer and Troy Lasker are currently vice presidents of live performances at CTA.

The middle and high-level teams of the music departments on both sides are the same team, so communication is naturally easier.

"I've been to one of these board meetings, and it has been a lot of inspiration and surprises, one of which is that at United Artists, every board member can speak freely for this great agency. So, I want to thank everyone here, especially Chairman Berkus and President Zimmer, for giving me this opportunity. Thank you for giving me time today to discuss a key strategic decision. This Decisions that have the potential to shape the trajectory of UTA for years to come."

Well-prepared Han Yi, the opening remarks can be described as watertight. No matter what the two attitudes are, I would like to thank Jim Berkus and Jeremy Zimmer for providing the so-called "speak freely" platform and stop their mouths. Complete the following statements yourself.

"I think this acquisition can reposition our position in the show business field and give us a unique advantage over two strong competitors - WME and CAA."

"As we all know, the entertainment industry is changing rapidly. Streaming platforms, global interconnection, and the digital age have irreversibly changed the face of live entertainment. Today, traditional channels and mainstream markets are no longer the only options. The gig market On the Internet, a variety of dynamic sub-categories have emerged, full of opportunities for rapid growth."

"That's why I like Circle Talent Agency."

"Although Circle Talent Agency is smaller in scale than UTA, it has established a strong and significant presence in one of the fastest growing and most influential fields: electronic music. Let's consider a few key points..."

"First, the untapped sector of the music management space. While mainstream music, or pop, has always been at the core of our business, the global rise of electronic and hip-hop cannot be ignored. Both styles have shown impressive Resilience and adaptability. Their digital marketing and promotion methods are perfectly in line with modern consumption habits. The appeal across borders can bring us to more emerging markets while significantly reducing barriers to art communication. Because… …Don’t forget, electronic music is a global art that can be understood without language. Anyone with the desire to dance is our potential customer.”

“Secondly, by acquiring Circle Talent Agency, we gain access not only to their client list and talent pool, but also to their deep relationships, network and expertise in electronic music. It’s not just about expanding our lineup; it’s It's about infusing UTA with electronic music DNA."

"Third, it gives us a new way to challenge the hegemony of WME and CAA in the music field. If we want to go head-to-head in the pop music market, how much do we have to spend to win Adele or Taylor-Swift? For superstars who can earn hundreds of millions of dollars, why should they change their schools? Since we cannot quickly close the gap in traditional fields, we can completely change our thinking. By investing in niche markets, we can open up our own unique territories. And to be the go-to institution for artists and talent in these styles. This move will allow us to be ahead of our time, anticipating industry shifts and being ahead of trends rather than just reacting to them."

"Fourth, the acquisition of CTA, in my opinion, is also economically viable to a considerable degree. The return on investment of this acquisition is not just about immediate profits in the short term, but a long-term game. Our two companies The synergies between music festivals, brand events and various platforms that are closely related to these styles may promote the development of relationships. In other words, we will be able to attract a large number of partners to UTA that were previously unreachable. I believe , UTA can provide them with more comprehensive brokerage services, not only on the artist side, but also on the digital marketing and business side.”

"Finally, the acquisition of CTA is also a great benefit to our UTA brand equity. As we enter these fast-growing music fields, we are sending a clear message to the industry: UTA is aggressive, adaptable, always A creative company that is one step ahead. We are not just competing in the entertainment management industry, what we want to do is to lead the development of the entire industry.”

"In conclusion, ladies and gentlemen, this acquisition is not just a transaction. It is a strong statement of UTA's strategic intent for the future. By bringing Circle Talent Agency to our ranks, we will not only strengthen our position in the industry status, and will set a precedent that others will hope to follow."

"Thank you for the in-depth introduction, Yi."

Jim Berkus rubbed the back of his right hand with his left finger, pondered for a moment, and spoke first.

"I believe leveraging these segments, and a segment-focused agency like Circle Talent Agency, should be an effective strategic move to help UTA grow and diversify. I fully support us...to explore this further opportunities to ensure UTA remains at the forefront of the entertainment industry."

It stands to reason that, as the chairman of the board of directors, Jim Berkus should not be the first to voice his support for Han Yi's proposal, but should discuss it with other members of the board of directors and reach a consensus before making a final conclusion.But Berkus needs to seek Han Yi’s attitude change and final support. After all, 1.9 million U.S. dollars has already arrived in the account. How to use this money to invest and in which fields to invest are matters that require the nod and support of institutional shareholders to proceed smoothly.

Han Yi wanted UTA to allocate some of the 1.9 million US dollars to directly eat Circle, which was not an excessive request.First, the valuation of Circle Talent Agency is not high. Even if it is calculated based on 12000 performance agreements a year and an average performance fee of USD 2 per artist, the total revenue from performances is only USD 2400 million.Performance income already accounts for more than 90% of CTA's total income.Even if UTA’s EBIDTA profit margin is used, the annual profit is 600 million U.S. dollars. Even if the overall acquisition, with a little premium, 4000 million U.S. dollars is enough to take 100% of the equity from Kevin Kimble and Steve Gordon.

Spending 4000 million US dollars can indeed strengthen UTA's management power in the music sector, leaving 1.5 million US dollars left.

Using a clear-cut attitude in exchange for Han Yi's other expansion proposals for Jim Berkus and his direct descendants is profitable no matter what.

"I totally agree with Jim."

Jim Berkus's most loyal right-hand man, Jay Suss, quickly set the stage for the boss.

"Mr. Han, your proposal is indeed very insightful. We need to carefully discuss this opportunity to ensure the best benefits for UTA, and to ensure that the teams in each business sector are on the same front to jointly promote UTA's progress. direction."

"Yes, we have no time to waste. Before...Mr. Warnock took office, UTA's music business line performed well for all to see." Peter Benedek's chess piece in the company David Kramer After taking over the words of Jay Suss, he did not mention the latter, but refuted the latter every word.

"This is an opportunity we can't pass up and I think ... the team responsible for the M&A should act now. Guys, we need more decision-making power and action than just agreeing."

"The lengthy procedures are the reason why we are gradually lagging behind in many emerging fields... and even lagging behind boutiques like CTA. As Mr. Han said, we must be aggressive, adaptable, and always one step ahead. Many In terms of things, we must first increase the speed."

After saying this, David Kramer drank from his glass and buried his face in the mug, deliberately ignoring Jay Suss' stiff expression.

"I understand David and Jay's concerns, but I also see great potential in this partnership."

After the key players finished their speeches, Jeremy Zimmer, who did not take the lead, made his final statement.Since you can't be the first person to state your position, keep calm until all stakeholders are on the spectrum, and then find a middle point that best suits your interests to mediate. This is Jeremy Qi Murder has been a tried-and-true trick since his tenure as UTA's chief executive.

"Everyone in this room wants the best for UTA, so let's dig into this opportunity and make sure the company has the most appropriate procedures in place...Neil, you can first contact Circle on behalf of UTA, and find out What do they think?"

Jeremy Zimmer turned to sit in the third position on the right of Han Yi, keeping his arms crossed all the time, like Neil Warnock who was out of his mind.He said that he would study in depth and adopt appropriate procedures, but in action he directly arranged for Neil Warnock to start contacting. The middle position of Jeremy Zimmer was obviously biased towards Han Yi.

As a result, a strange situation formed in the entire conference room—Jim Berkus, Peter Benedek, and Jeremy Zimmer all supported Han Yi’s proposal to acquire Circle Talent Agency, but because of The degree of support is different, and it is divided into two opposing pieces.

After a few words of confrontation, the person who seemed to be the least supportive of Han Yi's idea turned out to be Jim Berkus who was the first to voice his support.

This is undoubtedly a very depressing result for Berkus and Seuss.

"Ah, no problem, Jeremy. I will personally contact the CTA and start a conversation about potential M&A opportunities. Once there is substantial progress, the company's M&A team and legal team can directly intervene to act quickly and strategically. action."

"Great, Jim, Jeremy, glad you agreed with my proposal."

Han Yi clapped his hands and clapped his hands twice, his smile looked quite high-spirited.

"This will be a good start for the expansion of our music business line... Now, I would like to propose a bolder idea. No, in my opinion, it is actually a very logical and correct approach – Besides CTA, why can’t we consider…and also include Paradigm Talent Agency?”

"Paradigm?"

Han Yi's second proposal was exported, and the meeting room fell into a brief dead silence.

Even Matt Rice, head of TV, who has nothing to do with the music section, Blair Cohan, representative of film and television agents, and Chris Day, director of corporate communications, all rubbed their cheeks or raised their eyebrows in different ways. Or make a long and comfortable voice, expressing their tactfully...

Strongly doubt.

It is also an emerging force independent of the four major performing arts agencies, Paradigm, which is much larger than Circle.

The founder of Paradigm, Sam Gore, is the ultimate OG who has been active in the Hollywood show business circle since the late 70s. In 1986, after seven years of hard work in the company of the previous generation of legendary agent Martin Gage, Sam Gore established his own acting agency SGA, and through the successful operation of Philip Seymour Hoffman's film and television career And come to the fore. In 1993, after gradually eating up several small brokerage companies, he changed the name of SGA to Paradigm, and embarked on the road of rapid development almost at the same time as UTA.

Today, Paradigm not only owns Oscar winner Adrien Brody, one of the protagonists of "Modern Family" Julia Bowen, Latin lover Antonio Banderas and other Hollywood film and television stars, but also expands its business to music field.In other words, a more appropriate expression is that Paradigm's current main source of profit is actually the music section.

In 2005, Paradigm entered the music industry for the first time, acquiring the Monterey Peninsula artist agency, bringing Black Eyed Peas, Aerosmith, Dave Matthews Band and Toby Keith under its umbrella.Later, the brokerage company Little Big Man in New York was also included, making The Fray, and the Coldplay Band, whose commercial value soared in the future, became Paradigm's flagship clients.

In 2012, Sam Gore with a unique vision established a joint venture with the radio company AM Only to deploy in the booming electronic music field and signed legendary producers such as David Guetta, Skrillex and Tiesto. . In 2014, after taking a 50% stake in the London-based Coda brokerage, Paradigm added several bright new names to its client list, Bon Iver, Jason Mraz and... Ed Sheeran.

Among other things, the two British names of Coldplay and Ed Sheeran can put a lot of distance on UTA's client list.

Last year, PTA's annual revenue was $2.6 million.

It is not the same as the CTA of tens of millions of dollars, and its volume is more than one-third of that of UTA.

How much would it cost to swallow up a brokerage company of this level?

In this conference room, Han Yi is the only one who knows. In 2019, Paradigm had contacted UTA to negotiate an overall package sale of the company's music brokerage segment, with a price tag of US$[-] million or more.

In 2021, Paradigm, which has been hit hard by the live performance sector, sold its music business to Wasserman Music, a subsidiary of the entertainment family Wasserman family, at a low price.Even during the black swan period, the cash received by Paradigm was in the range of [-] million US dollars.

There is no doubt that this is far beyond what UTA can afford at the moment.

1.5 million US dollars, in 2016, can the entire PTA be acquired?

dream.

Can you buy their music business line?

Maybe, but the US$1.9 million was obtained by selling 41% of UTA's equity, and a considerable part of it was employee dividend incentives and board members' bonuses.

It's all spent, what do they eat?
“Yi, I really appreciate the boldness and vision behind your proposal. It is this kind of forward thinking that is driving our industry forward.”

Jeremy Zimmer exchanged a look with Jim Berkus, and he knew that, despite being on different sides, Jim Berkus had already thrown himself under the bus once and it was time for him to take control this time.

“However, I must express some reservations regarding the proposed acquisition of Paradigm Talent Agency. From a financial point of view, such a significant acquisition may be an undue drain on our resources. However, I note the aggressiveness in this proposal, I think we always have to look at the big picture ... that's really critical. You know, making sure that we make decisions that best serve UTA's long-term stability and growth rather than short-term revenue stimulus."

"I also have to agree with our CEO."

Vice Chairman Jay Suss, this time standing up ahead of Jim Berkus, used his mouth to express the attitude of his superiors.

"While Mr. Han ... your proposal is indeed ambitious and, I believe, promising, we must ensure that our financial foundation is solid. In such an unstable industry environment, a large-scale acquisition may bring Unnecessary risk. I mean, there is a balance between foresight and practicality.”

Compared with Jeremy Zimmer, Jay Suss' negative tone is stronger. As the person in charge of the specific business sector, there is a top decision-making layer between him and Han Yi. Some words are expressed by him, which is more harmful low, and may suffer less negative impacts.

"I do not think so."

Peter Benedek's throat rolled twice, and he muttered in a low voice.

"Running a business is not just about maintaining the status quo or playing it safe. Real success often comes from businesses that are willing to take big risks. By always taking the safe path, we risk missing out on the biggest opportunities in our industry. Jim, if we Did not choose to merge at that time, will there still be the golden sign of United Artists Management Company?"

"Yi, I fully support your proposal. I think... we should seriously consider this aggressive expansion strategy."

This old guy has lost his mind and gone crazy just to kiss the new shareholder's ass.

Jim Berkus, who was directly picked out by Peter Benedek and placed in front of the stage, cursed in his heart.This silver-haired old fox has retired to the second line and has not held any real power position in the company. Whether the company has money or not has little to do with him.The acquisition bonuses of one or two million and two or three million that were assigned to him would not make any difference to Benedek at this age.

Maybe, Peter was deliberately supporting Han Yi's radical expansion, disrupting the normal operation of the company, muddying the water, and then waiting for an opportunity to regain his position.

"While taking risks is part of business, we must also be deeply aware of the possible consequences."

Jim Berkus sorted out his thoughts and said.

“At this moment, I think we should focus on building on our strengths and making sure we can withstand unforeseen challenges while expanding cautiously. I admire your enthusiasm and innovative thinking, Yi, but I am concerned about pursuing this particular with reservations about the great adventure."

"Hmm."

Hearing Jim Berkus's words, the social temperature exuded by Han Yi dropped significantly.

He folded his hands on his chin, stared at each other, watched for a while, saw that the whispers in the conference room had completely disappeared, and saw Jim Berkus straighten up his cuffs unnaturally, he suddenly smiled, Change the eyes from "do not understand" to "agree".

"Jim, thank you for your reminder. It is true that we need to be extra careful on the way forward... I fully understand and respect your position. I am a little aggressive."

"Considering the stability and healthy growth of the company, I have an alternative: Why don't we consider acquiring a smaller but equally influential performing arts agency? Such a merger may reduce risk while bringing UTA More opportunities and benefits.”

"Like which one?"

"Like...the Cara Lewis Group."

(End of this chapter)