hollywood billionaire

Chapter 405 Magical Rainbow
[How did the meeting go?]
After nearly an hour of lively socializing, Lionel Richie sat back in his seat, holding a half-full rum glass. He had just put away his signature hearty smile, ready to enjoy a hard-earned moment of solitude in the noisy atmosphere, when a text message from his manager Bruce Eskowitz popped up in the notification bar above the phone screen.

[That's great. This kid is quite insightful.]
Placing the phone on his knees, Lionel Richie narrowed his eyes slightly and typed a reply.

[How to say? ]
[You know……]
Lionel stroked his mustache on both sides of his philtrum, thought for a moment, then put his right hand back in front of the screen and tapped the keyboard intently but extremely slowly.

For this old man who was born in the 1940s, it was a bit too difficult for his presbyopic eyes to make Lionel Richie chat and laugh and write passionately on a six-inch mobile phone like today's young people.

[He is not the person we thought he was.]
Lionel deleted the opening sentence of the long speech he had originally intended to make and jumped directly to the closing statement in a concise and concise manner.

Celebrities who have been immersed in the entertainment industry for decades have seen countless colleagues disappear due to gaffes, so they pay special attention to their words, no matter what form or platform. Only when they are with the behind-the-scenes team that they absolutely trust and have worked with for decades, will they talk about their true views on the industry ecology with reservations.

Lionel Richie met with his manager Bruce Eskowitz, who happened to be in Las Vegas. October 10th is one of the ten public holidays designated by the federal government, commemorating the Columbus Day when Italian explorer Christopher Columbus discovered the New World of America. Taking advantage of the holiday, Bruce Eskowitz gave himself and all the employees of Red Light Artist Management a five-day extended vacation.

In the entertainment industry, it is very common for management companies and performing arts agencies to take advantage of public holidays to give themselves long vacations, especially during the golden period of European tourism at the turn of summer and autumn. After all, this job does not require people to be tied to their desks 24 hours a day. As long as they have a mobile phone, internet access, and the ability to send and receive emails, they can negotiate cooperation agreements worth hundreds of millions of dollars.

Like his multimillionaire peers, Bruce Eskowitz usually uses these long vacations to head to Europe, turn off his cell phone network, and enjoy seclusion on the deck of his yacht in Positano or in his cabin in Gustave. But this year, Bruce Eskowitz not only stayed in North America, but also flew to his least favorite city, Las Vegas, contrary to his usual practice.

For no other reason than to meet Lionel Richie.

It is not uncommon for managers to meet with artists. Some close partners may even appear beside each other like companions. But for Bruce Eskowitz and Lionel Richie, a pair of business partners, meeting is far from as easy as imagined.

On the one hand, Lionel Richie has entered the twilight of his career, and has devoted most of his time and energy to family life, and his activity in the music field has become less and less active. On the other hand, Bruce Eskowitz has also been making great strides in the field of artist management. In 2009, he resigned as CEO of Live Nation's North American branch and became the COO of Red Light Artist Management. In just seven years, Bruce led the company to great strides and signed management contracts with more than artists.

In addition to legendary superstars like Lionel Richie, there are also Enrique Iglesias, Luke Bryan, Dave Matthews, Odesza, Zomboy and other famous musicians who have made great achievements in their respective genres, and even Sabrina Carpenter, who is unknown at the moment but will conquer the entire world music circle as a champion after years of dormancy... With so many artists to manage and so many collaborations to negotiate, it is naturally difficult for Bruce Escovetz and Lionel Richie to meet. In fact, this meeting in Las Vegas is their second meeting this year. The last time was at the Grammy Awards in February.

Such a rare meeting was not for the purpose of reuniting with old friends or to visit the set of a movie. Bruce Eskowitz went to the heart of the Nevada desert to meet with Lionel Richie for only one reason.

That is, to discuss a major acquisition with the front-end client of the Red Light Artist Management Company and find out their attitude so as to better promote the next step of the negotiation. After all, the financiers who are willing to acquire the artist management company do not value the cash flow on the company's books, but the management contracts locked in the safe.

The acquired party is Red Light Artist Management Company.

The acquirer...is managed by Yu.

“Is Crane really considering selling Red Light?”

The surprise and subsequent suspicion upon hearing the news were Lionel Richie's direct response to Bruce Eskowitz. The "Crane" mentioned by Lionel refers to Crane Capshaw, the founder of Red Light Artist Management and Bruce Eskowitz's only boss in the company.

Entering the music industry in 1991, starting as the owner of a nightclub called Trax in Charlottesville, Virginia, Cran Capshaw gave Dave Matthews and his band their first residency contract, and thus became the long-term manager of the singer-songwriter. The success of Dave Matthews Band allowed Cran Capshaw to earn his first pot of gold as a music capitalist, and also allowed Red Light Artist Management to enter the mainstream and begin to cooperate with Hollywood giants such as Live Nation, Universal Music, and Warner Music.

Today, Red Light Management has become the most eye-catching brand in the music industry. It has 70 professional managers, 400 signed artists, and even more supporting teams, with offices in New York, Los Angeles, London, Nashville, and Seattle. According to Pollstar, the box office revenue generated by the musicians managed by this company in terms of touring alone exceeds $ million each year.

This happens every year and is extremely stable and healthy.

So, at least on paper, Cran Capshaw had no reason to sell this gold mine that was constantly generating revenue. And this was the source of Lionel Richie's confusion.

"Apparently, that's the case." Bruce Eskowitz swallowed a gulp of ice water and two painkillers he put in his mouth for his headache and nodded. "The story goes that the other party made an offer that Colan couldn't refuse."

"An offer you can't refuse?" Lionel looked up. "What's the exact amount?"

"One hundred million dollars."

"That's indeed... a lot, but not to the point where I can't refuse it."

Lionel Richie is well aware of the financial situation of his management company, or in other words, anyone working in the music industry can easily infer the actual revenue and expected gross profit of a company in a certain segment from some public data.

For example, we know that the total annual box office of Red Light Management artists is about $5 million. According to the normal concert revenue and expenditure structure, 10% of the total box office is booking fees and handling fees, such as the cost of mailing tickets, or the "privilege fee" that allows you to print tickets at home. 5% is the average sales tax rate. In some European countries that collect cultural taxes, the tax rate can sometimes be as high as 35%. In addition, performance royalty organizations such as ASCAP and BMI will also collect performance royalties ranging from 0.1% to 0.8%. The larger the venue, the lower the tax rate.

In this way, the income left for artists and organizers is only 84% of the total box office, which is $5 million out of $4.2 million. Of this $4.2 million, the artists can pocket 70% on average, which is $2.94 million. Roughly calculating personal income tax at a rate of 30%, the actual cash that artists can get is $2.058 million, and the artist management company can get 15% of it, which is $3087 million. After deducting the company's operating costs, manager commissions, and taxes that the company needs to pay, the annual net profit should fluctuate around $1000 million.

The $2 million offer is equivalent to the net profit of Red Light Artist Management Company for ten years. Considering that the duration of artist management contracts is usually between 5 and years, this is already a very generous offer.

But Crane Capshaw is not a man who has never seen big money. He has already achieved financial freedom with the Dave Matthews Band, and he owns shares in many medium and large venues across the country. He does not need to rely on selling a stable cash cow to cash out.

Should he accept the $100 million, distribute it proportionally with other investors and senior managers who own equity, and then cash out with tens of millions of dollars? Or should he continue to make the pie bigger, strive for an IPO, increase his net worth several times or even dozens of times, and directly cross the class to knock on the door of the top rich club? For ordinary people, this may not require any thought, but for Clan Capshaw, these are indeed two options that must be carefully weighed and considered.

Moreover, at least in the opinion of Lionel Richie, who is also worth tens of millions of dollars, the latter is the more appropriate and sustainable path.

"Yes. But the $1 million comes with an additional condition."

"Which is?"

"They will help Crane take back MusicToday."

"Ah, now I understand."

Lionel Richie suddenly realized.

Musictoday is another business segment that Cran-Capshaw has expanded. As a music e-commerce company, Musictoday is committed to building an e-commerce platform for artists to directly connect with fans so that they can bypass traditional retail channels and sell merchandise, tickets and other fan-related products directly to audiences. This description sounds like a cliché in 2016. After all, there is no company that does not emphasize its "e-commerce" attributes now, and Hollywood-related companies that like to keep up with the trend are all following suit. But considering that Musictoday was founded in 2000, the development strategy proposed by Cran-Capshaw can be regarded as extremely forward-looking.

In the first year of its establishment, Musictoday encountered an unprecedented Internet bubble. A large number of e-commerce companies collapsed, but Musictoday, like Amazon, survived the cruel filter. In 2006, Musictoday, which already had more than musicians and venues as clients and sales of more than $ million, was acquired by the live entertainment giant Live Nation, and Cran Capshaw continued to stay in charge of the specific operations of Musictoday.

Cran-Capshaw's idea was to use Live Nation's platform to develop Musictoday into the industry's largest ticketing and peripheral sales platform. Live Nation had the same idea at the time. They hoped to make Musictoday a sharp sword for the group to fight against Ticketmaster, the leader in digital ticket sales, and get a share of the retail terminal.

But please note that what we are talking about here is Live Nation "at that time".

Because, in 2009, Live Nation and Ticketmaster shook hands and reached a merger agreement that shocked the live entertainment industry, and jointly formed a new Live Nation Entertainment. Live Nation's former CEO Michael Rapino served as the CEO of the new group, and Ticketmaster's helmsman Irving Azoff was nominated and elected as the executive chairman of the board of directors of the merged company.

Musictoday's strategic position in the new environment plummeted. Its ticket sales business Ticketstoday was transferred to Ticketmaster, and the rest of its business was sold in 2014 to Delivery Agent, a company that specializes in providing interactive business services for TV networks and sports partners. Crane Capshaw and his forces were directly kicked out by Live Nation.

Continuing to serve as the CEO of Musictoday, Cran-Capshaw did not win a turnaround in the new environment. After all, compared with Live Nation, a component company of the S&P 500 index, Delivery Agent, which is striving to go public, is much smaller and has much weaker financial power. In September 2016, after failing to bid for an IPO, Delivery Agent, which was unable to continue, directly applied for "Chapter 9", the bankruptcy reorganization process.

As early as June this year, Cran-Capshaw, who had sensed the signs of crisis, had been looking around for funds and methods to redeem Musictoday from the delivery agent.

"But Musictoday is not cheap." Continuing to think deeply, Lionel Richie discovered the paradox of this additional condition. "I know Delivery Agent has closed down, but Musictoday is still operating normally... Do they still have the agency rights for AC/DC and Pink Floyd's peripherals?"

"Yes." Bruce Eskowitz nodded slightly, "Also Bruce Lee, Elvis, Prince, David Bowie, and the Police."

"And me."

"With you." Bruce pointed his index finger at Lionel, "All the peripherals managed by Red Light Artists will be sold by Musictoday."

“So, this company is still very valuable.”

“Who says it has no value?”

"If it is operated properly, its ceiling and appreciation potential should be much higher than that of the red light."

“Yep.”

"Then I'm a little confused." In the private suite provided by Planet Hollywood, Lionel Richie can relax his facial expressions. The 67-year-old legendary singer frowned, and his skin stretched by hyaluronic acid showed his old age. "Why would someone buy Musictoday as a bonus for buying a red light?"

"Who said Musictoday is a bonus?" Bruce Eskowitz spread his hands.

"Isn't it?"

"Do you know who this mysterious investor is?"

"You know I don't like guessing."

"I know. I don't like it either." Bruce curled his lips. "When I first heard the news from Crane, I was as surprised and confused as you. I kept asking who the buyer was, but he kept evading the question. Until finally, I told him seriously, 'Cran, listen, I am not only responsible for this company, but also for my clients. I must know who we are dealing with and who will take over this company. I can't guarantee that I can convince my clients to stay without any valid information. I can't put them in such a situation'..."

"And he told you?"

"Then he showed me a news report." Bruce pulled out his phone from his inner pocket and handed it to Lionel. "This news report."

【Business News- UTA gets cash infusion from new investors】

【亚历桑德拉-斯泰格拉德，2016年3月28日，11:11am】

"You mean..." Lionel Richie pointed at the screen, "the same investor?"

"You read on."

[United Artists Management said on Monday it would receive a cash infusion from two new strategic investors.]

[The West Coast's well-known capital management institution, Bohui Capital, together with its mysterious partner Han Capital, will hold a minority stake in this Beverly Hills entertainment agency. 】

"I didn't know UTA had new shareholders." Lionel Richie squinted his presbyopic eyes, placed his thumb and index finger on the screen, zooming in and out, and read with great difficulty.

“That’s normal. You don’t have to worry about changes in the industry anymore. You’ve transcended that.”

"Haha, see, Bruce, that's why you've been my manager for so long, you always know what I want to hear... I'll be damned!"

"What did you see?" Bruce Eskowitz's smile grew. He saw the same expression on Lionel Richie's face when he first read the news. "That photo?"

"The buyer is this child?" Lionel flipped his phone and pointed the enlarged photo of Han Yi, who was standing next to Jeremy Zimmer and Douglas Le Bon, at Bruce with a high spirit.

"Obviously, yes."

"I may be older than him because of the stubble on my face!" Lionel shook his head in disbelief. "How old is he? Is he twenty years old?"

"That's a well-hidden piece of information that I haven't been able to find yet." Bruce shrugged. "It's undeniable that he is young... certainly younger than us. But you know, Asians are very good at hiding their age."

"I don't care how he hides it, but he... can't be over 30 years old." Lionel's eyes narrowed into slits, trying hard to find any clues to the secret on Han Yi's face in the photo.

"Yeah, like I said, he's very young. I talked to people who have seen him before... and they said he's basically still a baby."

"How old was Richard Branson when he founded Virgin Records?" Lionel pondered for a long time, and suddenly asked this question without any context.

"This is such a pointless and difficult question to answer." Bruce stood up, propped himself up on the sofa, frowned and thought, "Maybe 21 or 22 years old? I'm not sure, but definitely not older than college graduation age." "This Chinese is the Richard Branson of the 21st century." Lionel Richie breathed a sigh of relief, "He's Chinese, right? Judging from his name and everything else, I don't want to sound like a racist."

"You're right."

"Born here?"

"I don't know." Bruce Eskowitz straightened his back and crossed his arms. "But it doesn't feel like that. Do you think if he was born here, I wouldn't be able to find some details about him and his family?"

"So you really don't know anything about him?" Lionel Richie was a little surprised. Although his manager was deeply involved in the entertainment industry, he had been working in Hollywood and the East and West Coasts for many years. He had many friends in various industries, and there were more than one or two people working in Langley. He was always well-informed. "The only way you know about him is through this news report?"

"This guy just appeared out of nowhere." Bruce took his phone back from Lionel. "This is the earliest news report I can find about him."

"It sounds like there have been a lot of reports about him since then?"

“This is something people on the hill have been talking about all year.”

Sometimes, Bruce Eskowitz really envies successful artists like Lionel Richie, who don't need to care about the latest developments in the industry because any changes will not affect his status in the industry and his stable and lucrative retirement life.

But such a thought, when spoken out loud, seemed a little too condescending. Experienced and calm Bruce suppressed it and replied slowly with a normal look.

"After acquiring a stake in UTA, this agency has been growing rapidly recently. It acquired Circle Talent Agency... another agency that you may not have heard of that mainly deals with DJs. Moreover, it recently announced that it had acquired Carla Lewis's agency."

"Who?"

"Do you know Eminem?"

"Of course, I have heard of it."

"Carla Lewis is Eminem's manager."

"I see. Didn't we..."

"You saw her at the Universal Music reception this year."

"Really? I have no impression..."

"The woman who yelled at her assistant at the bar and made her cry because of an email."

“Oh, that woman.” Lionel smacked his lips. “There is no shortage of such ruthless people in our industry.”

"I don't mind." Bruce tilted his head. "The take-no-prisoners approach scores lucrative deals."

"Then why don't you be more like her?"

"My condition is worse than hers, but you just can't see it."

After smiling at each other, Lionel Richie clinked glasses with his manager and continued the original topic.

"So UTA has been doing quite well this year because of this...Yi-Han's investment, is that what you mean?"

"In music, yes. People have started discussing how long it will take UTA to catch up with William Morris and CAA." For an old hand like Bruce Eskowitz, he still prefers to use the old name of WME to refer to the leader in the agency industry.

"What do you think?"

"I think it's unlikely. William Morris is backed by almost all the investment banks on Wall Street, with billions of dollars invested. One person can't beat everyone."

"That makes sense," Lionel Richie agreed, "but it's still an admirable act."

"impressive?"

"Yeah, I mean... as a foreigner, you would actually choose to go to a country with the world's largest entertainment industry and the most... active financial market to... accept the challenge? I don't know if it's appropriate to say that. Anyway, going to a strange land and fighting against the biggest bully there is something admirable in itself."

"Well..." Bruce blinked hard, his words cryptic, "I'm not sure if this is accurate."

"why?"

"Because...UTA is not the only business he has invested in in the United States." Bruce explained, "In addition, he is also building an entire music ecosystem. A music group named after his last name - Han Music. Record companies, copyright distribution companies, artist management companies, they are now frantically launching hot singles, hot singles that rank number one on the Billboard and UK Singles Charts, and this group has only been established for half a year."

"You mean, there must be someone behind him for this company to grow so fast."

“These companies are private and not much information is public, but I did manage to track down one of its major investors. It’s an investment fund called CEP-III… founded and run by the Carlyle Group.”

"So Carlyle Group is the backer behind the scenes." Lionel Richie's brows were even tighter and deeper than before. "But this doesn't make sense. If Carlyle Group wants to invest in the music industry, there are plenty of companies that will welcome them with open arms. Moreover, these companies are all founded by senior Hollywood practitioners. Why would they choose... a young Chinese person to stand in front of the stage?"

"Yes, it is very strange. I have given it a lot of thought, and in the end, there is only one explanation that seems reasonable to me."

"What explanation?"

"This guy is just a disguise, or a bait, whatever you want to call him. The real investor behind the scenes uses him to divert people's attention... And the real investor should have a close relationship with the Carlyle Group and be powerful enough to use this group as a cover to invest heavily in Hollywood."

"You're saying..."

"I didn't say anything."

"But it still doesn't make sense." Lionel Richie knew what Bruce Eskowitz meant, but he still remained skeptical. "Who would send a twenty-something kid to stand on stage as a disguise?"

"Isn't it a common trope to use him to create a Richard Branson-style legend? After all, no one could make up such a ridiculous story, so it must be true."

"Okay, let's assume that what you said is correct. This behind-the-scenes investor is using Han as a cover to invest in Hollywood."

"Yes."

“He’s buying up the biggest agencies and planning big projects to take over the charts.”

"Yes."

"Offered to buy Red Light and help Crane Capshaw buy back his MusicToday."

"According to Crane, they actually approached Carlyle Group for financing, acquired Musictoday through Carlyle Group, and then gave Crane an opportunity to buy a minority stake and continue to run the company."

"From what you've said, I'm guessing they're interested in acquiring Musictoday because they want to complete their ecosystem in the music industry and get a media channel that can help them sell tickets and merchandise."

"That's beyond doubt," Bruce said. "Just two or three months ago, Han Music announced the establishment of a live performance department and launched its first large-scale music festival project - a music festival that will be held here."

"Here?" Lionel Richie pointed down. "Las Vegas?"

"Kanye West, Justin Bieber, Ariana Grande, the whole nine yards."

"They've poured in a lot of money," exclaimed Lionel Richie. Having become famous in the last century, he had naturally heard of these most familiar names of this century - including the fact that probably a few zeros could be added behind these names.

"With a production budget of over $4000 million, I believe they don't just want to be the biggest promoter in Las Vegas." Bruce Eskowitz smiled, "If they want to be like Live Nation or AEG Live, they have to build their own retail outlets - hence Musictoday."

"And if they really want to be Live Nation, they have to have their own Roc Nation," Lionel Richie followed up Bruce Eskowitz's words, "Hence Red Light Management."

"Completely correct."

“It will be an empire.”

"The Indestructible Empire."

"If you were given a choice, who would you like to be the emperor of this empire?" Lionel Richie raised his hands in front of his eyes. "A respected legend who has worked in this industry for decades, or a stranger with no roots and no one knows about him?"

"In this case... it's clear that the bigwigs behind the scenes chose the second option."

“But why?”

"That's what I want you to help me...help us, figure out, man."

Bruce Eskowitz duly handed over a beautifully framed invitation.

"I just received the invitation to the Crazy City Music Festival a few days ago, specifically inviting you to attend this music festival."

"Who sent it to you?"

"Jimmy Iovine."

Hearing the name, Lionel stopped flipping through the invitation.

"Do you think……"

"I do not know."

Bruce replied sincerely.

"But it is clear that one of the important figures of Universal Music has stood with Han Music, or at least has a vested interest in them. Will he join this game? I don't know, but this is a question worth exploring. If Jimmy Iovine, Carlyle Group... and Cran Capshaw all value this guy, then I think we should also investigate the truth of the matter. If there is no doubt about it, join the game as soon as possible so that we can all have a piece of the pie."

"What do you think about this? About this person, about this project, about his company?" Lionel Richie asked. "Is it true or false?"

"One thing I've learned from years of experience is to never rule out the possibility of a magical rainbow in the sky. But another thing I've learned is that almost 100% of magical rainbows are the biggest hoax you'll ever see."

[This time, you are wrong, Bruce. He may very well be the one and only real magical rainbow.]
Fast forward to 20 days later, Lionel Richie, sitting at the Crazy City Music Festival, responded to his manager like this.

[How did you know?]
[I just know it.]
Lionel Richie doesn't like to type too much, nor can he type too much. He plans to leave the detailed explanation to his next meeting with Bruce Eskowitz.

[He knows what he’s doing. This project, everything, was his idea.]
[And this time, he also made me an offer I couldn’t refuse.]
[Quote about what?]
[He offered...to buy me out. ]
(End of this chapter)