Sale of EPE (but not of Graceland)
- Sports Entertainment Enterprises, Inc. -OTC BB:SPEA.OB- Announces Closing of Elvis Transaction with Robert F.X. Sillerman
(Yahoo! Finance, February 7, 2005)
Sports Entertainment Enterprises, Inc. announced today that it had consummated the previously announced transaction pursuant to which RFX Acquisition LLC, an entity formed and controlled by Robert F.X. Sillerman, acquired a controlling interest in the Company. That transaction was closed simultaneous with the Company's acquisition of an 85% interest in entities that own the name, image and likeness of Elvis Presley and own or have the right to use and benefit from the Graceland mansion and related attractions, as well as other assets and revenue streams associated with Elvis Presley and Graceland.
The Presley acquisition is the first acquisition in the Company's plan to acquire, control, develop and build content in various forms of media. The Company's business plan is to make selective and strategic acquisitions of, or partner with, individuals or companies that control various forms of established or developable content. Thereafter, the Company will seek to improve and enhance the development and marketing of such content. The Company will also seek to capitalize on the increasing distribution opportunities that make it easier and less costly to deliver content to consumers and which enable consumers to selectively decide how, when and where they will consume content.
Commenting on the acquisition, Mr. Sillerman said, "We are excited to launch CKX with our investment in the Presley assets. I can think of no better way to introduce our artist-centered business than to reintroduce Elvis Presley in this digital age, including enticing opportunities in Las Vegas and outside the United States. CKX will be all about partnering with the finest creative talent as the methods of distribution of entertainment continue to evolve. The old model, in which a few decision makers tell consumers what they can see or hear, and how, when and where they can see or hear it, is quickly disappearing. In the coming months and years, CKX hopes to partner with or acquire developable or already developed content as we align ourselves with the creators of content."
On a combined and audited basis, the Presley businesses had total revenue of $44.4 million for the twelve months ended December 31, 2003, and $32.4 million for the nine months ended September 30, 2004. Operating income for those periods was $10.8 million and $7.3 million, respectively. Operating income for the respective periods includes depreciation and amortization expense of $1.2 million and $0.9 million, respectively.
As previously announced, RFX Acquisition (i) contributed $3,046,407 in cash to SPEA in exchange for 30,464,072 newly issued shares of Common Stock; (ii) received 20,485,817 two-year warrants to purchase shares of Common Stock at between $1.00 and $2.00 per share and (iii) acquired an aggregate of 2,240,397 shares of Common Stock directly from certain principal stockholders of the Company at the same price of $0.10 per share. ...
- The Art of a Deal!
By Rose Quintiliano
(Canyon News, January 2, 2005)
... We all heard about Lisa Marie Presley merging with SFX Entertainment founder Robert F.X. Sillerman. Media mogul Sillerman has been a prominent figure in both the radio and concert business for many years. His Sillerman Broadcasting owned radio stations from 1992-1998 until being sold to Hicks, Muse, Tate & Furst, and his SFX Entertainment promoted numerous concerts from 1997-2000 before being sold and rolled into Clear Channel Entertainment. Lisa Marie, the sole heir to Elvis Presley, has sold his estate, including his name and likeness in a deal close to 100 million dollars. "For the past few years, I've been looking for someone to join forces with to expand the many facets of (Elvis Presley Enterprises), to take it to new levels internationally and to make it an even greater force in the entertainment industry," said Lisa Marie in a statement.
The deal includes the King's image and name while Lisa Marie keeps Graceland and many of Elvis's personal effects. The new company even has plans to include a reality show called "Elvis Idol" and Presley theme parks in Germany and casinos. Priscilla Presley, Lisa Marie's mother and Presley's former wife, will remain executive consultant to the business. Lisa Marie, who is currently working on her sophomore CD, is another celebrity that has posted on her website a personal note regarding the recent business announcement. You can read the entirety of her post on her website at www.lisamariepresley.com.
- Elvis, One for the Money: The King of Rock Sold His Soul for a Song
By David Segal
(Washington Post, December 30, 2004)
It's been two weeks since Elvis Presley was acquired in a cash and stock deal valued at $100 million, and still hardly anyone seems to have noticed, let alone gotten worked up about it. There were the obligatory mentions in the business pages. There were groans in the visitor forums of some Elvis Web sites -- "the seven deadly sins come to mind," sniped one fan. But not much more.
Sort of surprising, isn't it? We're talking about ownership of the preeminent icon of American pop culture, and like any icon, this one is in some important way our creation. A businessman named Robert Sillerman, who made a fortune buying and selling radio stations and concert venues, now owns the King and he's going to sell him -- or his likeness, anyway -- in markets he calls "under-Elvised." That means cities like Las Vegas and countries like Japan where, he said in interviews, images of Presley are surprisingly hard to find.
Sillerman has gobs to invest in all sorts of ventures, and he could slap Elvis on mugs, T-shirts and souvenir mini-bowling balls from here to Okinawa. Lots of Presley partisans will salute this international product rollout, and anything else that raises the profile of their hero. But that alone won't explain the silence that greeted the size of the King's ransom. No, to understand that you need to know this: Elvis is the greatest sellout in American history.
Not just in the history of rock-and-roll, mind you. He's the greatest sellout, period. You'd be hard pressed to find someone who sold out more, sold out earlier, sold out with greater regularity. Elvis started selling out almost as soon as he caught on and he didn't stop until -- well, he never stopped actually. Which is why the Sillerman purchase never raised anyone's dander. It makes perfect sense in the context of Elvis's entire life.
Actually, it makes perfect sense in the context of American history. We've always been a little ambivalent about selling out; we do it more often and more grandly than any nation on Earth. The first recorded use of the phrase, according to the Oxford English Dictionary, referred to "the proposed sell-out of the State of North Dakota to the infamous Louisiana Lottery Company." We can only imagine what that must have been about. The year was 1890.
The classic sellout, of course, involves trading your ideals for money, which Presley did. He was a celestial, once-in-a-century talent. Nonetheless, he ended up squandering his gifts singing cheesy bossa novas, acting in lousy movies and taking the easy money. While Presley was occasionally disgusted by the dreck he was asked to sing in the studio, and while he resented hack scripts like "Harum Scarum," perhaps the worst of his many movies, he was never bothered enough to make a fuss, at least not a fuss that would improve his material.
If your only goal is to sell, quality be damned, you have lots to sell and nothing to sell out. That's an ethos with legs, as it happens. If you want to understand Snoop Dogg or 50 Cent or any number of rap stars, you need to understand Elvis. Those guys owe the man.
Before we get to why, let's be clear that Elvis can't be entirely blamed -- or credited, if you prefer -- with his innumerable sellouts. Elvis was needled and psychologically badgered into nearly every deal that shaped his professional life by his manager, Col. Tom Parker. A former carny whose quick-money philosophy shadowed every dotted line that Elvis signed, Parker was notorious for two-bit schemes. He once charged admission to see a horse, billed as the world's smallest, that was actually just a pony, buried up to his knees.
But leave that aside. At the time that Elvis started selling out -- arguably when he all but gave up on rock in the early '60s -- the idea of a rock star selling out didn't exist. Rock then was just a type of music that was huge with the kids. The expectation was that something else would replace it, soon. Only later, when it was clear that rock wasn't going away -- when it took on the spiritual significance of a religion -- was the idea of "selling out" your rock-and-roll roots even possible.
By the mid-'60s, Elvis was basically a spectator at the revolution in pop. He spent most of his studio time on easy-listening soundtrack albums for a series of increasingly crummy films. He just couldn't turn down a big check, even if some of those decisions were stupendously ill-advised. In 1973, when they both were in need of a cash infusion, Elvis and Col. Parker sold to RCA the artist's royalty rights to all of Presley's back catalogue, for a measly $5 million. But for that notorious deal, the price tag on Elvis Presley Enterprises, which is the entity that Sillerman recently bought 85 percent of, would have been many times larger.
"Elvis died when he went into the Army," John Lennon said when Presley actually expired in 1977. It's a sentiment you'll hear from more than a few of his early and ardent fans. But the critics have always been outnumbered by the admirers. They don't fret much about how Presley is merchandised. It's one of the things that Elvis had in common with his audience.
"A handful of people wrote e-mails saying the sky is falling when the [Sillerman] deal was announced," Jack Soden, the CEO of Elvis Presley Enterprises, said Tuesday. "But a significant majority understand that this is a good thing. That this will allow the legacy of Elvis to grow and prosper."
Presley was rock music's first franchise and today he's as close to a one-man Wal-Mart as any artist will ever get. This is his legacy to today's performers.
Take Snoop Dogg. Right now, according to Rolling Stone magazine, the Dogg is getting paid by T-Mobile (for an ad) and Vital Toys (for an action figure), and XM Satellite Radio (for a monthly show), and Pony Sneakers (for the Doggy Biscuitz shoe line), by the makers of VSOP Passion Blend, a booze, and by the naughty lads behind "Girls Gone Wild" videos, who license his name for a "Doggy Style" line of tapes.
You hear anyone calling Snoop a sellout? Nah. He and every other platinum rapper are the true heirs to Elvis's brand-it-now, sell-it-soon approach. Songs beget films, films beget endorsements and endorsements beget more songs. It's the great shameless cycle of American commerce, and proof, if any were needed, that the King is gone but he's not forgotten.
- Vintage Elvis all my own
By David Hinckley
(New York Daily News, December 22, 2004)
I was feeling pretty pleased when one of my early holiday gifts this year turned out to be a bottle of Elvis Presley wine. And no, smart guy, it didn't have a sticker that read, "Best if used by ... " It's a 2002 Napa Valley Cabernet Sauvignon, bottled at Graceland Cellars, Healdsburg, Calif. Now I admit the chance of Elvis owning a winery is about the same as the chance of Kobe Bryant spending his weekends dressed as a Pilgrim conducting candle-dipping demonstrations at Colonial Williamsburg. But that's not my point. My point is that even as I was enjoying the fact that I owned this wine - did I mention it's called "Blue Christmas"? - I saw that one Robert F.X. Sillerman was closing a deal to own pretty much the whole Elvis.
Specifically, Sillerman is spending $100 million to buy 85% of Elvis Presley Enterprises as a foundation for CKX Inc., a publicly traded entertainment venture he's starting. That's what Sillerman does. He starts entertainment ventures. He has owned radio stations and concert-promotion companies, which he sells to bigger companies for more money than you and I make together in a week. The concert business, for instance - Clear Channel paid him $4.5 billion for that. Now he's venturing again, which is where Elvis comes in.
Or at least that's the story being fed to the media, which have gulped it down like a triple mochaccino latte. Me, I think there's something else going on. I think Sillerman wants to own all this Elvis because he can't stand to see someone else owning more. Even before the Blue Christmas wine, I had Elvis Presley light-switch covers. I had the framed picture of Elvis with President Richard Nixon. I have an Elvis coffee mug, Elvis coasters, Elvis movie-theater lobby cards, Elvis sheet music, an Elvis vigil candle and an Elvis pen. Thanks to my wife, I have 12 Delphi Elvis commemorative plates.
I have Elvis shampoo. I have Elvis playing cards. When my wife and I attended a reception in Graceland - did I mention we met Priscilla? - we slipped a half dozen Elvis cocktail napkins into our pockets. For the holiday season I have a white Elvis tree ornament and a 3-D pop-up model of Graceland at Christmas. Plus, of course, the music. CDs, DVDs, videos, LPs, 45s, 78s.
I think Sillerman knew this, and when he heard I was getting the wine, too, he decided he needed to do something dramatic to pull ahead. So he cut this deal, because he had $100 million and I didn't. Well, good for him. But as long as I have the Elvis wine and the Elvis tree ornament, I concede nothing.
- COMMENTARY: ANALYSIS OF THE GRACELAND DEAL - "The King is Dead. The King is Dead. Long Live the King." - Some old movie (or possibly TV-5 Wrestling)
By SHERMAN WILLMOTT
(The Memphis Flyer, December 20, 2004)
In 1979 Memphis Mayor Wyeth Chandler wanted the city to buy Graceland (asking price rumored to be $10-11 million). Jack Soden's business partner, who handled Lisa Marie Presleyıs estate for Priscilla Presley, wanted to sell Graceland in 1981. It is a good thing for Lisa Marie Presley that neither got their wish. Soden's business partner, Morgan Maxfield, died an untimely death in a private jet crash over Labor Day weekend in 1981, leaving Soden to pursue his vision of opening Graceland to a very hungry public.
When Soden took over Graceland and the formation of Elvis Presley Enterprises, Graceland itself hemorrhaged money. Colonel Parker's "accounting" for Vernon Presley had bled the estate dry. The IRS wanted a big chunk of change from the estate, too. Fans wanted to visit Graceland, but security costs and upkeep kept the estate finances in negative territory to the tune of approximately $500,000 a year. Elvis' reputation had taken a beating by the Dr. George Nichopolous trial as well as the tawdry details of Albert Goldman's book Elvis. Elvis' world did not look so good.
Elvis' chronicler Bill Burk wrote in June, 1982: "When Graceland swings its doors open Monday, it will be like the founding of a new industry in Memphis.' And right he was! Admission was $5.00 a head and thousands of fans (and fanatics) lined up every morning for the new tour. Graceland could handle three thousand per day, and in the first year Elvis Presley Enterprises took in $1.35 million. Cash poured through the doors
The next task Soden had was to corral all of the unlicensed Elvis products on the market and create a new paradigm for the intellectual property (trademark and copyrights) of a celebrity's image. Soden and company did not just re-write the book on the celebrity image business; they created the rules of the industry. There is no doubt that they were the force behind the 1984 Tennessee statute regarding Protection of Personal Rights. EPE has used its war chest and lawyers to pursue the rights of Elvis' image to the ends of the earth, at times at a major negative publicity cost. Seldom has Soden's team lost, and when they have, it has been over inconsequential financial circumstances. Their litigiousness has made hucksters reconsider illegally using the King's image and has increased the negotiation value of the estate with any legitimate licensees.
Twenty-two years later, Elvis' image is restored. EPE's business is intact, running like a well-oiled machine and clearing $12 million a year in profit (a surprising figure, given the very few music rights available to EPE for Elvis' biggest hits, an unfortunate Colonel Parker legacy). EPE has just negotiated a sweetheart deal for Lisa Marie Presley. Presley's new benefactor is media mogul Robert Sillerman, who made a massive fortune selling his concert company SFX to Clear Channel for over $4 billion in 2000. Presley will receive $53 million in cash; $25 million in debt assumption; and $22 million in preferred stock of Sillerman's new company as well as 500,000 shares in common stock of Sillermanıs new company. She will still own 15% of Elvis Presley Enterprises, which Sillerman is buying.
What did Presley have to give up for this treasure trove of receivables? She keeps her father's personal effects and Graceland, which is a great p.r. move for her appeasing the zealotlike Elvis fans as well as a physical and emotional tie to her father. She will continue to license the use of Graceland and these effects through EPE to Sillerman's company. She merely extends the licensing capabilities from EPE to Sillerman's company for worldwide promotion and exploitation. In effect she is giving the rights to Elvis' image that EPE has accrued and has been licensing worldwide to Sillerman's new company for a huge chunk of change plus approximately 15% of Sillerman's new company. If Sillerman creates a bigger licensing market for Elvis, she will profit nicely. If not, she will have received almost 8.5 times EPE's net profit per year for those rights. Although all employees of EPE are listed as remaining, were he to retire after this deal, Soden could smile, knowing that he had mastered the art of the Colonel Parker deal, getting far more than ever imaginable from the use of Elvis.
So Sillerman got taken on this deal, eh? Not exactly. Sillerman has enough resources and capital to take Elvis to the ends of the earth, where Elvis has not yet reached his potential. Translation: Graceland will still be Elvis' home base, but, hello, Japan, China, and Europe, where Elvis is extremely well-known and his image use is very under-served. Not mentioned in the deal but certainly implicit is that Elvis the image has just become the star attraction and calling card in a new entertainment company. Sillerman will undoubtably use the Elvis image as bait to attract licenses from other celebrities (and their estates) alive and dead ("Hey, kiddo, if it's good enough for the King, you can't go wrong with Sillerman ..."). It would be hard to argue that the #1 entertainment image in the world is a bad one with which to begin a company. Most media buyers will take Sillerman's calls just on the Elvis name, if they were not familiar with him previous to this deal. Memphis probably will not notice much difference in the use of the image, but other countries will most likely see a much higher presence of the King in all media formats
One thing concerning the deal that gives Presley watcher's pause is Lisa Marie herself. How has EPE built $25 million worth of debt with $12 million in net profit per year? Obviously her marriage to Michael Jackson taught her the profligate ways of Hollywood. Or perhaps this deal will merely cover some sort of massive Scientology debt she owes. Ms. Presley is approaching her maximum spending years, and if she continues to spend more than she makes, this deal would merely be a one time stopgap. Either way, once the dust has cleared on this deal, Lisa Marie pockets $50 million, erases her debt, keeps the house, and becomes a large shareholder in a company destined to succeed with the world's number one entertainment image in the growing industry of celebrity licensing.
In her press release Lisa Marie Presley's quote is a big disappointment, making this deal sound like it is in her father's interest: "My greatest responsibility to my father is to preserve and protect his legacy." Au, contraire! This deal is about maximizing Ms. Presley's financial interests with the prospects that visitations to Graceland may continue to slow down with the aging of the '50s generation of rock 'n roll fans. Maximizing the return on Elvis and his image has been the focus point of Elvis' career since the Colonel got hold of him, and this deal is no different, albeit a sweet once-in-a lifetime one that the Colonel himself would be proud of.
Indeed it is good to be the king('s daughter)!
- ITTY BITTY BITS: Lisa Marie sells Elvis Estate ...
(Black Entertainment, December 20, 2004)
... *The Elvis estate has left the building, thanks to his daughter Lisa Marie Presley. She's hanging on to Graceland, her daddy's 13-acre home, but has chosen to unload the bulk of the estate, including rights to her father's name and image, in a deal worth approximately $100 million. The agreement will pay her $53 million in cash and absolve her of $25 million in debts owed by the estate. Elvis Presley Enterprises Inc. announced an agreement Thursday to sell 85 percent of its assets to businessman Robert F.X. Sillerman, founder of music and sports promoter SFX Entertainment. As Presley's only child, Lisa Marie is the sole heir to the estate, most of which is now to become part of a publicly traded company that will be called CKX Inc. The Elvis heir also is to get shares in the new company expected to be worth more than $20 million.
- Lisa Marie Presley Sells Elvis' Image, Holds On To Graceland
(chartattack.com, December 20, 2004)
Don't have enough Elvis memorabilia in your life? Well, by next holiday season, there'll likely be a load of new Elvis-related products to put under your tree.
Lisa Marie Presley, who has apparently been too busy having a life (not to mention a less-than-stellar singing career of her own) to fully capitalize on her father's legacy, has sold 85 per cent of the Presley estate - which includes the right to license the King's image. The buyer is Robert F.X. Sillerman, who built the SFX sports and entertainment promotion company (which he sold to Clear Channel a while back). Shares in the company will be traded publicly.
Why has little Lisa Marie sold her daddy's legacy? Well, partially because it's a pain in the ass to manage an estate of that significance, but also because if put in the hands of a savvy businessman, the Elvis image can earn a whole lot of coin. "For the past few years I have been looking for someone to join forces with to expand the many facets of Elvis Presley Enterprises," she said in a statement. "To take it to new levels internationally and to make it an even greater force in the entertainment industry."
Just because Lisa Marie sold her father's estate doesn't mean she literally sold his physical estate. She will retain and continue to operate tours of Elvis' mansion, Graceland, which has become a major part of the Memphis tourist industry. She will also hold on to all of Elvis' personal possessions.
- Sale of Elvis estate won't affect Graceland tours
By WOODY BAIRD
(Orbitz December 17, 2004)
Lisa Marie Presley is keeping Graceland but selling the bulk of the Elvis estate, including rights to her father's name and image, in a deal worth approximately $100 million. ... [as below]
- Lisa Marie Presley Selling Elvis Estate
By WOODY BAIRD
(Yahoo! News / Associated Press December 17, 2004)
Lisa Marie Presley is keeping Graceland but selling the bulk of the Elvis estate, including rights to her father's name and image, in a deal worth approximately $100 million. Elvis Presley Enterprises Inc. announced an agreement Thursday to sell 85 percent of its assets to businessman Robert F.X. Sillerman, founder of music and sports promoter SFX Entertainment. The Presley estate brought in almost $45 million last year. Sillerman said more aggressive marketing, supported by capital raised through a new publicly traded company, can make Elvis an even bigger earner.
... As Presley's only child, Lisa Marie is the sole heir to the estate, most of which is now to become part of a publicly traded company that will be called CKX Inc. The agreement will pay her $53 million in cash and absolve her of $25 million in debts owed by the estate. She also is to get shares in the new company expected to be worth more than $20 million.
Lisa Marie will retain possession of her father's home, its more than 13 acres of land and many of her father's "personal effects," an announcement on the agreement said. "For the past few years, I've been looking for someone to join forces with to expand the many facets of (Elvis Presley Enterprises), to take it to new levels internationally and to make it an even greater force in the entertainment industry," Ms. Presley, also a singer, said in a statement.
Tours of Graceland, which gets 650,000 visitors a year, will continue unchanged. The throngs of fans drawn to Memphis each August on the anniversary of Presley's 1977 death will notice little different, Sillerman said.
Although Elvis already ranks No. 1 on the Forbes magazine list of top-earning dead celebrities, Sillerman said new markets and business opportunities may be available, including abroad. ... Sillerman said the staff at Graceland will remain in place.
Elvis Presley Enterprises was created in 1980 by Priscilla Presley, the singer's ex-wife and mother of Lisa Marie, who was still a child then. She is to remain as a consultant to the new owners.
Sillerman founded SFX Entertainment in 1977 and ran the company until it was bought by Clear Channel Communications in 2000. He said he expected the sale to wrap up within two months, pending standard regulatory approval.
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