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SBJ/November 5 - 11, 2007/This Weeks News
NBC buys out partner in Dew Tour
Published November 5, 2007
NBC Universal has purchased Live Nation’s 45 percent stake in the AST Dew Tour, making it the tour’s sole owner in a deal sources valued at $15 million to $20 million.
Negotiations regarding the joint venture began in April and concluded with an amicable split in late August.
“We both shared the belief moving forward [that] this venture would require additional marketing and financial resources,” said Kevin Monaghan, vice president of business development at NBC Sports. “Both Live Nation and we agreed that NBC was best suited to handle that responsibility.”
Charlie Mancuso, president of Live Nation motorsports, notified his staff of the change by e-mail in late September, saying that the tour needed more capital investment for future growth and NBC was better suited to take the lead and possibly find another partner to further expand AST.
Action sports marketers and agents said the split came at a logical time for both Live Nation and NBC, considering the Dew Tour’s efforts to expand internationally and into winter events in 2008.
“It’s not going to change how Dew Tour looks, runs or operates,” said Bob Walker, president of Connexions Sports and Entertainment, a Radiate Group agency. “It frees Live Nation up to focus on its core business, which is motorsports. And when it comes to snow, Live Nation has no expertise, so it allows Dew to run and control its new winter venture by subcontracting out the expertise it needs.”
AST Dew Tour is coming off a year in which attendance grew by 13.9 percent to 283,342, and sources close to the three-year-old venture said it made its first modest profit. Though it attracted less than 1 million television viewers on average during its NBC broadcasts, sponsorship churn was minimal and its video-on-demand viewership and online traffic increased.
NBC Universal is looking at more capital
investment to expand its action sports tour.
“GE’s big initiative is organic growth,” Monaghan said. “AST represents the largest opportunity for NBC Sports. [Dick Ebersol and Ken Schanzer are] confident we can develop and continue to grow this thing even more remarkably in the future.”
Monaghan said NBC has no immediate plans to replace Live Nation with a new partner, but sources said the tour has been approached by a variety of interested parties, including private equity firms and Viacom.
AST has partnered with several media entities in the past, including News Corp.’s Fuel TV, Viacom’s MTV Networks, Eurosport and Wasserman Media Group’s Sportnet. Monaghan suggested those types of strategic partnerships appealed to NBC moving forward, as opposed to simply a cash investment.
“NBC is content to own 100 percent of AST,” Monaghan said. “Clearly, we’re always on the lookout for partners who can help grow brand awareness and TV distribution both domestically and internationally.”
Viacom may be the strongest possible partner as it would offer the tour instant access to the coveted 12- to 24-year-old demographic through MTV Networks, an audience it struggles to reach through NBC and USA Network.
MTV’s new reality show “Life of Ryan,” about skateboarder Ryan Sheckler, has been a major success. The show has been picked up for a second season, and supplementing it with additional action sports content from the AST Dew Tour would complement it well.
A deal between Viacom and NBC, of course, could be challenging when it comes to rights and issues of property control. Viacom does not comment on merger and acquisition speculation.
NBC originally partnered with Clear Channel to launch the Dew Tour in March 2004. Clear Channel’s motorsports division offered the expertise necessary to run the events and its radio stations nationwide gave the tour instant local marketing exposure, which was part of the original joint-venture agreement.
But in the fall of 2005, Clear Channel spun off its live event business to create Live Nation after the government opened an antitrust investigation into its operations. Since then, Live Nation’s focus has increasingly been on its music and live concert business.
During that period, AST has grown increasingly self-sufficient, building out an event management staff of its own and developing its own local marketing strategies by reaching out to local NBC affiliates, newspapers and skateboard shops. That made it feasible for NBC to take sole ownership of it.
Wade Martin, AST president and general manager, plans to expand his staff from 17 to 25 now that it’s independent from Live Nation, which helped with office management, accounting and legal advice.
The tour has already made a new hire in Dawn Williams, who will leave her job as director of events at WMG to become head of the winter Dew Tour. Williams ran the Vans Triple Crown before going to WMG and will be responsible for launching the winter Dew Tour in December 2008.
Martin plans to add other local marketing, event operations, finance and administrative employees in the coming months.
AST’s staff, which has worked out of Live Nation’s Aurora, Ill., office for three years, is currently searching for new offices closer to Chicago. Martin expects to move in early 2008.
“We’ve been preparing for this for a while,” he said. “The transition will be smooth, and we’ve gained a level of independence that will suit us well moving forward.”