Sony Music Entertainment has concluded its acquisition of a 49 per cent stake in the German concert organizer DEAG Classics in Berlin.
DEAG launched its DEAG Classics subsidiary in 2004. The company achieved double-digit growth rates in 2008 with open-air concerts featuring Netrebko, Rolando Villazón, Jonas Kaufmann, Jessye Norman and Lang Lang.
“We only negotiated with Sony for a few months,” said DEAG CEO Peter Schwenkow at a press conference in Berlin, who has agreed to commit to the CEO job for the next five years as part of the deal. “As the chemistry between us, the new head of classics Bogdan Roscic [president Sony Music Classical] and the [Sony Music Entertainment] CEO Rolf Schmidt-Holtz is very good, we soon came to an agreement and will now jointly set about conquering the European classical music scene.”
DEAG has not provided any information on the purchase price for the 49% paid by Sony Music Entertainment. Schwenkow hinted that it was an eight-digit euro figure. The payment made by Sony Music Entertainment is said to be a mixture of a basic purchase price, a payment to the capital reserve at DEAG Classics and a loan to DEAG Classics. Last year DEAG generated total revenues of €110 million ($154.3 million); according to Schwenkow, DEAG Classics accounted for up to 30% of this amount.
Schwenkow said that conditions for pop/rock concerts, which DEAG also promotes, were getting increasingly tough, as stars believe they can make up declining income from recorded media by taking a greater proportion of total concert earnings.
In contrast to the fast-moving and sometimes fickle pop/rock market, classical concerts can be planned over a time span of up to four years, because classical stars such as Anna Netrebko and Rolando Villazón have an enduring appeal. DEAG Classics is able to plan more strategically over the long-term than its rock/pop unit in some cases; it is currently promoting 45 concerts by the internationally successful violinist David Garrett, some of which are two years away.
There are also plans to expand into Benelux. In the U.K., the company is represented on the market by its partner Raymond Gubbay Ltd., in which DEAG holds a 78.1% stake.
The participation of Sony Music Entertainment is a major step for DEAG Classics and provides an opportunity to further develop Sony Music’s major classical stars in the concert business, too. This will in turn benefit sales of recording media, said Schwenkow.
“The transformation of Sony Music Entertainment into a multi-faceted entertainment group by the sustainable diversification of its core music business has strengthened our international presence in live entertainment,” said Rolf Schmidt-Holtz, CEO of Sony Music Entertainment, at the press conference. “Our DEAG participation and Sony Music’s renewed focus on classical music will equally lead to a diversification in our classical business, first and foremost in the live sector.”
Bogdan Roscic announced, that from Sept. 1, 2009, Sony Music will concentrate its international classical repertoire division in Berlin, making the German capital Sony Classical’s main location after New York.