Spotlight: Robert Sillerman, SFX Founder/CEO
SFX Entertainment has been the focus of a ton of music journalism lately (myself included), largely due to their latest problem with delivering their signed artist’s royalty payments from their music streaming service, Beatport. This doesn’t simply concern Beatport, but the entirety of the electronic music industry. To better understand the problem at hand I want to invite you to take a look at the man behind SFX Entertainment; Robert Sillerman.
While on the surface SFX Entertainment appeared to climb out of nowhere and quickly become the leader in electronic music promotion industry; the reality is that this is it’s second coming. The original, SFX Broadcasting was founded by Sillerman in the 90s and focused on acquiring a variety of radio stations to form a larger conglomerate, similar to how its modern incarnation functions today. The majority of those assets, however, were sold off in 1998 for a 2.1 billion dollar profit, and the remainder were held on to until 2000 where they were sold to Clear Channel (currently iHeartMedia) for 4.4 billion. Sillerman seemingly continued this strategy with his revival of SFX in 2012 where he quickly picked up major promotion companies such as ID&T and Life In Color, and continues to maintain ownership over.
In an interview with Miami New Times, Sillerman comments on his strategy saying “The fact is if you buy great and successful businesses, you try to empower them to do what they do. And in this case, what they do is provide great entertainment.” This perfectly describes the mentality behind his strategy of conglomerating the biggest festivals in the world; by purchasing independently successful businesses at any cost, and then simply leaving them to “do what they do” he can form a successful and functioning media and promotion conglomerate. As put a “dance music insider” interviewed by Billboard,
“Sillerman showed no cohesive strategy in the companies he was acquiring. It was as if he thought that just because he brought in companies with some smart people onboard, they’d come up with something amazing, without any clear direction from SFX Executives.”
This lack of direction is clearly reflected their actions over just more than this past year SFX has faced major executive changes through the loss of both its chief marketing officer and senior vice president, failed to secure financing to take the company private in August, and had its most recent deadline for their second attempt at privatizing extended from Oct. 2 to the Oct. 14th. Moreover, Sillerman’s initial attempt at privatizing is being taken up as a class action by New York law firm Abbey Spanier LLP, claiming that Sillerman’s intentions were not to buy all shared not already owned by him, but rather to disguise falling share values and profits by offering unrealistically high prices which he would be unable to pay. Compounding liquidity issues, Sillerman and SFX’s chairman of strategy and development, Sheldon Finkel, are facing a $100 million lawsuit from founding partners who claim to have never received their equity shares, echoing their recent trouble with paying royalties to their Beatport artists.
Best stated by the lawsuit filed against him, Sillerman continually demonstrates a “reckless regard” not only for his investors, but his influence over the EDM industry as a whole. His laissez-faire approach to managing acquired assets is slowly eating away at the integrity of an industry rooted in selflessness and accountability, and his actions continue to highlight his lack of connection to the community he wishes to control. If SFX hopes to have successful future, it should look to the root of the problem, not all that has sprouted because of it.
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