All Your Base Are Belong To Us

Fridays announcement that Clair Global bought Sound Image generated both shock and surprise in the pro audio biz. Clair and others, particularly Solotech have been gobbling up production technology companies at a rapid clip for the last several years. Increasingly those also include integrators involved in higher margin, higher profile installs. Not so long ago integration, or install as we used to call it, was the domain of specialty providers that were more like electrical contractors focusing in all forms of low voltage installations. As the design/build methodology gained ground on the consultant/architect/installer paradigm more sound reinforcement rental houses started installation businesses to complement the rental and sales side. In the modern landscape it’s a good fit.

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It’s natural for large providers to grow via acquisition rather than growth from the ground up. This sort of business consolidation has been going on since people started businesses. The principals get an exit strategy or get out from under debt acquired as they were building the business. The upside for the buyer is a functioning business unit with tools and personnel and hopefully sales in place. Pro audio manufacturers have long gone on buying sprees. Harman went on a big ol’ buying spree in the 90s. Then Samsung bought Harman. Mackie bought EAW formed Loud, offshored manufacturing and basically tanked the EAW brand. Behringer, now Music Tribe absorbed many brands over the years with varying degrees of success. Consolidation does not always mean success.

It’s not been limited to pro audio manufacturers. For the better part of the last 30 years production technology vendors have been consolidating. Pool Group in Europe started acquiring companies in the 90s. In the 2000s they folded all the associated companies under a single brand. PRG started acquiring companies in the mid 90s. This was the first those this side of Atlantic that didn’t tour saw a conglomerated production services company. They bought such industry stalwarts as theatrical sound specialists Pro Mix, seminal touring companies A-1 Audio and Electrotec and respected rental house Burns Audio (forgive me I’m going from memory). They also ended up with several lighting companies including the storied Light and Sound Design.

Clair has been acquiring companies over the last couple of decades as well. Perhaps the largest most surprising acquisition was when Clair bought longtime competitor industry giant Showco in 2000. So the story goes (though I’ve never confirmed) Showco was on the verge of selling to Clear Channel who at the time had acquired most of the big concert promoters in the country. The concert promoter business came when they bought SFX who was gobbling up most of the big promoters at the time. The concert side became what we know as Live Nation.

Word at the time was Clear Channel saw bands carrying production as duplicated money and resources. They were said to have wanted to cut costs by providing house sound and lighting systems at the venues they owned (basically many of the venues Live Nation owns today). Showco was said at the time to be financially smarting from investments in Vari-Lite, Show Power (touring generator/power distribution company) and the Show Console, one of the first digitally controlled analog consoles. The console was pretty temperamental and didn’t travel well.

As the story goes Showco gave Clair a call before the supposed deal with Clear Channel was to go down to give them a heads up. It’s said they were told not to sell anything until they heard back. Thus Showco was sold lock, stock and two smoking barrels to Clair. Don’t know if it’s true but it was the story making the rounds at the time and poetic even if it’s bullshit. Clarifications, flames and confirmations welcome. If it’s not true it would be like finding out there is no Santa. For a time it was operated as Clair-Showco then eventually back to using the Clair only moniker. Clair had also acquired Nashville based MD Systems a few years prior with some lovingly referring to the combined company as MDClairCo.

At the time many were wondering how the industry would survive with the two giants combining. History tells us it did just fine. Many smaller providers were out there capable in both gear and people to do big gigs. Eighth Day, Sound Image, ATK, DB, Concertsound and Brit Row were some. Now they’re all in the Clair Global family.

The gang in Amish country aren’t the only ones that have been on a buying spree. Our buddies to the north, Solotech have been gobbling up rental and integration companies worldwide. I’d only known them from the Meyer guys at the Montreal Jazz festival and from a couple of house gigs in Montreal. They had a longstanding relationship with the circus and installed most of the production shows and newer theaters in Vegas. They have a hand be it lighting, audio or LED in most of the residencies in town. The last several years have seen them swallow Pro Sound, SSE, Wigwam, Capital Sound and most recently Morris (that I knew as Morris Leasing way back when) and others. Over 40 plus years I’ve worked on systems from nearly every company that has been acquired by the big two. That’s a pretty far reach.

The point is how this consolidation is going to affect pro audio. As a comparison let’s look at how other industry consolidations have worked out for consumers. Let’s start with everyone’s favorite the airline industry. Cutting to the chase, it sucked for consumers. I didn’t like flying 20 years ago even in business or first class. It’s nearly a hostage situation now. Big box retail? Walmart killed more local stores than the bubonic plague. Now the big boxes are being killed by Amazon. Business is a vicious cycle. How about everyone’s concert favorite Ticketmaster. Except for the outrageous hidden fees they’re actually pretty good. Except when rabid Swifties are banging on the gates trying to get it. You guys are lucky you don’t have to camp in the Tower Records parking lot a day or two before the onsale date.

Given the examples above the likely answer for how it will impact the industry is not much at all. We aren’t like these other industries. We generally aren’t competing on price alone at that level. When there is a mass market product and the the demand for lower pricing is high sellers and manufacturers adjust. Our industry doesn’t chase price like it was a seat on a plane or a gallon of milk. At that level you look for the best value not the lowest price. If the price is significantly lower than the other vendors ask why. Same if it’s higher than everyone else. The barrier to entry while capital intensive isn’t like an airline with the complexities of regulation and limited routes and gates.

There can be competitive pricing on high end touring with limited players vying for the same work. Even on the biggest tours the sky isn’t the limit. The act has to make money unlike the olden days of tour support and huge advances that were never recouped. Production is still very much a networked industry where trust is paramount. These days a critical error from a vendor or failure of a system can cost millions in lost revenue on a mega tour. Personal connections count. More than anything.

What’s going to matter the most in terms of service and revenue retention (or growth) is if the conglomerate can keep the individual cultures of each specific brand alive. It’s one thing to absorb a company and fold the resources into your existing company and try and port that culture to the acquired company. It’s another to run it as an existing operation with its own culture and business structure. There are ways in which the conglomerates can leverage economies of scale in business operations that would have minimal impact on the unique operations of each subsidiary. At this point it appears the acquired companies are still operating with their respective cultures. Even if the brands are folded into the parent companies name it’s not like they’re interlopers or investment banks looking to extract the maximum when they flip the company. These companies are in the business of making money doing sound not making money by flipping companies. All of the acquired companies were top shelf before they were acquired. That won’t change.

If there are generic structures imposed across all brands what is going to give each brand a separate identity? If they go to a homogenous identity the things that made the smaller companies what they were are no longer a draw to some clients? That’s a tight rope to walk. They’re going to have to grow revenue not just cannibalize each other. If the market maintains the demand it currently has there will be an opportunity for a smaller boutique vendor to slot into some of those tours. I’ve done that. More than once. Typically the mega vendors don’t do small tours during the busy season. Larger established vendors can also use the opportunity to expand their touring base. Each conglomerate buying half a dozen high profile companies doesn’t mean there aren’t other options.

The issue isn’t getting gear. It’s people. Always has been. Right now seasoned pros for big tours are in short supply. It’s not about adding more gear to your inventory as much as it is adding the right people. Large PA companies know this which is why there are formal training programs to try and cultivate new talent. Pre pandemic the rush to build was sustainable because of relatively inexpensive, somewhat disposable labor. You have a few on staff but mostly you use freelancers and probably through a labor provider. If conglomerates can’t keep the labor pipeline flowing it doesn’t matter how many shops they have. If you always have more gear than labor you’re in trouble.

I’m not seeing that with the big providers right now though by their own admission some of the labor is less experienced than they’d like. That’s the circle that needs to be squared. How to maintain a scalable on demand labor force that’s trained to the extent you like. If anything consolidation may help ease labor shortages by using that scale to train new and less experienced techs or to hire more full timers. I’m old school and a big fan of hiring direct when possible but realize today using a labor contractor makes more business sense for the company.

Contrary to what some may say the sky isn’t falling terms of a provider monopoly. The consolidation will likely have some unintended consequences but suddenly raising prices on a whim isn’t going to be one. There is still competition. The companies are leveraged and need to keep working in order to service that debt. It’s not free money even if you could pay out of cash on hand (unlikely they did). While Taylor or Ed or Bey have limited choices due to scale most other tours don’t have such restrictions. There are still plenty of good providers that aren’t part of a conglomerate that do a fine job. What the conglomeration does mean is that investment capital sees our industry as worthy of investing at scale. That’s a long way from doing a Frankie Valli gig at Franklin and Marshal College in the 60s.

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