Pearlman looking for a buyer

Back - Index - Submissions - - What is RSS? Date: Nov 23, 2099 Source: USA Today 22 November 1999 Submitted By: HiC Music man looking for a buyer Teen starmaker finding what his business is worth By David Lieberman USA TODAY Is a major deal in store for the strange company behind some of the hottest teen pop stars, including Backstreet Boys, 'N Sync, Britney Spears, Innosense, and Take 5? It will be if Trans Continental Cos. CEO Louis Pearlman has his way. He recently hired investment bank Allen & Co. to put a price on his far-flung holdings, and he says he's already had ''some nibbles.'' ''We are looking to have another company acquire us to give us more working capital,'' says the 45-year-old pop music impresario. If that doesn't happen, he'll consider a public offering for his company, which he says is probably worth ''upward of $900 million.'' A buyer would need a lot of faith. The company's real value is Pearlman's ability to find or mold talent. In the fickle teen entertainment arena, hot hands can quickly turn cold. Still, Pearlman's operation and stable of clean-cut acts could fit with a youth-oriented company such as Walt Disney or Fox. Disney's Hollywood Records, for example, remains an also-ran against music powers such as Seagram's Universal, Time Warner, Sony, BMG and EMI. The Trans Continental chief pointedly adds that his music-oriented empire would be ideal for a family-friendly company that also sells marketing services at sports events and theme parks, and that has travel services such as cruise ships. Pearlman -- who plays a big role in shaping and promoting his younger stars -- doesn't mind comparisons between his company and Motown. Indeed, some wags refer to Orlando-based Trans Continental as O-town. Beyond teens, its music roster includes Kenny Rogers (with foreign sales rights) and Pearlman's cousin, Art Garfunkel. Along with management, touring, merchandise and recording rights to most of the acts, Trans Continental holdings include: * Trans Continental Airlines, which charters 49 planes, six luxury jets and four promotional blimps. Luxury jet clients, Pearlman says, have included Michael Jackson, Paul McCartney and Wings, Madonna, the Rolling Stones and New Kids on the Block. The blimps have been used by McDonalds, Sea World, Budweiser and Met Life -- although business, of late, has been slow. * Chippendales, the chain of clubs known for male strippers and the top-selling calendar. * A fledgling restaurant unit, with a prototype in Orlando called N.Y.P.D., for New York Pizza Delicatessen. Pearlman encourages his acts to stop by the joint. ''It's like a mini version of Planet Hollywood,'' he says. * Shape CD, which owns a patented process that can cut playable compact discs to shapes, such as a Christmas tree, a business card, or a picture of Elvis. * A new movie and TV operation. The first feature film for Trans Continental Pictures is Jack of All Trades, a teen-oriented comedy-drama with Paul Sorvino and cameos by some of Pearlman's acts, including Spears, 'N Sync, and Garfunkel. He is seeking a distributor for the film, which cost $16 million to make. The first TV production is a behind-the-scenes look, by the team that created MTV's The Real World, at Pearlman's effort to create a new teen sensation. The multi-part series is due to appear on ABC in early 2000, he says. * Units that manage and provide security for pop stars, and create Web sites for them. Pearlman looks for the Allen & Co. valuation, due in early 2000, to simplify a deal. But negotiators would still have a lot to consider. For example, Pearlman is a central figure in a $150 million breach of contract suit BMG filed against 'N Sync, which wants to switch labels. The band recently filed a $25 million countersuit against Pearlman, claiming he took advantage of them. The band said, in its court brief, that Pearlman signed members ''to a web of agreements with entities he controlled which were utterly inimical to their interests. This blatant self-dealing ultimately gave Pearlman the ability to take as fees the vast majority of the group's income from all possible sources.'' Pearlman says he's trying to work out a settlement, adding, ''I was there for them when they needed schooling and coaching.'' Even if the lawsuit goes away, Trans Continental could pose a challenge to accountants. The aircraft unit is part of an unprofitable, publicly traded penny stock, Entertainment International. Pearlman owns 25% of the company and Gulf Oil just picked up 4%, after converting some debt to equity. Pearlman says he's considering taking the company private, and possibly blending it with his entertainment properties, before offering it to the market again. In the last six months, it has fallen to about 10 cents from 45. The latest annual report adds ''there exists substantial doubt'' that it ''has the ability to continue as a going concern.'' Comment on this item. Next Item: Billboard Nominations Announced-BSB nominated in 5 categories Prev Item: Backstreet Boys "Horrified" At Ticket Scalping In Denver