Entertainment Matters: Kirkland Nets Globetrotters Sale
In a deal announced Tuesday, Kirkland & Ellis is advising Harlem Globetrotters International—which operates the famed Globetrotters barnstorming basketball troupe—in its sale to Herschend Family Entertainment Corporation for an undisclosed sum.
Norcross, Georgia-based Herschend's existing portfolio of properties includes Dollywood amusement park and Dollywood Splash Country water park in Pigeon Forge, Tennessee—attractions the company runs along with country singer Dolly Parton—as well as Atlanta's Stone Mountain Park and Silver Dollar City in Branson, Missouri.
Herschend is buying the Globetrotters from Shamrock Capital Advisors, a Los Angeles–based private equity firm cofounded by Roy E. Disney that holds an 80 percent stake in the team. Reuters reported in June that Shamrock planned to put the business up for sale and expected to get between $50 million and $100 million.
The Globetrotters have been entertaining crowds with their signature brand of acrobatic and trick-play-heavy basketball for more than 80 years, playing—and mostly winning—more than 25,000 games around the world, most of them against the hapless Washington Generals and New York Nationals. The team was inducted into the Naismith Memorial Basketball Hall of Fame in 2002 and its many alumni include basketball legends Wilt Chamberlain and Connie Hawkins and baseball Hall of Famer Bob Gibson.
Though details of the agreement were not disclosed, Herschend said the Globetrotters' management team and player roster will remain intact.
The Kirkland team advising the Globetrotters in connection with the transaction includes corporate partner Damon Fisher and tax partner Russell Light, as well as associates Bryan Ikegami, Ilan Napchan, and Alice Yuan. The firm has advised Shamrock on a number of past deals, including the 2005 acquisition of control of the Globetrotters from former player Mannie Jackson.
Herschend, meanwhile, is relying on lawyers from McKenna Long & Aldridge to provide outside counsel on the transaction. A firm spokeswoman did not immediately respond to The Am Law Daily's request for information regarding the firm's deal team.
SFX Taps Reed Smith for EDM-Tinged IPO
A month after two drug-related deaths shut down an electronic dance music (EDM) festival in New York and created negative publicity for companies that stage such events, one of those companies, SFX Entertainment, is moving forward with plans for an initial public offering.
SFX, which is owned by music entrepreneur Robert F.X. Sillerman, promotes EDM concerts and live events, including the three-day TomorrowLand festival in Georgia this past weekend that reportedly did not suffer any significant problems.
In a filing with the Securities & Exchange Commission last week, SFX priced its IPO between $11 and $13 per share after saying earlier this year that it hopes to raise up to $175 million via the offering. SFX said in last week's filing that it is aiming to position itself as the largest producer of events focused on what it refers to as "electronic music culture" or "EMC"—a market projected to generate $4.5 billion this year.
SFX is moving to capitalize on EDM's growing popularity even as the genre's alleged link to drugs—especially MDMA, also known as ecstasy or Molly—has raised flags in the wake of the deaths at the Electric Zoo festival in New York in August.
In its original prospectus, which was filed in June, SFX said it expected to use some of the proceeds from the planned IPO to complete its acquisition of a majority stake in Made Event, the company behind the Electric Zoo event, as well as on deals for other EDM-focused businesses.
Both that filing and last week's revised prospectus noted the potential for illegal drug use at its events to expose SFX to legal liability and cause it to suffer financially as a result of drug-related cancellations or revoked licenses; the latter document explicitly cited the Electric Zoo deaths in the section devoted to "risk factors."
Reed Smith's Aron Izower is advising SFX on the planned IPO, according to the SEC filings. Izower also represented SFX on its $50 million purchase of Beatport, a music downloading website, in February. White & Case capital markets partners Colin Diamond and Holt Goddard are representing a group of underwriters led by UBS Investment Bank, Jefferies, Deutsche Bank Securities, Stifel, and BTIG.
Dre Day for Munger Tolles, Latham
Dr. Dre's past collaborations include crafting and performing on tracks for such artists as Eminem, Snoop Dogg, and Tupac Shakur. Now, with the help of Munger Tolles & Olson, the legendary hip hop producer is teaming up with yet another heavyweight: private equity firm The Carlyle Group.
Carlyle announced Friday that it is making a minority investment in Beats Electronics, the company founded by Dr. Dre, whose given name is Andre Young, and Interscope Geffen A&M chairman Jimmy Iovine that makes the wildly popular Beats by Dr. Dre headphones and other audio products.
Though the parties did not disclose the terms of the deal, The New York Times, citing anonymous sources, pegged Carlyle's investment at $500 million—a sum that would value the company at more than $1 billion. (While that may seem like a large valuation for headphones, there are those who feel Carlyle actually got a bargain in buying its chunk of Beats—a company that has grown rapidly in recent years to the point that it controls more than 64 percent of the North American market for high-end headphones.)
Munger is representing Beats on the investment as well as on its related agreement to buy back the 25 percent stake in itself that had been held by Taiwan's HTC. Beats is paying $265 million for that stake, while also repaying a $150 million promissory note held by HTC. (The firm represented Beats on HTC's original investment in the company in 2011.)
The Munger team working on the matter is led by Los Angeles–based corporate partner Kevin Masuda. Tax partner David Goldman and corporate finance partner Judith Kitano are also advising, along with associates Jennifer Broder, Samuel Greenberg, Jasmine Roberts, and Mark Sayson.
For its part, Carlyle is being advised by longtime outside counsel Latham & Watkins. The Latham team includes M&A partners David Lennon and Paul Sheridan. Tax partner David Raab, finance partner Jeffrey Chenard, benefits partner David Della Rocca, IP partner Steven Betensky, and antitrust partners E. Marcellus Williamson and Susanne Zuehlke are also advising. Associates on the matter are Benjamin Berman, Eric Geffner, David Greene, Adam Kestenbaum, Blair Marsteller, Katherine Putnam, Andrea Ramezan-Jackson, and Cory Tull.
Finger Still Causing Friction for M.I.A., NFL
The Hollywood Reporter revealed last month that rapper-singer M.I.A. has been involved in behind-the-scenes legal proceedings with the National Football League and its Proskauer Rose lawyers in connection with the infamous 2012 Super Bowl halftime performance during which she flashed her middle finger on camera while performing alongside Madonna.
According to THR, Proskauer partner Charles Ortner is representing NFL Enterprises in a suit filed last year with the American Arbitration Association in which the league seeks $1.5 million from M.I.A. based on its claim that her display of the offending digit constituted a breach of her contract for the show. That contract, according to the league, stipulated that M.I.A.'s performance remain in line with the NFL's "goodwill" and "reputation for wholesomeness." (Neither Ortner nor a Proskauer spokeswoman immediately returned calls seeking comment.)
Last week, the singer posted a YouTube video in which she called the suit "completely ridiculous" and argued that the halftime show's inclusion of underage dancing cheerleaders was more offensive than her own actions. M.I.A. attorney Howard King is also trying to paint the NFL as a hypocrite by asking fans to submit examples of what he describes as the ways in which the NFL and its representatives have damaged the league's reputation with unsavory behavior. King has also noted that—unlike the notorious Super Bowl incident that gave rise to the term "wardrobe malfunction"—neither the Federal Communications Commission nor the network that aired the game, NBC, has filed a claim regarding M.I.A.'s finger.
Proskauer, which frequently serves as the NFL's outside counsel, advised league management last year in labor talks with the National Football League Referees Association, which resulted in a new contract only after a three-week lockout, and in 2011 when the NFL and its players agreed to a new collective bargaining agreement.
Court Deactivates Big Video Game Industry Deal
In news related to games played on a screen rather than a field, a Delaware Chancery Court judge recently pressed "pause" on Vivendi's $8.2 billion sale of the majority of its 61 percent stake in Activision Blizzard, publisher of such popular video game franchises as Call of Duty and World of Warcraft, in the wake of a shareholder lawsuit over the share buyback.
The suit, filed by an Activision investor in Delaware last month, alleges that the two companies breached their financial duties by not subjecting the deal to a shareholder vote.
On September 18, Activision released a statement announcing the court's decision to issue a preliminary injunction blocking the deal, which was announced earlier this summer, in connection with the shareholder suit. Now, Activision is hoping that its emergency appeal, filed last week, will reverse that ruling and put the transaction back on track. Otherwise, the company might have to put the deal up for a shareholder vote—though it claims the injunction does not give it adequate time to schedule a shareholders' meeting before the existing deal with Vivendi automatically terminates on October 15.
Vivendi and Activision reached the deal at issue in July when a group of investors joined the latter to buy out almost all of Vivendi's shares in the gaming company. According to our prior reporting, the two companies had hoped to close the deal by the end of September. Gibson, Dunn & Crutcher has been representing Vivendi on the matter with Richards, Layton & Finger serving as the French conglomerate's Delaware counsel. Skadden, Arps, Slate, Meagher & Flom has been advising Activision, with Sullivan & Cromwell acting for the investor group and Wachtell, Lipton, Rosen & Katz counseling a special committee of independent Activision directors.
Arguments in Activision's appeal are scheduled to begin in Delaware court on October 10, according to Reuters.