HOB Entertainment, Inc.

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HOB Entertainment, Inc.

6255 Sunset Boulevard
Hollywood, California 90028
U.S.A.
Telephone: (323) 769-4600
Fax: (323) 769-4787
Web site: http://www.hob.com

Private Company
Founded: 1992
Employees: 2,029
Sales: $87.8 million (1998)
NAIC: 512220 Integrated Record Production/Distribution; 512290 Other Sound Recording Industries; 514191 On-Line Information Services; 722110 Full Service Restaurants; 711310 Promoters of Performing Arts, Sports, and Similar Events with Facilities; 711320 Promoters of Performing Arts, Sports, and Similar Events without Facilities

HOB Entertainment, Inc. owns or operates several concert venues, with its primary involvements in blues music. The company’s core operations are its House of Blues restaurant-concert hall venues in Cambridge, Massachusetts; Los Angeles; New Orleans; Chicago; Myrtle Beach, South Carolina; Orlando, Florida; and Las Vegas. The House of Blues offers a range of blues and blues-influenced music, such as the early, rural blues, gospel music, Cajun styles, reggae, contemporary blues, and rap. HOB Entertainment provides blues-oriented entertainment over the Internet, including live concert footage, and through its recording label. The company also promotes a variety of live music performances through concert venues nationwide.

Isaac Tigrett’s “Mission from God” in the Early 1990s

When Isaac Tigrett formulated the House of Blues restaurant and blues club concept, his intention was to bring something authentic to the world. Tigrett had been disappointed with the commercialism that developed as the Hard Rock Cafe, which he cofounded with Peter Morton in London in 1971, grew into an international chain of restaurants. The restaurants featured rock ‘n roll music memorabilia, with Hard Rock Cafe t-shirts becoming a status symbol among fans of rock ‘n roll music. Tigrett sold his interest in the company in 1988 and planned to lead a more spiritual life, but his spiritual teacher advised him to remain active in business. He conceived the House of Blues concept as a way to preserve blues music, as an art form with more than 100 years of continuous development, by providing a forum for live performance of traditional and contemporary blues. He also viewed education about the history and social influence of the blues as a way to cultivate multiculturalism, hence the company’s slogan, “Unity in Diversity.”

Some of the inspiration and momentum for the House of Blues came from the popular 1980 movie, The Blues Brothers, starring Dan Aykroyd as El wood Blues and the late John Belushi as Jake Blues. Like the protagonists in the movie, Tigrett felt himself to be “on a mission from God” (Los Angeles Times, April 13, 1996). The original House of Blues logo featured the faces of Jake and Elwood Blues. Initial investors in the House of Blues included Aykroyd and Judith Belushi Paisano, widow of John Belushi, as well as the late John Candy and the late River Phoenix.

Tigrett opened the first House of Blues venue, a 280-seat concert hall and 200-seat restaurant, in Harvard Square in November 1992. The interior design of the restaurant-blues club presented a contemporary variation of the old southern juke joint like the ones Tigrett had enjoyed as a native of Tennessee. Artistic touches included African-American folk art and the plaster relief portraits of 80 renowned blues artists, such as Muddy Waters and B.B. King, embedded in the ceiling panels. A retail store—Take It Easy, Baby—offered recorded blues on audio and video, blues magazines, musical instruments, and a full line of clothing. In addition to live music nightly, the House of Blues offered a Sunday gospel brunch, with live gospel singers and three seatings, which sold out a week in advance.

The international menu offered dim sum, wood-fired pizza, and tandoori chicken, as well as classic southern dishes, such as jambalaya and baby back ribs with a choice of four barbecue sauces: spicy Jamaican, Smokey Joe, Tennessee Style, and Kansas City Style. Within a month the House of Blues served 200 to 225 lunches daily, with check averages at $8.50 person, and dinner checks that averaged $12.00 per person serving 175 to 200 meals per night.

Tigrett’s plans for the company included House of Blues venues in New Orleans, Chicago, Los Angeles, and other major cities; syndicated radio and television shows; a record label; and a nonprofit educational organization on blues music. Through a joint venture with CBS Radio Network, HOB Entertainment launched the House of Blues Radio Hour in September 1993. Hosted by Aykroyd as his Elwood Blues character, the show emphasized the history of blues music. By December the show was syndicated in 35 markets.

To fund further projects Tigrett raised $32 million through a private placement of 71 percent interest in the company. Surprisingly, the Harvard University Endowment Fund invested $10 million, commending Tigrett’s creative vision and previous success. Sir James Goldsmith, a wealthy British capitalist and an associate of Tigrett’s father who had invested in the first Hard Rock Cafe, also invested in House of Blues. Other investors included James Belushi, brother of John Belushi, and members of the Aerosmith rock ‘n roll band.

Tigrett formed the House of Blues Foundation to develop a curriculum on the history and culture of the blues and blues-based music from the plantation workers of the Mississippi Delta to present times. The Center for the Study of Southern Culture at the University of Mississippi and The Dubois Institute at Harvard University provided scholarly support. The first series of classes, offered three hours a week, three days a week took place at the House of Blues. The program proved to be very popular with local schools and Tigrett planned to offer it at other House of Blues venues as they opened.

The New Orleans House of Blues opened in the French Quarter in January 1994. The 27,000-square-foot facility housed a 1,000-seat concert hall and a 350-seat full-service restaurant. The interior featured a look similar to that of the Cambridge venue, with the plaster relief portraits on the ceiling by local artist Andrew Wood and folk art from the Mississippi Delta region. The grand opening featured renowned New Orleans blues artist Dr. John, and a newly formed Blues Brothers Band with Dan Aykroyd, Andrew Strong, Carla Thomas, and local bluesman Robert Jr. Lockwood.

Aerosmith played the March 1994 grand opening of the House of Blues on the Sunset Strip in West Hollywood. The $9 million project housed 1,000 seats in the concert hall, a $500,000 sound system, a 75-foot bar, and a movable wall on the second floor that could be raised for diner viewing when the concert hall was full. High-definition video monitors displayed information about the blues artist performing and about history.

Tigrett covered the front exterior of the three-story building with corrugated metal from a cotton mill in Clarksdale, Mississippi, where legendary blues singer-guitarist Robert Johnson supposedly gave his soul to the devil so he could play the blues.

The venue also housed the Foundation Room, a private club with membership based on a minimum donation of $2,200 to the educational foundation. The club featured a 70-seat luxury dining room and a lounge lushly decorated with East Indian fabrics, wood carvings, and art. Tigrett promoted the club by opening it to the entertainment elite, making the House of Blues the place to see and be seen. With the attraction of celebrities, the Hollywood House of Blues became overcrowded, but after a couple of years it settled into a credible blues night club, with performances that sold out regularly.

House of Blues Expansion Through Related Businesses in the Mid-1990s

In August 1994 the House of Blues Music Company formed a new record label through a joint venture with Private Music, an imprint of BMG Music Group. Private Music handled sales and marketing, and HOB handled talent, recording, and publicity. House of Blues Music purchased and renovated a recording studio in Memphis, hiring David Z as producer and sound engineer. The company signed its first contract with “Monster” Mike Welch, a 14-year-old blues artist from Boston, and planned to produce a compilation of previously unreleased recordings by Albert King.

The House of Blues New Media group formed in January 1995 to utilize the capabilities of personal computers and the Internet toward the company’s goals. HOB New Media planned to create interactive entertainment software for CD-ROM using live concert footage from HOB club venues. Electronic publishing projects included a blues magazine, the history of the blues, video games, and screen savers. The group’s first main project involved a live gospel concert with the Five Blind Boys of Alabama and a show on blues history broadcast from the Hollywood club via the Internet on Martin Luther King Day. The successful project became an annual event. Only the most advanced computers could download the program, however, so HOB reprogrammed the show for general access. HOB Back-stage Pass arranged similar reprogrammed, on-line concerts from House of Blues venues.

HOB Entertainment expanded and developed in a number of areas. The radio show expanded to 140 markets and attained worldwide syndication through Armed Forces Radio. “Live! From the House of Blues” began cable broadcast on Turner Broadcasting System (TBS) on network cable in early 1995, but it was canceled a year later after competition from major sports programming proved too formidable. House of Blues Records signed new gospel artists Blind Boys of Alabama and Cissy Houston. A compilation recording, “Essential Blues,” reached the top five on Billboard’s list of Top Blues Albums.

Company Perspectives:

HOB Entertainment, Inc. is a Los Angeles-based global entertainment company committed to providing the best live concert entertainment both on-stage and on-line.

HOB continued to successfully attract new capital for expansion. In mid-1995 Walt Disney purchased a 12 percent interest in the company in anticipation of the House of Blues opening near Pleasure Island at Walt Disney World in Orlando. A blues-themed hotel was under consideration for the Orlando site, as well as at proposed venues in Chicago and New York. Other new investors included Carly Simon, Isaac Hayes, and John Goodman. In May 1996 HOB obtained $55 million in financing from a consortium of venture capital firms.

HOB took the blues on the road with several temporary venues and its own concert tour in 1996. The “Barnburner” 30-city tour featured Joe Cocker and Buddy Guy and the Fabulous Thunderbirds. Participation in music festivals nationwide included company-sponsored stages at the Chicago Blues Festival and the New Orleans Jazz and Heritage Festival. Atlanta Mayor Bill Campbell invited Tigrett to stage a House of Blues venue during the 1996 Olympics. A 93-year-old Baptist Tabernacle church provided 2,200 seats for concerts held every day from July 19 to August 4. The Blues Brothers Band, with Aykroyd, Jim Belushi, and John Goodman, opened the events; other concert highlights included diverse, blues-influenced artists, such as Al Green, Johnny Cash, and Tito Puente and his Latin Jazz All-Stars. HOB also sponsored an outdoor stage and a food tent during the Olympics, with the rustic cabin where Muddy Waters was born on display next to the food tent. Mayor Campbell wanted Tigrett to open at a permanent location in Atlanta, but Tigrett declined, citing losses during the Olympics and lack of other development and a solid customer base near the proposed site. HOB also provided half-time entertainment for the Super Bowl in New Orleans in January 1997.

HOB Online continued to develop HOB’s Internet presence with contests and live chats with blues artists through HOB’s home page. HOBTours.com featured concert itineraries, artist biographies, sound clips, and merchandise. In a partnership with Progressive Networks HOB started LiveConcerts.com, the first web site dedicated to on-line concert programming. Progressive Networks had developed Real Audio, a technology that enabled real-time audio over the Internet, and continued to work on technology to provide live video in real time. HOB hoped to broadcast live concerts in real time via the Internet. The company planned to place computer monitors at restaurant tables, allowing customers at one House of Blues to watch a live show from a venue in another city.

Changes at House of Blues Music involved a change in ownership, with Private Music selling their interest in the joint venture to Platinum Entertainment in the fall of 1996. House of Blues Records became an imprint of Polygram, which took over sales and marketing responsibilities. While unknown artists had not done well, leading some evaluation of artists signed, compilations sold well, as “Essential Blues 2” made Billboard’s list of Top Blues Albums. Planned compilations included “Essential Southern Rock” and gospel artists on “Houses of God.”

New Venues and Internet Opportunities Becoming the Focus of the Late 1990s

By late 1996 HOB’s expansion plans began to manifest themselves, with three new venues opening within a year. In November 1996 the Chicago House of Blues opened at the Marina City Towers. HOB modeled the 41,000-square-foot restaurant-night club on existing venues, with the addition of television production studios and multimedia and radio broad-cast facilities. House of Blues venues opened in Myrtle Beach in May 1997 and in Orlando in September 1997. The 57,000-square-foot venue at Disney World, a warehouse-style juke joint, was set in a voodoo garden along a Louisiana-style bayou. The concert hall accommodated 2,000 people and the restaurant sat up to 500. New merchandise at the retail stores included pork-pie hats, like those worn in the 1940s, Louisiana hot sauce, and mojo bags, a voodoo love magic. Each House of Blues venue cost $15 million to $20 million to open.

Despite the opening of these new venues, the growth of the company was slower than expected, leading to conflicts between Tigrett and the board of directors. Tigrett wanted slow growth in order to build anticipation, but the board wanted rapid growth. Tigrett stepped down in October at the behest of the board, which also expressed concern about Tigrett’s liberal spending habits and the company’s poor financial performance. Tigrett remained on the board as emeritus, while COO and President Greg Trojan, who joined the company in 1996, became CEO.

Bob Dylan opened the seventh House of Blues venue in Las Vegas at the Mandalay Bay Resort & Casino in March 1999. Just off the casino floor, the House of Blues offered nightly live music at the 1,800-seat concert hall, Mississippi Delta cuisine at its 500-seat restaurant, a Sunday gospel brunch, and the 16,000-square-foot International House of Blues Foundation Room. In addition, one floor of the hotel featured guest rooms with House of Blues themes.

HOB’s August acquisition of Universal Concerts from Seagram’s for $190 million created a substantial shift in the scope of the company. Not only did HOB obtain the second largest concert promoter and venue operator, HOB gained some of the best and most experienced promoters in the business. Universal Concerts, renamed HOB Concerts, owned, operated, or controlled 20 concert venues of various sizes, and the acquisition included development plans for 12 new venues nation-wide. The acquisition involved a record and home video label that provided a new source for on-line concerts, potentially beneficial for artists and HOB.

Key Dates:

1992:: First House of Blues restaurant-night club opens in Harvard Square.
1993:: Launch of “House of Blues Radio Hour” with Dan Aykroyd.
1994:: Hollywood venue hosts House of Blues Foundation Room.
1997:: Sixth House of Blues venue opens in Walt Disney World.
1999:: Purchase of Universal Concerts for $190 million.

Through related agreements, Getmusic.com, an on-line venture by Universal Music Group (UMG) and BMG Entertainment, provided exclusive e-commerce opportunities for HOB on-line properties. In turn HOB provided support for Getmusic.corn’s introduction of the Digital Media Distribution (DMD) system. In addition, UMG artists received opportunities to play at HOB venues and to show concert footage on HOB web sites.

In early 2000 HOB expanded its presence on the Internet through its agreement with Internet providers. HOB’s agreement with MTVi enabled live, pay-per-view concerts from House of Blues venues over the Internet at MTV.com, VH1.com, and SonicNet.com. The two-year agreement involved MTVi’s purchase of equity in HOB and HOB’s commitment to promote the MTVi events at 27 concert venues. House of Blues Digital formed a partnership with Winfire, Inc., in June to provide HOB concerts on a pay-per-view basis and HOB’s entertainment library archives on-demand to Winfire’s FreeDSL subscribers. Under that agreement HOB.com became the preferred broadband content provider. Winfire provided high-speed Internet access on broadband delivery formats, such as cable DSL technology.

Through HOB’s summer “Run of the House” promotion, the company sought to draw attention to House of Blues conceit venues and the web site. The promotion gave away two ALL ACCESS passes to the seven House of Blues night clubs and 15 HOB Concerts venues. HOB distributed more than two million CD ROMs, which directed customers to the contest location on the web. The CD ROM highlighted the web site’s audio and video download features and included concert archives and artist interviews. Winners of the promotion received unlimited entry to the 22 participating venues, including VIP parking and backstage access.

HOB planned to take the company public, registering with the Security and Exchange Commission in March 2000. HOB withdrew the offer in June, however, citing poor market conditions. HOB had hoped to raise $100 million to fund development of new venues and to expand its digital Internet presence. Cities targeted for new restaurant-concert hall venues included Paris, London, Tokyo, Rio de Janeiro, New York, Atlanta, and Denver.

Principal Subsidiaries

House of Blues Club Venues; House of Blues Concerts; House of Blues Digital; House of Blues Music Company; House of Blues Media Properties; House of Blues New Media.

Principal Competitors

Clear Channel Communications, Inc.; dick dark productions, inc.; Hard Rock Cafe International, Inc.; Launch Media, Inc.; Planet Hollywood International, Inc.; The MTVi Group; SFX Entertainment, Inc.