How Pemberton Music Festival continues to hammer Pandora

By Drew Penner

It’s the season when artists are prepping their applications for music festival installation grants, food vendors are planning their merchandise offerings and headliners are cooking up those tracks they hope will dominate the airspace. But as event PR managers hit up their lists to generate buzz and record label office workers consider how the Grammys could influence signees’ summer gigs, the carcass of Pemberton Music Festival continues to slowly decompose.

“We got fucked over for 60 grand,” said Lewis Neilson, owner of Production Power Corp., which had run electricity at the BC Interior grounds in 2016 and was expecting to do the same in 2017 before it was cancelled. “They lulled us into a false sense of security.”

But as B.C. Supreme Court Justice Paul Pearlman rejected ticket seller Ticketfly and its former owner Pandora Media’s efforts to recoup losses from the event in a Dec. 29 decision[1], the possibility of vendors and some ticketholders seeing any more of what they’re owed grew dimmer.

The event was managed through a complex partnership that shifted at the last minute as losses piled up and investors lost faith in Huka Entertainment LLC, which had been the exclusive producer starting in 2013. So when the dust cleared and local companies tried to figure out how to get paid, they discovered Huka was no longer in charge.

“They just sort of dropped off the face of the Earth,” Neilson said, noting Huka was always named on his contracts, along with an entity called Twisted Tree (whose directors were senior Huka executives). “The first thing they did was pay themselves.”

There’s plenty of bitterness and frustration lingering in the music industry, likely due in part to the role the event’s failure played in a power struggle over who will control the future of the next musical revolution – streaming.

It may be hard to imagine a festival that averaged nearly 40,000 people a day in its final year in operation still managed to lose $47.7 million over three years, but the court case lays that truth bare.

By May last year, when organizers filed for bankruptcy, they had just $3.3 million in cash left, a good portion of which came from 2017 ticket sales.

That will probably go to investors, since they’re the only parties named as senior creditors, as noted in a recent Amplify article[2]

As the streaming industry saw streaming revenue grow 60% in 2016, according to a IFPI Global Music Report, Pandora has been losing ground.

Its ad revenue growth declined, as Pemberton rolled out it’s slate of 2017 headliners, including Muse, A Tribe Called Quest and Chance the Rapper. Meanwhile, its own digital war with Apple Music, Google Play and Spotify intensified. Pandora was an early streaming success but now must fend off these players, all carving out healthy shares of the digital audio listening market.

Pandora was at least on track to beat expectations in its second fiscal quarter last year – until Pemberton came along.

The company had dropped $450 million in cash and stock in 2015 to acquire Ticketfly, named the exclusive ticket vendor for the festival.

On a conference call in July 31 to reveal financial results for Q2, Karen Walker, the company’s CAO, said it was Pemberton that caused it to fall short of its hopes for the quarter. That included a $6.6 million charge.

“Had it not been for the previously mentioned bad debt expense for Pemberton, we would have exceeded the high end of our guidance by a significant margin,” she said.

Its Q2 earnings before interest, taxes, depreciation and amortization came in at a loss of $54.3 million. Early in June the company announced the sale of Ticketfly to Eventbrite, for $200 million.

Pandora and Eventbrite both declined to be interviewed for this article.

As part of the deal Pandora would have to deal with the rest of the Pemberton consequences.

“Pandora agreed to assume responsibility for any and all obligations of Ticketfly resulting from these bankruptcies,” Jeremy Liegl, Pandora’s assistant secretary, wrote in an affidavit Aug. 16, noting they’d also benefit from any money that could be recovered through the courts.

It tried to get remaining money set aside into a constructive trust for attendee refunds (about 80 per cent of whom have already been paid out by credit card companies).

In rejecting Pandora’s idea, Justice Pearlman also said they had failed to prove promoters acted fraudulently or in bad faith.

But that doesn’t change how sketchy organizers acted during the 2016 festival when they were in the midst of sustaining $14 million in losses, Neilson said.

“Why do they look like someone died?” he remembers thinking when they were hiding out in their offices and wouldn’t even eat with the crew. “It was because they weren’t going to admit how much money they lost. They were trying to fix it. Fix it. Fix it.”

If they had just blown their own money that would have been one thing, Neilson said.

“They took our money and they stole it from us,” he said. “Huka got paid. And we didn’t. So explain me that.”

Huka did not respond to multiple requests for an interview for this article.

As of Jan. 27, 2017, however, its website, carrying a 2018 copyright, still claims to be “TICKETFLY POWERED.”

[Photo Credit: Nick Thompson]

References   [ + ]


2 Responses to How Pemberton Music Festival continues to hammer Pandora

  1. TBONE says:

    ‘Its ad revenue growth declined, as Pemberton rolled out it’s slate of 2017 headliners’

    You get part marks on this one, it should be ‘its’. Sincerely, a Pemberton Secondary Grad.

    • nonconfidencevote says:

      That’s the point of the whole article….spelling, grammar and punctuation…………..
      Missed out on “Reading Comprehension” in Pemby Secondary did we?

      I guess the dozens of contractors that were burned for thousands of dollars bores you?
      You have to go off track to point out minor spelling faux pas?

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