SFX planning to sell Beatport

Troubled EDM empireSFX Entertainment is trying to sell off its streaming and download platform Beatport.

As SFX is currently restructuring after filing for chapter 11 bankruptcy on February 1 to sort out mounting debts of US$490.2 million (A$677.9 million), it must seek permission from Delaware bankruptcy courts to let go of the major EDM brand.

It claimed in court documents that it can no longer continue financially investing in Beatport, which lost $5.5 million ($7.6 million) in 2015 after earnings of $7.1 million ($9.8 million) in 2014. After generating revenue of $46.5 million ($64.3 million) in 2014, the figure dropped to $39.1 million ($54 million) last year. Beatport expenses rose from $11.2 million ($15.4 million) to $18.7 million ($25.8 million).

“While the Beatport assets are valuable to the SFX enterprise, given SFX’s current financial condition, SFX cannot afford to make additional investments in Beatport as may be needed in the future, and therefore, has decided to sell the Beatport assets.” See full document here.

SFX bought Beatport in 2013 for $50 million ($69.1 million), to consolidate its presence with DJs, EDM artists and consumers as a digital marketplace, and expanded its offerings to include video, streaming and editorial.

Already 24 parties have expressed interest, with 18 of these performing due diligence. The auction is held in New York, with bids to be submitted by April 28 and make regular payments of $250,000 ($345, 700) from May 3. The court will approve the sale on May 5.

Beatport’s lure is its reputation as a brand in the global EDM sector, which would allow corporations to use it to launch themselves into the buoyant EDM and streaming sectors.

Beatport responded, “We are both flattered and encouraged by the number of companies that have already expressed an interest in acquiring Beatport. For over 12 years, Beatport has served as the global source for electronic music worldwide. This legacy, and the complete music experience we have built around it, will continue to guide our vision. As always, our priority remains our customers and partners. We are excited for the future.”

Immediately after SFX’s bankruptcy filing, Beatport assured the EDM community that it was “just business as usual”, with the store remaining open, the streaming uninterrupted, new releases added daily, new videos shot and payments to labels and suppliers “ongoing in their usual manner.”

SFX is also looking at selling marketing company Fame House, which it also bought in 2013. It is now the chief digital agency for SFX properties such as Made Event, ID&T and Beatport.