Minneapolis Hearts Clear Channel: The Semantics Of Ownership

Council vote seals theater deal

The most striking thing about last Tuesday's debate over the future of the Hennepin Avenue theater district was that a majority of the Minneapolis City Council had no qualms about getting in bed with Clear Channel Entertainment. The second most striking thing was that a few ward leaders even believe the media behemoth to be a benevolent presence.

Back in November, when city leaders were first considering a theater agreement, council members like Gary Schiff (9th Ward) and Scott Benson (11th Ward) were effusive in their praise of productions CCE had brought to the profitable district. A handful of council members, most notably Paul Zerby (2nd Ward) and Paul Ostrow (1st Ward), expressed reservations about allowing Clear Channel to run the show and wondered if the deal would allow the San Antonio-based company to own the theaters outright one day. Lisa Goodman, who represents the theater district's 7th Ward, was dismissive of any dissent, at one point calling the ownership question "silly."

Tuesday's meeting wasn't much different, except that this time even the voices of dissent carried an air of concession. The staff recommendation, months in the making, was presented before a joint meeting of the council's Ways and Means/Budget and Community Development committees. The proposal, presented by Lee Sheehy, the city's new planning and economic development czar, contained a number of clauses to clarify that the "local nonprofit," Hennepin Theatre Trust, would assume ownership after 30 years.

HTT, it was reasoned, was not susceptible to a corporate takeover, and would be run by a board that would ultimately have control over the events at the theaters. (In other words, Clear Channel couldn't swallow the nonprofit and own the theaters.)

But the "local for-profit"--the Historic Theatre Group--and Clear Channel would be responsible for the day-to-day operations and reap the revenue from the gate. (For this, Clear Channel would back the bonds on $22 million in theater-related debt.) Some were surprised to learn that, as Sheehy put it, a relationship between HTG and CCE would be "consummated" should the council approve the agreement: That is, Clear Channel will assume majority ownership of HTG in a matter of weeks.

Fred Krohn, who has been involved with some incarnation of HTG since the 1970s, when it had a stake in Bob Dylan's purchase of the Orpheum, explains that he'll "be more involved than ever...Clear Channel will have a 51-49 ownership for five years," Krohn says, and then the arrangement will be reviewed. "Say what you will about Clear Channel, but they've been very good at capital improvements, putting some $40 million in the Boston opera house. We've had a relationship with Clear Channel for nine or ten years."

Advocates for the Clear Channel deal repeatedly referred to clauses in the "term sheet" detailing parts of the proposal that specify that HTG maintain an "open calendar" policy, meaning that the booking of the theaters won't be dominated by Clear Channel. The conglomerate will be responsible for booking and promoting the "Broadway season," or about 50 percent of the events presented at the theaters. More than that, the clause only guarantees "right of first refusal" to Clear Channel. If CCE declines to promote a show, HTT, the local nonprofit, will be free, theoretically, to produce and promote events without the company's influence.

Even so, it's doubtful that CCE, which has been a money-losing endeavor for Clear Channel, will beg off of much. The company has dominated theater productions in New York and Chicago, and judging from the glee on the faces of City Council members and some HTT board members at Tuesday's meeting, no one is likely to stand in Clear Channel's way. When someone or something has taken some $22 million in debt off your shoulders (and another $300,000 in annual operations), you don't ask too many questions.

In the end, the two council committees had different votes on the matter. The Community Development Committee voted to forward the recommendation to the full council with approval. (Barret Lane of the 13th Ward did not vote, because, as he said, he hadn't had enough time to review the term sheet.) The Ways and Means/Budget committee, however, voted to forward without recommendation.

But either way, the dissenters only number three or four on a thirteen-member body. The final vote goes before the full council on April 15, and it's a guarantee that Clear Channel is here to run the theaters for as long as it sees fit.

 
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