Over half a million tourists from all over the world stream into the shrine called Graceland each year. When his record company rereleased Elvis singles to promote his latest greatest-hits compilation in 2002, 19 of them became top five hits in Britain. (A hip-hop-style remix of "A Little Less Conversation" was a No. 1 hit in more than two dozen countries, including the U.S.).
And Elvis impersonators are still fixtures in everything from movies to corporate events. As a business, though, Elvis has been stagnating. Revenues at the company that manages his affairs, Elvis Presley Enterprises, have been flat at $40 million for five years. A costly restaurant venture in Memphis went bust. There is little profit to invest in potentially lucrative assets like the Heartbreak Hotel, across the street from Graceland.
Elvis's 37-year-old daughter and heir, Lisa Marie, has been unhappy that the business has been going nowhere: "We were doing good, but you can't stay the same," she says. "You either have to grow or go down."
In other words, Elvis is a classic buying opportunity: The underlying fundamentals are sound, but current management has been unable to take the business to the next level. At least so says a Wall Street entrepreneur who is hoping to make Elvis the centerpiece of his burgeoning media company—not only extending the King's reign but also taking advantage of technological and demographic changes rocking the media and entertainment industries.
In just the past few weeks we've seen a flurry of deals by companies seeking to profit from this tumult: TV networks are offering shows for sale, AOL is selling vintage programs online, and cellphones and iPods can now deliver music, video, and TV. In other words, distribution companies are falling all over each other to reach customers through new, competing outlets. With so many formats vying for consumers' attention, content is king.
And the King is content! The man who bought Elvis is Robert F.X. Sillerman, 57, a Wall Street operator with a long history of minting money in the media business. In 1989 he sold a group of radio stations to Westinghouse (now Viacom) for $389 million. Eight years later he unloaded a bunch of stations to Hicks Muse for $2.1 billion.
In 2000 he sold a company that owned concert venues to Clear Channel for a reported $3 billion. In each case Sillerman assembled a collection of media properties—all in distribution—at low prices and then unloaded the bundle for a higher price. He seems to have a knack for selling just when markets are at their peak, which has given some buyers severe indigestion. Now, after "lying in the weeds" for a few years and fighting and beating cancer, Sillerman is at it again, pulling together another media empire, which—though Sillerman won't acknowledge that he has an endgame in mind—he'll ultimately look to sell for another big score.
Sillerman's latest publicly traded corporate incarnation is called CKX. The CK stands for "content is king," while the X is a reference to one of his middle initials (they are F.X., and he won't tell anyone what they stand for). Besides buying Elvis Presley Enterprises from Lisa Marie Presley last February, Sillerman and his lieutenants have purchased the smash-hit TV show American Idol and other properties from a company called 19 Entertainment, which was owned by British pop impresario Simon Fuller.
Sillerman intends to buy more high-profile properties like these (think athletes and rock groups, for instance—Sillerman is tightlipped about possible deals), find new ways to distribute them, and increase their value. These are Sillerman's strengths: identifying trends in the media business before others, then gathering and deploying capital to make the strategy work.
"Bob is like a Clint Eastwood character in an old Western movie," says Dennis Arfa, a business associate of Sillerman. "He rides into town and leaves with all the money and the women. He made a lot of people wealthy, and he made himself even wealthier." Visit with Sillerman for an hour or two in his Manhattan office, and you are likely to get a rapid-fire discourse on politics from the 1960s to today, or rock & roll radio, or Thoreau, or education in America, or all of the above. You may find him a bit quirky. He loves to party. He's been known to sneak up on people and scare them. And there are a couple of Sillerman stories that involve
Says his longtime business partner, disc jockey "Cousin Brucie" Morrow: "Bob is very exhausting to be with. He has unbounded energy when it comes to business. He can outlast and outtalk anybody." Says a close colleague: "His BlackBerry messages start at 6 a.m. and never stop into the night. I should get a waterproof one for the shower."
At this particular sit-down, when Sillerman gets around to talking about CKX, he says, "Technology is breaking down the old lines of distribution. More and more content can go directly to consumers through cellphones, devices like iPods, and home video, which makes content even more valuable."
But doesn't Sillerman's strategy fly in the face of what big media is doing right now? Aren't companies like Viacom and Time Warner disassembling or considering disassembling their empires, while Sillerman is putting one together?
"It's different," Sillerman says. "Those companies promised two things. They wanted to marry content with distribution, where CKX will not be in the traditional distribution business. And they said they would synergize their content. Synergy is not important. It's a word I've never liked. That's not part of our strategy." Though the Elvis business isn't that big yet, it gives us a window into how Sillerman operates. First, understand that Sillerman actually owns very little of Elvis's music.
Elvis's legendary manager, "Colonel" Tom Parker (a.k.a. Andreas Cornelius van Kuijk), sold the rights to RCA—now part of Sony BMG—decades ago. What Sillerman bought was Elvis Presley Enterprises (EPE), a company that gets its $40 million in annual revenue from Graceland tours, onsite retailing, and licensing—each contributing a bit less than a third of the total—with the balance derived from an apartment complex and the Heartbreak Hotel.
To Sillerman, Elvis is an underexploited asset, like a poorly managed textile company or a baseball team without a marketing department. The truth is, for all of Elvis's transcendent mystique, EPE has never been much of a business. When the King died in 1977, his estate was a mess. Between Elvis's legendary free spending and the fact that he didn't own his songs, the situation was dire.
"In February 1982 the probate judge told the trustees of the estate that he feared it would go bankrupt because of taxes and legal fees," says Jack Soden, a Kansas City money manager brought in to advise the Presley family. "We had to do something right away to make money, and that something was to open up Graceland for tours."
On the first day Soden and Elvis's ex-wife, Priscilla, opened up the Memphis mansion, 3,024 fans filed in, paying $5 each. Today about 600,000 visitors make the pilgrimage to Graceland each year (30% from abroad), paying between $22 and $55 apiece. Take a walk through Elvis's home with the throngs, and the feeling you get is reverential.
"The Bolshoi Ballet came en masse to Graceland," Soden recalls. "All these ballet dancers from Russia were huge Elvis fans, and [their handlers] were asking for our help to get them out of here and back to rehearsal. They had a per diem, and they were missing meals and saving money so they could buy more stuff at the shop." Soden has escorted everyone from William F. Buckley to I.M. Pei through the hallowed halls. "I suppose there are all kinds of gratifying lines of work," he says.
"This stands out as unique. I have never had one single boring day." Soden, who will continue running EPE in the new company, enhanced the Elvis business by