BILLBOARD MAGAZINE ARTICLE (this week's edition - Sept. 12)
Planet Entertainment Buys Northeast One-Stop
By Ed Christman
In agreeing to buying Northeast One-Stop (BillboardBulletin, Sept. 10), Planet Entertainment, the 2-year-old, publicly traded music label, plans to capitalize on the wholesaler's distribution capabilities to give the label's proprietary product a presence in the market.
Wallace Giakas, chairman of the Middletown, N.J.-based Planet, says that prior to the acquisition, the company, which now owns the masters to 15,000 recordings, has been mainly licensing its titles to other labels to generate revenue. The acquisition will allow the company to put out some of its own titles and realize higher profit margins, says Giakas.
Northeast One-Stop, based in Albany, N.Y., is believed to be the second-largest one-stop in the Northeast, with total net sales last year of $34 million.
Giakas says that the wholesaler will continue to be run by its existing management, including founder Lou DelSignore, president Ron Nix, and head of sales Jay Fink. Also, Bill Castle, head of rackjobbing division Summit Entertainment, will stay in place. DelSignore, Nix, and Castle will join Planet's board of directors. DelSignore was unavailable for comment.
In another development at Planet Entertainment Corp., veteran music man Marty Scott has joined the company as VP of marketing and development. Scott has responsibility for exploiting Planet Entertainment's music holdings, seeking other opportunities in music and entertainment, and advising other members of the executive team.
Scott has played a key management role in a number of music companies, including Gem, which evolved from an importer of recordings to a pioneering national distributor of alternative music. In addition, he was president of Passport Records, in association with Sire Records, and Paradox Records, through MCA.
Giakas reports that Planet will pay $3 million in cash and short-term notes for Northeast, with the acquisition expected to close later this month. In June, Planet raised $5 million through a private placement of debentures, and the company will use those funds to pay for the acquisition.
Northeast has 144 employees, with sales offices in Michigan, Vermont, Maryland, Pennsylvania, and New York, according to a press release. DelSignore has long sought to sell the one-stop and in the past has had informal conversations with Alan Meltzer, former owner of CD One Stop, as well as Planet, according to sources.
Planet is acquiring the stock of Northeast and will assume the company's debt, including accounts payable, and its obligation under the revolving credit facility.
Giakas says that thanks to some recently signed rackjobbing deals, Northeast could achieve sales of $55 million this year. Also, he says he plans to use Northeast to buttress a planned Planet World Wide Web site, which in addition to pushing the company's proprietary product, will offer the 120,000-title catalog stocked by Northeast. Moreover, Northeast will handle fulfillment for the site, making it one of the few music sites not fulfilled by Valley Media.
Planet was formed in 1996 by Giakas, a former investment banker with 18 years of Wall Street experience. Since its acquisition, the company has been acquiring masters, restoring them, and licensing them to other labels. Recent deals, according to Giakas, include licensing 100 compilation albums to Nippon Columbia, of which 50 were released June 25, while the other 50 are expected to be released in December in five markets in the Far East; a joint venture with Shandell Music in Johannesburg, South Africa, that issued 15 albums through a company named Planet South Africa; and a joint venture in the U.K. with London-based New Millennium Group that has issued 15 albums through a company named Planet U.K.
The compilations include series about the history of rock'n'roll and a history of the blues series. The company has licensing rights to masters including recordings by Tony Bennett, Janis Joplin, Glenn Miller, Jefferson Airplane, and Alabama, Giakas reports.
In addition, Planet runs the Higher Ground gospel label, which has issued an album by Chris Simpson. Also, the company owns a 48-track recording studio and restoration facility, overseen by Planet Music president Joe Venneri, who has had a long career in music, including a stint as a member of the Tokens. In addition to Venneri, a key member of Planet's management is John Arnone, president/CEO of the parent company.
Last year, Planet had revenue of approximately $1 million and this year expects about $5 million. Giakas projects that with the acquisition of Northeast the company will be doing about $200 million in a few years.
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