This week, Live Nation sold its theater business to Key Brand, a private investment group. (Check out the Variety coverage here.) The deal divests Live Nation of virtually all of its legit theater assets, and launches Key Brand as a solid niche player in that industry. This is a great example of a strong company further focusing its business on the assets that are making money.
Live Nation has firmly established itself as not only the leader, but really the only major player in the live music business. As anyone in the music industry will tell you, concerts are now the economic center of the music business. It used to be that concerts were used to promote music sales. Now, the roles are reversed -- recorded music is created as much for marketing tours as for profit. Live Nation is the company that has capitalized perfectly on this paradigm shift.
Live Nation separated itself from Clear Channel's broadcast assets in 2005 and has never looked back. The current move away from theater is a further refinement which allows it to fully exploit its dominant position in live music. LN can now focus virtually all of its attention and assets on the business where it makes (and will probably continue to make) the most money. This is smart and a great example of a solid business divestment strategy.
Most often, we think of companies divesting assets in order to pay down debt. In this case, divestiture is a key component to Live Nation's growth strategy. Think about this in your own business. What business activity could you stop doing that would open the door to further growth in the remaining areas?