The Wall Street Journal is reporting today that Canada's Mood Media will buy Muzak for $305 million in cash. If the deal goes through, it will not be the first time somebody has paid hundreds of millions of dollars for the company that pioneered generic white noise. It might even be a good investment, had Muzak the company kept pace with muzak-the-ever-present-phenomenon over the past thirty years. But it has it? A look at the corporate timeline suggests Muzak's real business is the business of being bought and sold:
The good times are rolling. Despite a national recession, the company's sales for the previous year approached $200 million. The Washington Post estimates 80 million Americans--a third of the country--hear Muzak each day. And they're not just content to supply background music. The company is branching out, striking deals with record labels to license original master recordings from artists like Fleetwood Mac and Steely Dan.
Westinghouse acquires Muzak after purchasing corporate parent Teleprompter for $646 million. Teleprompter's local cable franchises and 50 percent stake in Showtime were also included in the deal.
Field Corp. buys Muzak from Westinghouse and merge it with YESCO, a rival based in Seattle. Meanwhile, the brand's decline is starting to show on the balance sheet. According to Time, "the company and its affiliates [took] in more than $150 million" in 1983, down close to $50 million from their 1979 numbers.
The Seattle Post-Intelligencer details the new management's efforts to "update [t]he moribund Muzak sound" for the 1980s. Among the changes: swapping out recordings from "cadres of European orchestral musicians" with "contemporary instrumental versions of hits by Michael Jackson, Bruce Springsteen [and] Foreigner." It is at this point that Ted Nugent offers to buy Muzak for $10 million, solely for the purposes of shutting it down.
Tepid Wall Street reaction causes the company to pull its planned $69 million IPO. They turn instead to the junk bond market, quickly assuming $85 million in debt in an effort to meet operating costs and--confusingly--pay off existing debt.
Despite a heavy debt burden and stagnant revenues, Orlando communications firm Audio purchases Muzak for $250 million and assumes all of its debt. Operations are moved out of Seattle and to a brand new 100,000-square foot facility in Fort Mills, South Carolina.
Muzak and competitor DMX request an SEC antitrust exemption so they can merge, sell off the new company, and get out of the elevator music business forever. The timing would have been ideal. The market crash hadn't happened yet and Muzak was about to post a loss for the 13th straight fiscal year.The agreement predictably falls apart while waiting for government approval.
The music stops. Muzak files for Chapter 11 bankruptcy protection. Court filings place the company's debt somewhere between $100 million and $500 million, notes the New York Times' Andrew Ross Sorkin, with U.S. Bank alone on the hook for $371 million in unsecured debt. The company listed total assets of just $50,000.
The music begins again. Muzak emerges from Chapter 11 after less than a year, its debt reorganized down to $230 million