Take a seat behind ‘The Office’ desk at SXSW in Austin
Fans of “The Office” were given the opportunity to interact with Michael Scott’s desk at South by Southwest in Austin in March 2019.
Alyssa Vidales, Austin 360
The company that owns and puts on Austin’s iconic South by Southwest festival has sold an ownership stake to Penske Media Corp., publisher of magazines including Rolling Stone, Billboard and Variety.
The deal is for a 50% ownership stake in SXSW LLC, people with direct knowledge of the deal confirmed to the American-Statesman.
Roland Swenson, the event’s chief executive and co-founder, said the deal will give a “lifeline” to the festival, which suffered a huge financial blow in March 2020 after being canceled by Austin city officials amid the coronavirus outbreak.
“It’s been an incredibly tough period for small businesses, SXSW included,” Swenson said in a statement. “When Jay Penske came to us with interest in becoming a partner, it was a true lifeline for us.”
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Swenson said SXSW’s core business continues to be the March event in Austin. He added, “This strategic investment also brings the exploration of new capabilities in providing quality programming to our diverse community of highly engaged creative professionals.”
SXSW LLC executives declined to comment further on the terms of the agreement, but the company will retain control of the management of the festival, according to people with direct knowledge of the deal.
SXSW was held in an online-only format last month, testing the resiliency of the internationally acclaimed Austin brand that grew from a local music festival in the 1980s into a pop culture extravaganza each March that attracted close to 100,000 registered attendees, speakers and media members from around the world.
As a result of the 2020 cancellation, “our losses were financially devastating (because) much of the money we’d brought in had already been spent on the fixed annual costs” of producing the huge gala, Swenson told the Statesman earlier this year.
In written comments to the American-Statesman, Swenson said a $5 million forgivable federal loan last year — part of the government’s pandemic relief effort called the Paycheck Protection Program — helped the company stay afloat in the aftermath of the cancellation, as have “furloughs, reduced salaries and reduced expenses across the board.”
Pre-coronavirus, SXSW was widely considered to be the largest single event in Austin in terms of economic impact, with financial benefits to the metro area estimated at $356 million in 2019.
SXSW’s goal in the wake of the cancellation was to “at least break even” financially with the 2021 online-only event, Swenson said, and then to rebound with an in-person festival when people are comfortable gathering in crowds again. He voiced optimism for that being in 2022.
“Our hope is that once people feel that it is safe to return to what will be the new normal of life, there will be real enthusiasm for getting back to the things that brought them joy or opportunity or just the simple need to be out amongst humanity,” he said.
Penske Media is a digital media, publishing and information services company based in Los Angeles and New York. It publishes more than 20 digital and print brands, including Variety, Rolling Stone, WWD, Deadline Hollywood and others.
“We are grateful and proud to become enduring partners with SXSW, and collaborate with its exceptional team,” Jay Penske, CEO of Penske Media, said in a statement. “Since 1987, SXSW has been the world’s premier festival centered at the convergence of tech, media, film, and music. Today SXSW continues to be one of the most recognized brands for empowering creative talent and bringing together the brightest creators of our time.”
Penske said that as part of the investment, the company intends “to build upon SXSW’s incredible foundation while extending the platform further digitally and assisting Roland and his incredible team to bring their vision to even greater heights.”
SXSW’s management team and core business will remain unchanged while focusing on the March 2022 event in Austin, Penske said.
Cody Cowan, executive director of the Red River Cultural District, said he applauds SXSW finding a path forward.
“Workers and small businesses, like music venues, receive their single biggest annual cash infusion at SXSW, and we need those events to come back in person, sustainable and strong in 2022 for our music industry to recover,” Cowan said.
Amber Gunst, CEO of the Austin Tech Council, said SXSW’s decision to sell an ownership stake was probably wise to get additional investment. Gunst also said she doesn’t think SXSW ‘s leaders would take on a partner that is going to take away what has been special about SXSW
“I don’t really see it having a negative impact on how (SXSW) is run. I think it’s a good idea to bring in new ideas and bring in refreshing aspects as well,” Gunst said.
She said having an industry giant such as Penske Media become co-owner of SXSW is an indication of Austin’s growing national reputation.
“I think it just goes to show that Austin is on the map for what companies are wanting to do and for the investment that’s coming into the area,” Gunst said. “It’s an opportunity to have a large brand like that now associated with a really popular Austin brand that has been around for over 20 years, that really gives this aspect of looking at it from a global perspective.”
Statesman staff writers Bob Sechler and Deborah Sengupta Stith contributed to this report.