The Urge to Merge

In the Afterword to Stage Money: The Business of the Professional Theater the impact of the recession on the theater, particularly the not-for-profit theater, is examined. We write that statistics show that the NFP theater was ready for consolidation before the recession.  And a recession always speeds the pace of consolidations.

"Consolidation" is a business term for what happens when some line of business is overbuilt, when there are more suppliers than there are buyers to support.  In response, firms go under, become smaller often via bankruptcy, change their line of business, or merge with other businesses hoping size will save them.  With fewer suppliers, the supply and demand become balanced. We've seen lots of NFP theaters going under and a few going through bankruptcy to reorganize their debt.  Many NFP theaters are staging safer, more middle-of-the-road material than before, a kind of changing of their line of business.  Now we're seeing mergers.

Colonial Theatre and Berkshire Theatre Festival are merging, according to an article by Larry Murray writing for Berkshire On Stage.  The two theaters are about 25 miles from each other, in Pittsfield and Stockbridge, Massachusetts, and differ in size and ambition.  Reconciling the differences should be an interesting challenge to all involved.

Berkshire Theatre's 2009

Einstein Show.

The Berkshire Theatre describes its mission as "to sustain, promote, and produce theatre for its community through performance and educational activities. . . .dedicated to producing theatre that recognizes its venerable past, while providing a home for the next generation of the American theatre's creative artists."  It has two performances spaces, seating 400 and 120.  It produces revivals and new plays with a yearly budget of $2.7 million as of its 2008 IRS filing.

The Colonial Theatre mission is "[t]o enrich life in Pittsfield and the Berkshires by presenting, producing, and hosting a wide variety of quality performing arts events, accessible to all, while fostering artistic collaboration and performing arts education in a restored national historic landmark building.  Its one theater seats 700 and largely books touring acts and shcws. Colonial's yearly expenses as of its 2008 IRS filing were just a little more than $2 million.

Not coincidentally, Arts Insights, the monthly newsletter of the Arts Consulting Group, posted a good piece in November 2010 titled "To Merge or Not to Merge? The Right Process Reveals the Answer," written by Karhryn R. Martin.

Why is the NFP theater ripe for consolidation?  Because of two facts.  Between 1990 and 2005 the number of NFP theaters with budgets of $75,000 or more doubled.  But between 1992 and 2008 the audience for theater increased by only 1.7 percent.  Clearly, there are more NFP theaters--many started during a time of relative economic plenty--than there are audiences to support them.  For the source of these statistics, see page 153 of Stage Money.

Added January 20, 2011

It's not theater, per se, but yesterday the Kennedy Center announced that it is taking over operations of the Washington National Opera, which without this merger, "appeared doomed," according to the Washington Post.  "In what amounts to a rescue operation, the Kennedy Center announced Thursday that it is taking over the Washington National Opera, a company that has been floundering artistically and financially for years." The consolidation in the performing arts goes on.