The Sound of ... Money

Attention deep-pocketed theater lovers: Broadway is for sale.

Not the street, of course, or even the theater district named after it. But some of the rights to the best musicals ever produced on Broadway are going on the block. Bring lots of money if you're interested.

The daughters of Richard Rodgers and Oscar Hammerstein II are looking to sell the firm their songwriting fathers founded in 1943, the Rodgers & Hammerstein Organization. The women are reportedly seeking $325 million (though industry insiders say the firm is likely worth between $150 million and $200 million).

EMI, Sony BMG, Universal Music, and Warner Music -- as well as several non-industry private equity shops and hedge funds -- are all said to be interested in the company, which counts more than 100 musicals and 3,000 songs among its library.

Rodgers and Hammerstein, who wrote Oklahoma!, The King and I, and The Sound of Music were arguably Broadway's most successful writers ever. They won 34 Tonys, 15 Oscars, two Grammys, and a Pulitzer Prize in their time. But what makes a backlog of mid-century Broadway hits really worth hundreds of millions?

To start, consider the high school musical. Not the Disney Channel phenomenon, but the institution itself. R&H's Theatrical Division owns the rights not only to its namesakes' works but also to those by over 200 other writers and composers, including Andrew Lloyd Webber (Cats, Jesus Christ Superstar, and Joseph and the Technicolor Dreamcoat).

Every school that puts on a musical owned by the firm pays R&H a fee based on the show they choose, the number of audience members they expect to draw and the amount they will charge for tickets.

Schools seeking to stage The King and I in a 600-seat auditorium with a $10 ticket price must pay $700 to $800 per performance, for example.

The Department of Education reckons there are 132,000 elementary, middle, and secondary schools in the United States; if each one put on a three-night run of The King and I this school year, that would mean more than $2.8 million for R&H (and, with a sudden crop of Yul Brynner impersonators, rocketing sales for the bald cap industry).

In addition to schools, professional theatre troupes and bands pay R&H for the right to perform their shows or concerts based on them.

R&H also licenses individual songs. Its website offers applications for everything from lyric reprint permission to merchandising permission (which allows a song to be played inside a music box or stuffed animal).

Synchronization permission, though, is probably the most lucrative for the firm. That license permits buyers to use the songs in films, on TV and in commercials.

The Sound of Music classic "These Are a Few of My Favorite Things" has proved to be one of ad execs' favorite things. MasterCard recently produced a spot in which a woman fences and floats in zero-gravity while singing the song; in a 2007 ad, actress Kate Walsh uttered the title as she reflected on dark chocolate and Italian shoes.

Andrew Lloyd Webber himself presided over an "American Idol" episode last season in which the top six contestants covered his famous, R&H-owned tunes.¬

Lest anyone think R&H is resting on its storied laurels, the company is making a concerted effort to seek out and sign new talent. Its Williamson Music division represents the songwriters behind modern Broadway sensations Avenue Q, Legally Blonde and In the Heights.

Any of them could turn out to be the modern Rodgers or Hammerstein -- and a major cash cow for whomever buys the firm.

by Megan Angelo