Some guys from Denver own the biggest record company in Poland.
It sounds like a bad joke in search of a punchline, but it's not. Last month, A.B. Goldberg, the man in charge of mergers and acquisitions for Denver-based First Entertainment, Inc., finalized an agreement that gives his company an 80 percent stake in Polton, Poland's largest record company, in exchange for cash and stock valued at about $1 million. And no matter how many quizzical looks he receives when he tells people about the purchase, Goldberg believes that he made a wise decision. "It's been a nice acquisition," he notes. "It makes us a little more globally oriented. That's a good thing."
Music--Polish or otherwise--is relatively new territory for First Entertainment. Founded ten years ago as First Films, the company concentrated solely on movie production, and its first feature, shot in the Denver area, was Mindkiller, an ultra-low-budget flick that Goldberg describes as "a comedy/horror/dead teenager sort of film." Since then, Goldberg and associates have completed four more pictures, including 1992's Almost Blue, starring Michael Madsen, better known for his roles in Reservoir Dogs and Thelma and Louise, and former actor/Norm Early advisor Yaphet Kotto. Several other projects are in pre-production, Goldberg adds, and at least one of those should be ready for filming in 1995.
More recently, First Entertainment has been branching out. The organization owns the Comedy Works nightclub in Larimer Square, another in Tampa, Florida, and an interest in Interactive Video Technologies, Inc., a company that's presently testing Home Crosswords, an interactive game show, on cable systems in parts of Pennsylvania and Ohio. In addition, it's involved with Eastman Kodak in the production of travelogue videos that bear the Kodak imprimatur. But it was First Entertainment's investment in a small Los Angeles-based distributor of compact discs eighteen months ago that brought Goldberg into contact with Gary Firth, a Scottsdale, Arizona, resident who bore the title of chief executive officer of Polton.
Firth, a former DJ who'd started a Houston-based radio promotions firm in 1980, learned about Polton in 1989 from a friend in London who'd married a Polish native. Although Polton had been founded only seven years earlier, it was already the country's oldest privately owned record company, with artists ranging from Poland's state orchestra to Eastern Europe's raunchiest rockers. Given the fall of the Iron Curtain, Firth saw Polton as what he says was "a wonderful opportunity to bring Western talents of marketing and promotion to Poland."
After buying Polton, Firth decided to supplement its focus on Polish artists by obtaining the right to distribute CDs and cassettes released by labels under the Time Warner umbrella, including Warner Bros., Atlantic and Elektra. This vast catalogue, crammed with discs by artists such as Madonna and (his current moniker) "the artist formerly known as Prince," was a potential gold mine, Firth says, "because there was a lot of pent-up demand. The people had heard of acts like Eric Clapton and Led Zeppelin and Rod Stewart, but now they were getting their first chance to buy their albums."
The rub: Pirating discs--that is, making unauthorized copies of recordings for resale--was perfectly legal in Poland.
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"Out of 50 million albums that were sold in Poland in 1993," Firth reveals, "49 million were pirated. Pirates found it easy to get copies of CDs in Germany and then set up operations anywhere from their garage to very sophisticated factories. I saw one that was capable of making 20 to 30 million CDs a year."
If this situation had persisted, Goldberg admits that First Entertainment might not have been interested in Polton. But in February, the Polish parliament passed an anti-piracy law that established copyright protection and penalties for unauthorized reproduction of recordings. "The government gave the pirates a sell-off period until September," Goldberg says. "They said the pirates had until then to get rid of any inventory they had. But we've already seen the revenues increase 25 percent since February, probably as a result of the smaller pirates' shutting down immediately."
The passage of the law doesn't solve all of Polton's problems. For example, only 7 percent of Polish households include a CD player. But Goldberg and Firth, who remains CEO of Polton (1993 gross revenues: $2.3 million), believe that the country's relatively stable political structure and growing economy will help change that. First Entertainment is so optimistic that it's planning a chain of Polton retail stores throughout the country and is in touch with record conglomerates such as Sony, Polygram, EMI and other companies that might want to pour their music into Poland. There's even the prospect of bringing Illusion, a band Firth describes as "a Polish Nirvana," to the United States for a tour. "They're very good," Goldberg says. "And they sing in English."
While Goldberg admits that it won't be easy to convince Americans to embrace a Polish grunge band, he believes the Poles are ready right now for sounds from the U.S. "They're very much looking to buy American products," he says. "They're very pro-American--and they love Madonna.