Hollywood is rolling the dice in Las Vegas.
In the latest example of the convergence of the entertainment and gambling industries, the William Morris Agency has become the exclusive corporate consultant to Rio Hotel & Casino Inc. in Las Vegas.
The Rio, like other Vegas casinos, markets itself as an entertainment destination rather than a gambling hall. By retaining William Morris in a corporate consultancy role, instead of simply a talent agent, the hotel wants to develop a strategic plan for luring higher-quality entertainment including Broadway-caliber shows, concerts, major sporting events and televised award shows.
“You can play cards anywhere these days,” said Dave Hanlon, president of Rio. “People want entertainment, and entertainment will brand and define your hotel.”
While talent agencies have represented performers in Las Vegas for decades, the corporate consultancy is a new twist and is being headed by William Morris’ corporate advisory group, not its talent division.
“I suspect this arrangement will become less and less unprecedented over time,” said John Rohs, an analyst at Schroder & Co.
Rohs said Rio’s decision to join forces with William Morris reflects the changing gaming environment that has seen Las Vegas grow from a gambling town to a family vacation spot.
“More and more, customers who are coming to town have interests beyond gaming. This deal is a natural evolution that brings Las Vegas and Hollywood closer together,” he said.
But as the city grows, there has been increasing competition among casinos, especially with the construction of new and more lavish venues.
Among new hotels under construction are the $2 billion Bellagio and three other mega-hotels, The Paris, the Mandalay Bay and the Venetian.
“You need a range of entertainment,’ said Bruce Turner, an analyst for Salomon Smith Barney Inc. “Every hotel has some headliner, but the venue with the widest range of entertainment will be helped the most.”
The publicly traded Rio Hotel & Casino agreed earlier this year to be acquired by the larger Harrah’s Entertainment Inc., which operates a chain of gambling resorts. Gaming analysts see the deal as beneficial to both companies, because Harrah’s does not have a high-end resort like Rio.
Rio reported net income for the second quarter ended June 30 of $4.5 million, compared with $6.6 million for the like quarter in 1997. Revenue was $98.1 million vs. $97.2 million.
Rio officials blamed the poor second-quarter performance on losses at its gaming tables. The company’s stock was trading in the $14 range last week, down from a 52-week high of $29.13 on March 9.
Johnny Levin, a William Morris executive who is part of the team advising Rio, said his agency’s goal is to put Rio on the map with entertainers.
“If the Rio can become the first choice for talent and those that create it, that’s an advantage over its competitors,” said Levin. “Nobody else has it.”
