Deal would put future of Second City in question
A bizarre consequence of the pandemic is that private equity is flush with money.
The Second City is an attractive legacy brand. Social media activists without a clear fiscal plan can unwittingly do the dirty work for venture capitalists who can then swoop in when a company is on its knees. And our hometown Second City, at least as Chicago has known it for the last 60 years, might be vanishing in a fistful of out-of-town dollars.
All of those statements are reasonable inferences from the news this week that Chicago’s beloved comedy theater is in the final stages of talks with the private equity fund ZMC, controlled by the New York-based media and gaming mogul Strauss Zelnick, also the CEO of Take-Two Interactive Software, best known as the publisher through its Rockstar Games brand of the Grand Theft Auto franchise and other hit titles in the world of gaming.
Zelnick began to take control of Take-Two around 2007 when that company was still in distress following revenue-compromising revelations (wholly unconnected to Zelnick) of a sexually explicit mini-game within its “Grand Theft Auto: San Andreas” title, leading both to a news conference by Sen. Hillary Clinton arguing for better labeling and regulation and to the game itself being pulled from some shelves, although Rockstar blamed hackers for the crisis.
Zelnick was, in essence, the cleanup guy for a company that needed a savior. And by all evidence he has been very successful. Perhaps he can be so again in a very different situation.
The Second City deal with Zelnick, leaked to the Financial Times, might yet fall through. Second City’s officers are remaining silent, as are the current owners Andrew Alexander and D’Arcy Stuart, and no price has been disclosed, although there was early discussion of a target in the $50 million range.
Why was Second City for sale? In essence, Alexander resigned following widely reported allegations of racism within his own 60-year-old theater; some of his own staffers told him he needed to go following Facebook testimonies of institutionalized racism from former performers and students at the Second City Training Center.
I never bought the insinuation that Alexander remotely deserved that self-imposed fate stemming from nonspecific charges. Many former cast members of color agreed, although it is also perfectly clear that some of his employees were racially insensitive across a broad span of time.
The theater needed to change its culture in favor of greater human compassion, racial equity and inclusivity while retaining the ability to attract a broad spectrum of residents, tourists and conventioneers upon which its economic model depends, now and in the future. Even as America doesn’t find much agreement anymore in what is funny.
The issue now is the future of an institution that is not just a major tourist draw to Chicago but one of the very few avenues for diverse, Chicago-based comedic talent to move to a national stage.
A decadeslong success record needs no reiteration here, nor does the entertainment industry dominance asserted by the coastal cities that typically see Chicago as a market or a location, not a generator of content.
The current crisis is deepened by the closure of iO Theater last June, a rival comedy and improv company and a similar generator, also following charges of racial insensitivity made on social media.
The iO Theater brand is not as strong as Second City, but it’s not chopped liver either, and it is profoundly unfortunate that no one yet has stepped up to take the place of the co-founder and current owner, Charna Halpern, who has said she is willing to sell both the brand and its theater on Chicago’s North Side. And it would take a lot less than $50 million.
At least Second City has found Zelnick, who may turn out to be a fine owner. It is, for sure, unfair to engage in either prejudgement or deep-dish xenophobia.
Still, the lack of a Chicago-based investor stepping up to the plate to save such pivotal Chicago institutions is striking.
Both Second City and iO bleed Chicago history; they housed its greatest comedians across decades, and their Midwestern scruffiness, intellectual entrepreneurship, mom-and-pop humanism, scrappy determination and occasional ineptitude are baked into their legacies. You don’t have to be blind to the need for reform to see historic worth.
Attempts were made by some progressive artists to persuade local foundations to bankroll a nonprofit improv company in the iO space, but up to now that has proved too heavy a lift. I’m told the recent unionization push among the teachers, all independent contractors, at Second City was in part fueled by a desire to have some say on a new owner. Understandably so.
But private equity moved more quickly. It usually does. It holds more cards.
Both of these comedy companies are privately held businesses operating for-profit models. There are no boards of directors for activists to influence.
The owners are the owners.
Given that truth, frustrating to some anti-capitalist progressives, a reformed and updated version of that identity would seem the only viable solution in both cases. And it’s not as if Chicago lacks individuals who have the resources.
So why the vacuum? I think it’s mostly that the city’s private-equity class is mostly made up of more traditional industrialists and investors interested in technology.
Conservative by nature, if not political affiliation, they tend not to look at entertainment and media properties in the same way as do people such as Zelnick. They either feel as if they don’t have the requisite expertise or see them as too messy, too dangerous politically or too small on the scale of potatoes.
I think Zelnick might have made a very shrewd deal; in all likelihood he’ll greatly expand the Second City brand into areas such as film, TV and gaming.
But this is also a live theater, where anything and everything used to happen. One can hope Zelnick also becomes an honorary, full-disclosing Chicagoan, and that as he updates and reforms his likely acquisition, he’ll retain its Chicago-style retail sensibility, its legacy of nurturing diverse talent (and, yes, it did) and rebuild the courage needed to poke fun at all power on all sides of the political spectrum, especially at those who don’t think that’s funny.
Maybe Zelnick even can persuade one of his pals to give iO a look before its theater becomes condos.
Mostly though, I just want Second City to speak again. Its public silence these last few difficult months, even after hiring new executive producer Jon Carr, who started a month ago, has been depressing.
This was never a theater that did not return calls but thrived on them. I’d rather hear its voice, even if it disagrees with all of the above.