Comcast Rejected Funding Days Before Doomed Fyre Festival
In the days before the Fyre Festival collapsed into chaos on the Bahamian island of Great Exuma, the venture capital arm of media giant Comcast Corp. opted not to invest as much as $25 million in the event’s organizer, Fyre Media Inc., according to a person familiar with the negotiations.
Comcast Ventures decided that, following a due diligence review and the failure of Fyre to provide crucial financial information, the product didn’t have the necessary technical capabilities to justify funding, said the person, who requested anonymity because they weren’t authorized to speak publicly. Additionally, the VC firm found that, after speaking to Fyre employees, the huge branding event for the company—the festival that famously imploded last week—wasn’t organized in a fashion that was likely to succeed, the person said.
The Fyre Festival was billed as a super-exclusive escape on an idyllic tropical beach. Acts such as Blink 182, Tyga, Pusha T, and Major Lazer were booked to perform (Blink 182 backed out at the last minute). Lured by ads showing famous supermodels having fun in the sun, ticket holders flocked to the island with the hopes of a music-filled weekend in a paradise laden with yachts, villas, and fine dining. Some paid as much as five-figures for all-inclusive VIP packages.
They arrived to find something very different. Attendees described a half-built tent city, poor lighting, bad food, and a list of broken promises. Some were left stranded, waiting through the night for a ride off the island. Vendors got entangled in the mayhem as the event fell apart. The Bahamas Ministry of Tourism noted that the organizers were in “over their heads.”
Four proposed class action lawsuits have since been filed against Fyre Media, the largest seeking damages of $100 million in Los Angeles on Monday. The plaintiffs accuse the company of negligence, fraud, and breach of contract. A fifth complaint, filed Thursday by National Event Services Inc. in Philadelphia federal court, accused Fyre of breach of contract and fraud. The company, hired to provide emergency medical services for the festival, seeks at least $250,000 in damages. This suit alleges the Fyre Festival didn’t purchase cancellation insurance.
The revelation about Comcast’s dalliance with Fyre Media comes after employees emailed founder Billy McFarland on Sunday, seeking answers about the company’s future. According to the employees, McFarland previously told them that Comcast had invested $20 million in the firm. A spokeswoman for Comcast Ventures denied it had ever provided funding, adding that the firm notified McFarland of its decision in the days before the festival. She emphasized that the company never considered investing in the festival—just the app.
McFarland and his partner, musician Ja Rule, Fyre Media, and their lawyers didn’t immediately respond to requests for comment.
In February, McFarland and Rule, whose real name is Jeffrey Atkins, met with investors at Comcast Ventures after Fyre approached them in search of cash for the Fyre app. The app is a talent-booking platform for consumers looking to hire musicians and artists. The VC firm went so far as to submit a term sheet to McFarland, according to the person.
Problems arose when Fyre didn’t provide information necessary for a forensic audit, the person said. Also, McFarland wasn’t present for a call held between Comcast and Fyre Media’s engineers a few days before the festival, a person with knowledge of the technical diligence process said. During the call, Comcast analysts realized that the Fyre app didn’t have a satisfactory billing mechanism, said the person, who requested anonymity because the discussion was private.
In their email after Fyre Festival collapsed, a Fyre Media executive and 11 employees asked McFarland to explain his strategy for the company and expressed concern that he was publicly committing to staging an additional festival in 2018. The employees demanded that Fyre prioritize its app and start a total rebranding of the company. In the message, they also wondered if Comcast’s investment was in jeopardy, appearing not to know that the media company had never committed to the funding.
“What is the implication of this on Comcast’s recent investment in the product?” the employees asked. “Please provide the terms sheet and explain whether there is a possibility (however remote) of losing funding as a result.”