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- Insider rounded up the most active bankers in the entertainment and media space.
- 2022 kicked off with some huge transactions, from AT&T’s WarnerMedia spin-off to private equity scooping up content players.
- Company valuations are set to fall back to earth in 2023, and private equity and strategics are lying in wait.
Many on Wall Street believe that big dealmaking is on pause. The rising cost of borrowing is chilling activity in some corners of the TMT (tech, media, and telecom) sector, which plays a big role in the major overall banks’ M&A business.
Not surprisingly, WarnerMedia was at the heart of the richest transaction fee waterfall for big banks in 2022. AT&T’s $43 billion spinoff that created Warner Bros. Discovery also netted big banks some $320 million, according to the Financial Times. Some of those same banks had already won big transaction fees when AT&T acquired Time Warner. It’s been a big year too in other sectors of the entertainment universe, with sports teams and gaming companies trading hands.
The next buzzy deal on the horizon could involve distributor and producer Lionsgate. After working for a few months to sell its Starz cable network, the company said Wednesday that it will instead consider a spinoff of its studio business. The “Hunger Games” maker, whose current market cap is just under $1.8 billion, has worked with advisors from LionTree, Raine and PJT Partners in the past.
On a smaller scale, bankers have also been busy putting together deals for these four emerging entertainment players:
- Kevin Mayer and Tom Staggs’ Candle Media, backed by Blackstone, acquired all or parts of ventures involving Reese Witherspoon, Will Smith, and Spanish-language kids content initiatives from Isaac Lee.
- Peter Chernin’s North Road, backed by Providence Equity Partners, bought up Red Arrow Studios.
- Joshua Grode’s Legendary Entertainment, backed by Dalian Wanda and now Apollo Group, which took a stake in the studio in January.
- Gerry Cardinale’s RedBird Capital, which funded David Ellison’s Skydance and in June backed Ben Affleck and Matt Damon’s new production company while also making huge bets in sports leagues, such as AC Milan.
Perhaps one of the biggest surprises in media circles was Kim Kardashian’s entrance as a nascent buyer of media and tech companies in partnership with former Carlyle dealmaker Jay Sammons. With their new private equity venture, called Skky Partners, the pair have said they’ll eye consumer products, digital, e-commerce, hospitality, and luxury — a world where they both have plenty of contacts.
There’s lots of dry powder still in private equity, Navid Mahmoodzadegan, co-founder and co-president at investment bank Moelis, told Insider. “The level of dialogue is still very high both with strategics and private equity firms. It’s a tougher deal environment for sure, given the macroeconomic outlook, inflation, and interest rates, but secular forces leading to M&A are still very much intact and the appetite to do transactions is still very strong,” he said.
Prices for attractive acquisitions might be coming back to earth, Mahmoodzadegan predicted. “As you look out a little bit, the disruption in the markets will create opportunities for private equity and strategics to buy assets at more reasonable valuations and potentially engage in public-to-private [deals] once the markets come back, at a more active pace.”
“For bigger deals to happen it would be helpful for financing markets to get healthy again,” Mahmoodzadegan noted. “Generally bigger deals require debt financing at large scale and right now it’s difficult to do.” But he’s upbeat about the future. “At some point that will work its way through the system and the debt capital markets will become functional again.”
Insider took a look at some top media bankers who made standout deals in 2022 and are scoping out the opportunities in the rapidly changing world of media. They’re in business not just to crunch the numbers but also to understand the personalities and impulses behind new financial structures and fresh combinations to come in 2023.
