h2 2020 | media talk 18
media talk | h2 2020 19
THE MEDIA PORTFOLIO BACKING CONTENT
THE MEDIA PORTFOLIO SINGING A DIFFERENT TUNE
With growing supplies of dry powder, PE firms have been looking for more creative ways to deploy capital, and with the rise of subscription services, music copyrights have become highly sought after. Music- investment company Hipgnosis acquired a 50% stake in the publishing interests of Rick James in November, and made an early deal in 2021 for stakes in the interests of Jimmy Lovine, Lindsey Buckingham and Neil Young. Earlier in 2020, Stevie Nicks and Bob Dylan each sold a significant stake in their back- catalogue to Primary Wave and Universal Music Group respectively. PE firms are also looking at leveraging the growth of OTT subscription services in the sporting world. Of course, sports is not a completely new environment for PE – European PE investor CVC Partners, for example, was an early mover that held a stake in Formula One for a decade. It has also acquired a minority stake in English Premiership Rugby and is in the mix for a reported share of GBP £300 million in the Six Nations Rugby tournament, as well as a EUR €1.6 billion investment in Italy’s Serie A football league, alongside Advent International.
The scale of the opportunity is such that the big PE players all appear to be entertaining the chance to invest in Germany’s top football league, the Bundesliga, as it maps out plans for a global pay service. Reports suggest the league is open to selling a stake in the range of EUR €200m to €300m. It will only be a matter of time before other leagues follow suit, and Italy’s Serie A is already under pursuit.
With the proliferation of devices and platforms, and restrictions forcing viewers to spend more time at home, global consumption of video and TV continues to rise. Even though filming of new shows and films ceased for much of the year, post-production and virtual effects companies worked on through the lockdowns. By working remotely through connected equipment and practising social distancing where possible, the subsector was able to stay active despite the disruption. As content has become an increasingly popular commodity, PE has strengthened its foothold in the world of TV and film too. As in the publishing realm, access and scalability are critical considerations for investors looking to take advantage of popular titles matched with efficient distribution capabilities and audience access. In November, PE firms Aleph Capital and Crestview Partners acquired Framestore, a UK- based visual effects company that has worked on many UK children’s entertainment titles. It’s the third major investment in Framestore in the last six years, and enabled Framestore’s November acquisition of Company 3/Method
(C3M) for an undisclosed sum. The deal will make Framestore the world’s second largest visual effects company by headcount, adding 3500 artists, engineers and experts to Framestore’s 2500 existing employees. In July, Moonbug Entertainment, a creator of children’s shows distributed across numerous streaming platforms, received USD $120 million in funding from a consortium of private equity backers led by Goldman Sachs Growth Equity. The deal follows an initial USD $145 million round of investment by many of the same players in December 2018. The Series B announcement in July coincided with Moonbug announcing the acquisition of two US-based children’s entertainment companies, Blippi and CoComelon. CoComelon alone boasts over 3.5 billion online views a month. Digital publishing also proved a hot marketplace amongst PE firms, with special interest, education and technology-focused brands all attracting investment. Red Ventures – a portfolio company of General Atlantic Service Company and Silver Lake Partners – made headlines when it acquired the popular digital media brand CNET fromViacomCBS for approximately USD $500 million. The deal, which includes CNET’s subsidiaries Gamespot,
Metacritic, TVGuide, ZDNet and Chowhound, will help ViacomCBS to level its balance sheet after its blockbuster merger. Only days after announcing this deal, Red Ventures expanded its digital content with acquisition of Lonely Planet Global, the digital travel content publisher, for an undisclosed sum.
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