- Private equity firms are investing more deeply in film and TV content companies, even amid a possible recession.
- Private equity accounted for 42% of deals over the last year vs. 24% in 2018, according to PwC.
- From Abry Partners to ZMC, here are 16 private equity firms pouring cash into Hollywood.
Amid the ongoing pandemic, streaming wars, and market consolidation — the latter of which keeps generating larger and larger TV and film studio conglomerates — private equity players are still stuffing cash into the entertainment industry, with bets that Hollywood has infinite stories to tell and that audiences will be willing to pay for them.
Despite volatility in the public markets, in particular Netflix’s massive decline of over 70% in share price over the past year and its recent loss of over 1 million paying subscribers so far this year, several partners at these firms told Insider they’ll be sticking to their long-term thesis and not reacting to short-term uncertainty in equities.
“To be honest, I’m not planning on doing much of anything that’s different,” Atwater Capital founder Vania Schlogel told Insider. “I think a lot of times, investors — when acting as a collective — can deploy capital in a way that creates market distortions. For example, just using a concrete example, there’s a big trend now of, ‘Wow, the public equity markets have crashed, we’ve got to now push all our companies to be EBITDA-positive,’ rather than focusing on growth and market share capture.”
Such a trend could potentially push growth companies to focus on optimizing profitability instead of market share and doing “what they do best,” she added. “If you’re focusing on optimizing profitability, there’s the opportunity cost of maybe not growing as much as you should, or investing into the areas that you want to be,” whether that’s geographical expansion or greater projects in TV and film.
One leading Hollywood figure who sees that potential is Peter Chernin, who recently launched an indie studio, The North Road, with $800 million in backing from Apollo Global Management and Providence Equity Partners. And earlier in July, Swedish firm EQT invested in UTA, which makes the private equity player the largest outside shareholder of the talent agency.
KKR chairman Richard Sarnoff expects more potential for deals in the near future, “because some of the heat has come off” of once high-flying valuations.
Media and telecom dealmaking spiked in the first half of 2022, according to PwC, with M&A activity popping 28% year over year to 1,014 deals in the trailing 12 months. But the firm noted that activity among some major media entities has slowed “following a peak driven by content and technology acquisitions to fuel expansion of streaming services.”
By PwC’s count, private equity is fueling more dealmaking, accounting for 42% of agreements over the last year vs. 24% in 2018.
Insider’s second annual list of the top private equity players in Hollywood highlights 17 firms, based on our reporting and conversations with investors and insiders. New additions include Abry Partners, which took $100 million stake in Kevin Hart’s Hartbeat this spring, and Stripes, which led a $225 investment in A24 in a deal that valued the indie film studio at more than $2.5 billion.
This list is organized alphabetically by firm: