Private equity goes to the movies: 6 deals in 6 months

The Hollywood studios behind movies such as Top Gun: Maverick, and Judas and the Black Messiah, are attracting investments from KKR, RedBird, Clarion, Shamrock and others.

The emergence of streaming platforms as a viable alternative to movie theaters at the height of the pandemic left a lasting imprint on the sector, making multiplatform entertainment especially alluring for private equity. Back in 2021, through its media rollup Candle Media, Blackstone capitalized on the phenomenon that’s transforming content by acquiring a wide array of Hollywood production companies, most prominently Reese Witherspoon’s Hello Sunshine. Since then, quite a few buyout shops have jumped into the fray, investing in everything from a new production company co-founded by Hollywood A-listers and BFFs Ben Affleck and Matt Damon to a content studio focused on people of color. What’s especially astonishing about the brisk deal pace is that much of this activity has transpired within the last six months.

Following are six recent PE deals that are igniting the entertainment space, in chronological order by announcement date.

1. KKR leads $400m investment in Skydance Media

As soon as the foliage changed colors and temperatures cooled last fall, KKR led a $400 million investment in Skydance Media, producer of the box office mega-hit and Oscar-nominated movie, Top Gun: Maverick. The CEO of Skydance is David Ellison, son of Oracle co-founder Larry Ellison, and the Ellison family is the majority shareholder, with other investors including RedBird Capital Partners and Tencent.

Given the stratospheric popularity of the Tom Cruise-starring, long-awaited sequel, which was notable for attracting a multitude of moviegoers back to the theaters after the covid downturn, it’s easy to see why KKR would bet on the company.

“We are delighted to invest behind Skydance, David Ellison and the impressive, differentiated team of creative and entrepreneurial talent he has assembled,” said Jenny Box, a partner and co-head of KKR’s strategic group. The funding put Skydance at a valuation of over $4 billion.

2. RedBird backs Artists Equity

Next up, late November might be rife with turkey feasts, but for RedBird Capital Partners, the timing was perfect to announce the PE firm was investing in Artists Equity, a new Los Angeles-based film production company co-founded by award-winning Hollywood hyphenates and long-time chums Ben Affleck and Matt Damon. Though the financial terms were not disclosed, RedBird did own up that the sum was “significant.”

Like KKR’s commitment to Skydance, RedBird’s bullishness is also grounded in stellar credentials as Affleck and Damon combined “have generated over $10.7 billion in worldwide box office sales, 110 plus feature films as star or co-star, six produced screenplays, eight TV series as executive producer or writer, and earned three Academy Awards.”

The popularity of streaming platforms, which reached its apex at the height of covid lockdowns, was also a strong enticement for the transaction, noted Gerry Cardinale, RedBird’s founder and managing partner.

“Artists Equity is an independently capitalized studio that will enable content creators to navigate this evolving landscape and maximize value for their visionary storytelling,” he said, explaining RedBird’s interest in the celebrity-anointed production company. “The premium today is shifting more towards quality, which plays extremely well to Ben and Matt’s track record as filmmakers across writing, directing, producing and acting.”

3. Clarion Capital invests in Vin Di Bona Productions

The new year kicked off with an ambitious entertainment-focused venture for Clarion Capital, a New York-based lower-mid-market PE firm. After investing in Los Angeles-based TV production company Vin Di Bona Productions, creator and producer of the TV show, America’s Funniest Home Videos, Clarion and VDBP then teamed up to form production company V10 Entertainment, which subsequently scooped up content producer Venture 10 Studio Group.

For Clarion, this dealmaking was all about the big picture (no pun intended). “VDBP is Clarion’s first step in building a new, industry-leading platform,” said David Ragins, a managing director at Clarion.

4. PE-backed North Road scores $150 million from Qatar Investment Authority

The end of January ushered in another high-profile investment in Hollywood as Qatar Investment Authority, Qatar’s sovereign wealth fund, poured $150 million in TV and film studio The North Road Company. The capital infusion came six months after the multi-genre content studio was founded by CEO Peter Chernin, with Providence Equity Partners investing up to $500 million in equity and Apollo providing $300 in debt financing.

North Road is prolific, with over 85 active productions in the works. For QIA, supporting North Road’s expansion was in keeping with the company’s investment strategy to back “innovative media and technology companies around the world,” said Mohammed Al-Sowaidi, QIA’s chief investment officer of Americas.

5. Boardwalk Pictures secures investment from Shamrock Capital

February warmed things up when LA-based buyout shop Shamrock Capital announced it was investing in Santa Monica, California-based entertainment production company Boardwalk Pictures.

Founded in 2010 by Andrew Fried, Boardwalk’s “authentic storytelling” was hailed by Mike LaSalle, a partner at Shamrock Capital, known for investing in the media, entertainment and communication sectors. No doubt, Boardwalk’s track record, which includes 20 Emmy nominations and 4 wins, factored into the equation as well.

“[Boardwalk Pictures] have raised the standard for high-quality nonfiction content, delving into a wide range of subject matters that resonate with audiences around the world,” continued LaSalle. “We are excited to partner with this talented team as they continue to bring their skills and sensibilities to new genres, formats, and mediums.”

6. BlackRock Alternatives leads an over-$90m investment in Macro

Finally, March may have come in like a lion but it certainly did not go out like a lamb when BlackRock Alternatives spearheaded an over $90 million investment in Macro, a TV and film company focused on telling stories about people of color. HarbourView Equity Partners and Goldman Sachs Asset Management also participated in the round.

Launched in 2015 and founded by CEO Charles D King, Macro has made 16 feature films and two TV shows, garnering fifteen Oscar nominations and three wins. Among its projects are the Oscar-nominated film Judas and the Black Messiah and the recently wrapped film Freaky Tales, directed by Capital Marvel helmers Ryan Fleck and Anna Boden and starring The Last of Us heartthrob Pedro Pascal.

Pam Chan, chief investment officer & global head of BlackRock’s alternative solutions group, cited Macro’s success, coupled with its storytelling focus, “which has historically been short in supply but in demand” as two key reasons for the investment. “We are pleased to make this investment on behalf of our clients, and look forward to partnering with Charles and Macro’s management team to further the company’s mission of increasing representation of persons of color across its media verticals.”

Hollywood production might have slowed a few years ago during the lockdowns, but based on the recent spate of activity in this space, PE Hub predicts a lot more deals to come.