Introduction
We are excited to release the fourth (and first of 2024) issue of our monthly newsletter Sector Spotlight
This is a comprehensive newsletter coupled with decks for the current or aspiring investment banker/PE investor, diving deep into the qualitative and quantitative nature of transactions, businesses, and trends across sectors, from the POV of an investment banker/PE investor. The groups are led by incoming investment banking summer analysts & analysts across a range of bulge bracket, elite boutique, and middle market banks.
Unlike other finance newsletters, this will not just simply mention or briefly summarize deals and news but will link to decks that include in depth analysis on a given topic. As this is the first issuance, we’ll be covering three sectors: 1.) Media & Entertainment, 2.) , and 3.) Healthcare. We hope you enjoy this month’s edition and look forward to bringing you monthly updates moving forward. Enjoy!
Best,
Jagger Lambert lambertjagger@gmail.com
James Concepcion jamesconcepcion217@gmail.com
Media & Entertainment
January 2024 Trends: See deck above for a deep dive into these topics and more!
Film & TV
- The domestic box office (theatrical revenue) continued its strong recovery in 2023 rising 25% to over $9 bn. in 2023. However, the box office is still significantly below pre covid numbers of $11 bn+. On top of that, the impact of the writers and actors strikes shifting content schedules is expected to lead to a decline of 11% in the 2024 box office
- Lionsgate’s DBO (domestic box office) market share jumped from 1.2% in 2022 to 6.4% in 2023 due to the release of John Wick: Chapter 4 and The Hunger Games: The Ballad of Songbirds & Snakes
- The 2024 and 2025 box office is expected to decline from 2023 due to strike-related impacts, but will see a rebound in 2026, with Wall St. hoping for a $10bn office in 2026
- Lionsgate is spinning off its notable studio and 20,000-title content library from Starz in a $4.6bn SPAC deal, in hopes to value the Starz and studio assets separately and more generously
- In May 2023, Rosenblatt Securities valued Lionsgate’s library at $5.2bn, implying a valuation higher than the studio is currently being valued at
- •Netflix released Q4 earnings that showed explosive revenue and subscriber growth in levels unseen since 2020
- Its stock price rose 10.7% in a single day
- During the night of January 30th Byron Allen and his company Allen Media Group submitted an offer to the board of Paramount Global for all of Paramount Global
- His offer included acquiring all of Paramount’s outstanding shares for $14.3 bn and assuming the $15bn of debt which equates to an approximate TEV of $30bn
- The offer is $28.58 per voting share and $21.53 per non-voting share which is a 50% premium to the 1/30/2023 share price
Sports
- Amazon makes minority investment into Diamond Sports amid bankruptcy reorganization
- Disney and NFL are in advanced discussions that would result in an exchange of assets between the entities
- This proposed trade in assets would value NFL Media at an estimated $2.4bn (ESPN was valued at $24bn by Bank of America Securities as of October 2023)
- The Baltimore Orioles are a professional baseball franchise that competes in Major League Baseball (“MLB”) and is based in Baltimore, Maryland, USA. The Orioles’ ownership group, led by Peter Angelos, acquired the franchise in 1993 for $173mm.
- On 1/23/24, Netflix announced its 10-year, $5 billion partnership with WWE Raw, starting in 2025
- Upon release of the news, WWE’s holding company TKO Group Holdings’ stock price rose approximately 18%
Gaming
- M&A activity increased with 43 deals announced, up from 33 in the previous quarter. No high-value deals were reported, but activity remained robust for smaller/mid-sized transactions, many with undisclosed values. Significant deals of the quarter included Aonic/nDreams, Keywords/The Multiplayer Group, MTG/Snowprint, and Devolver/System Era
- Hypercasual games dominate in downloads and are evolving to offer deeper engagement through blended mechanics
- Bytedance is seeking to restructure and divest its global gaming arm Nuverse, formed in 2019 as a strategic push into gaming
M&A and Investments
- DISH and EchoStar completed its merger with Dish becoming a wholly owned subsidiary of EchoStar. The transaction companies EchoStar’s premier satellite communications solutions with DISH Network’s satellite technology, streaming services, and 5G Network. Evercore advised DISH Network and J.P. Morgan advised EchoStar
- Sony Group scrapped its $10 bn. Merger of its Indian arm with Zee entertainment. The deal faced significant regulatory pushback and Sony claimed that Zee failed to meet some financial terms of the deal
- Saudi Arabia’s MBC Group, the biggest broadcaster in the Middle East, IPO’d in Riyadh, raising $222 mm. For 10% of its business. Its shares rose over 100% in the first few weeks of trading, marking it as one of the most successful IPO’s of the past few years
- Google, AT&T, and Vodafone made $155 mm. Strategic investment in AST Space Mobile, a space-based cellular broadband network
- Netflix acquired the exclusive rights to WWE Raw and other programming for $5 bn over the course of 10 years. The deal is a 100% increase over the WWE’s current deal with NBCUniversal. TKO’s share price (UFC-WWE) rose 16% on deal news
- David Ellison’s Skydance Media made a preliminary all cash offer to buy National Amusements, the theater operator that has control of Paramount Global (80% of voting shares) from Shari Redstone. The offer includes the intention to merger Paramount Global and Skydance
- Byron Allen & Allen Media Group submitted a bid to the board of Paramount Global for all of Paramount. His offer is $14.3 bn. for the equity and an assumption of the approximately $16 bn. of debt equating to a $30 bn. enterprise value. The offer is $28.58 for the voting shares and $21.53 per non-voting share, representing a 50% premium
- The PGA tour received a $3 bn investment from Strategic Sports group (Fenway Sports group and several high-level U.S.-based sports owners) valuing the PGA at $12 bn. The deal creates PGA Tour Enterprises (making the PGA a for profit enterprise) and grants stock options to players that vest overtime. It is unclear whether this a replacement for the PGA LIV deal or an addition to it
- Reliance (the largest company in India) is close to merging its India media business with Disney’s media operations. The deal values Disney’s Indian operations at $3.5 bn. Together they will be the largest media business in India
