Introduction
We are excited to release the third 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
November/December 2023 Trends: See deck above for a deep dive into these topics and more!
- Film & TV company stock prices have ended the year generally up in line with the S&P, with Lionsgate & Netflix massively outperforming and Paramount & Disney underperforming
- Disney and Warner Bros. Discovery released their earnings reports in back-to-back days with wildly different market reactions – WBD dipped nearly 20% while Disney rose nearly 4%
- WBD was able to achieve DTC profitability (a feat Disney is still chasing) and substantial FCF growth but suffered stagnant DTC subscriptions on a YoY basis (and declining from the prior quarter). Disney was able to achieve more growth in revenue and EBITDA
- News has broken that Disney is going to license at least 14 shows and films to Netflix: a reversal of their policy to keep content exclusive to Disney+
- Due to the massive unprofitability of streaming and worsening stock prices, studios had promised investors to make their streaming services profitable by the end of 2023/2024
- Shari Redstone, Paramount Global’s controlling shareholder and non-exec chairwoman, is open to a potential merger or sale of Paramount in an industry where legacy media businesses should consolidate however market conditions provide a difficult backdrop for dealmakingPossible buyers/investors include: Warner Bros. Discovery, Comcast, RedBird Capital Partners, Skydance Media. Other potential partnerships with Big Tech companies may be in play
- Netflix shows interest in NBA TV deal
- There’s been a huge shift in dynamics for women’s basketball
- Amazon broadcasted the first ever NFL Black Friday game. In 2021, Amazon reached an 11-year, $1.2bn annual media rights agreement for NFL TNF to be streamed on Amazon Prime Video
- Liberty Media invested $500mm into the F1 Las Vegas Grand Prix, the most expensive sporting event in the US this year
- Creative Arts Agency (CAA) and deal maker Michael Klein will be launching CAA Evolution, a new investment banking firm focused on sports, media, and entertainment deals. The firm would be positioned to compete against the likes of LionTree and the Raine Group
- The global AR & VR market is expected to reach $137bn by 2027, fueled by significant investments since 2019
- The global Metaverse market was worth ~$83.9bn in 2023. 2030 revenue forecast: $1,303 bn
- Amazon and Netflix continue their push into the gaming space
- AI will be enhancing GTA 6’s gameplay experience
M&A/Investments:
- Paramount and its controlling shareholder Sheri Redstone/National Amusements began merger talks with Warner Bros Discovery and Redbird Capital’s Skydance Media
- Zegona Communications purchased Vodafone Group’s Spanish business at a $5.3 bn EV
- PE firm Silver Lake and Abu Dhabi Sovereign wealth fund Mubadala Investment are discussing a take private of UFC and WME-IMG owner Endeavor Group Holdings. Silver Lake is currently the largest shareholder in Endeavor
- Disney completed its acquisition of Hulu by purchasing Comcast’s remaining ⅓ stake. Disney has paid Comcast $8.5 bn and may be subject to paying more to them in 2024 depending on third party investment bank valuations
- Jim Ratcliffe, British billionaire and founder of chemicals company INEOS Group Limited is closing on a deal to buy 25% of Manchester United’s A and B shares at $33 per share, valuing the club at a TEV >$6bn ($5.4 equity value + $790mm in existing total debt) (See deck for an in-depth analysis)
- Lionsgate to spin-off studio and 20,000 title library from Starz in $4.6bn deal and Lionsgate closes Entertainment One $500 mm Acquisition
- Altice USA sells Cheddar News to Archetype
- The NBA approved Mark Cuban’s $3.5bn sale of a majority stake in the Dallas Mavericks t the family of Miriam Adelson, the controlling shareholder of Las Vegas Sands
- Disney and Reliance Industries, India’s most valuable company, signed a non-binding agreement to merge their Indian media operations; Disney will own 49% of the combined company, while Reliance will own 51%
- Paramount Global is in talks to sell its Black Entertainment Television (BET) network to a management-led investor group; with a price tag of ~$2bn
- India’s TV18 Broadcast will merge with Network18 Media & Investments in a $1.2bn deal to help the Reliance-owned companies expand and cut costs
- Warner Music-backed Influence Media Partners will acquire famed Latin singer Enrique Iglesias’ music catalog; the transaction is valued at nine figures
