Erik Hodge, who leads the Los Angeles office of New York-based The Raine Group, thinks things are a bit risky in Hollywood at the moment.
“Bob Iger said this — and it’s always a good idea to say what he says — there’s a lot of anxiety,” Hodge said on Wednesday’s TheGrill panel “Merger Mania: Behind the Mega Deals in Media & Entertainment. And that’s just a fact, we (are in) a global situation that’s unsettling. The stock market is down; media companies are down 40% and more.”
However, Hodge — as well as others featured on the panel moderated by Creative Media Chairman Peter Csathy — said Hollywood is in a period of transition, not a free falI, and that includes mergers and acquisitions.
“You have a company like Netflix, which was kind of leading the charge, that now has to transition from a single revenue stream business to a [multiple stream] business,” Hodge said. “And then you have the other media companies working on their streaming. So there’s a lot of transition, but I think there’s an unbelievable amount of opportunity … you have a moment where audiences are more connected to content creators and advertisers than they ever had been.”
A recent boom in M&A activity saw Hollywood saw AT&T sell WarnerMedia in a deal with Discovery; Amazon acquire MGM; and major talent agency CAA gobble ICM Partners to become one entity. Panelist Carlos Jimenez, managing director of Moelis & Company investment bankers, said he is seeing some clients hesitating to jump into new M&A deals in light of a struggling economy, as well as Hollywood’s own slowdown in the streaming boom as evidenced by Netflix’ recent loss of subscribers.
However, like Hodge, Jimenez suggests now may be the best time to seize the opportunity. He said his company’s job is not to sit on the sidelines for six months waiting for economic change but to “really to find where the opportunities are is where there is disruption is creating an opportunity. So it’s finding those talented managers, the solid business plans that are giving capital looking to this period of time versus sit back and watch what their peers are doing.”
See some of that below:
Hodge and Jimenez were joined on the panel by Andrew Howard, partner, Shamrock Capital and Emily Wang, managing director, LionTree. Wang, who focuses on gaming said she sees a trend toward the large game developers acquiring smaller companies.
Howard agreed that content is key, saying that his company is aggressively acquisitive when it comes to premium content across all platforms. “The A-plus talents are getting their story out there,” he said.
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