Private equity parks money in Hollywood despite recession ripples

The Future. In just over a year, P.E. firms have poured money into the ambitions of veteran execs to form production powerhouses that can make scripted and unscripted content for the dozens of streamers in need of new projects. While the new ecosystem will create a new indie film and TV ecosystem, expect a concerted focus on scaling international and unscripted fare, which gives streamers what they want most right now — a global footprint and cheap content.

Show business
According to THR, there doesn’t seem to be much worry about inflation, streaming stock drops, or a looming recession when it comes to private equity.

• Providence Equity Partners and Apollo teamed up to give Peter Chernin $800 million to form The North Road Co., which combines Chernin Entertainment, the U.S. assets of Red Arrow Studios, and Words + Pictures.
• Blackstone set up a $2 billion war chest for Kevin Mayer and Tom Staggs’ Candle Media, which has been used to acquire companies such as Reese Witherspoon’s Hello Sunshine and CocoMelon-creator Moonbug Entertainment.
• They’ve also hitched their wagons to celebrity-backed endeavors such as RedBird’s investment in LeBron James’ The SpringHill Company and Shamrock Capital’s investment in the Tom Brady-fronted Religion of Sports.

Additionally, PE firms are putting money into where projects are filmed, ponying up hundreds of millions of dollars to supercharge studio-space construction. That includes Silver Lake putting up $500 million as part of a plan to double the size of Shadowbox Studio in Atlanta and Blackstone helping finance the first new large-scale production studio facility in L.A. in 20 years.

The power of more
When it comes to production, the goal is to become an arms dealer for the streamers that need to fill their libraries quickly. Chernin, who ran 20th Century Fox for over two decades, laid out his plan for North Road with a simple, “While the world of content spending is increasing, the traditional larger suppliers are going away. I think it creates more opportunities for us because there is more and more need for this stuff, and the number of suppliers is dwindling.”

But, wait… aren’t companies like Netflix cutting back on their content spend? Yes and no. Every streamer is looking at where they can reduce or slow down their spend, but the plan is still to spend. Just a little bit smarter (at least smarter on paper).

And PE firms know this, with Shamrock partner Andy Howard saying, “content is king […] especially premium content. Iconic talent and brands that have an embedded following already have a leg up as they will not require the same marketing dollars to get it noticed in a very crowded marketplace.”