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Los Angeles Times
4 days ago
- Business
- Los Angeles Times
Hollywood is struggling. So why does anyone want to buy a movie studio now?
The theatrical box office market is down. It's harder than ever to get people out of their homes and into the cinema. The business model for movies in streaming is still a work in progress. Given all these challenges, who would want to buy a movie studio now? Many people, it turns out. Earlier this month, the entertainment industry was abuzz after reports that film and TV production company Legendary Entertainment, the company behind 'Dune' and 'A Minecraft Movie,' was considering a potential acquisition of 'Hunger Games' and 'John Wick' producer and distributor Lionsgate Studios. Both companies have declined to comment on the reports. It's hardly the only deal news in the film business. In June, independent film finance and production firm Alcon Media Group — known for 'The Blind Side' and 'Blade Runner 2049' — bought the film library of 'Joker' and 'Ocean's Eleven' producer and financier Village Roadshow Entertainment for $417.5 million after an auction process that was part of the West Hollywood company's Chapter 11 bankruptcy proceedings. Village Roadshow did not respond to a request for comment. Alcon could not be reached for comment. And of course, the biggest takeover in the business is the long-pending sale of Paramount Global to Skydance Media, an $8-billion deal that received government approval Thursday. Though the first half of the year has been rocked by uncertainty in the financial markets, including fears about the effects of President Trump's tariffs and trade policies, there is likely pent-up demand for dealmaking that could emerge in the coming months and years, said lawyer Tom Ara, a partner in the private equity group at Weil, Gotshal & Manges, who also leads the firm's entertainment, sports and media practice. 'There's a lot of capital sitting on the sidelines, and I think there's a lot of desire by different strategic and financial players to make deals,' he said. 'Film, TV — it's still the least expensive form of entertainment for the vast majority of the general public, and so it's not going anywhere.' Movie attendance was badly damaged by the COVID-19 pandemic and has not recovered. Domestic revenue remains down 24% from 2019, according to Comscore. But even as the industry has undergone change and upheaval, strategic buyers, both foreign and domestic, see value in what film studios are producing. Intellectual property has become key, as audiences now gravitate mostly toward what they already know. With studios' vast libraries of films, not only could those collections be ripe for reboots, sequels, prequels or spinoffs, but they also give owners options for other, non-film revenue streams, such as merchandise, theme park opportunities, TV shows, streaming deals and licensing. 'It's less about short-term earnings and more about using that film studio as a key to unlock strategic value down the road,' said Brandon Katz, director of insights and content strategy at research firm Greenlight Analytics. 'They're not necessarily standalone cash cows. The interest in one is more about the broader ecosystem.' While intellectual property can come from anywhere, movies are a particularly valuable way to generate value because of their worldwide distribution. A major hit can drive more revenue at every stage of a film's post-release distribution journey, said J. Christopher Hamilton, a practicing entertainment attorney and a professor at Syracuse University who focuses on the business of media. 'It's like being given the raw materials to build the empire,' he said. 'No matter how successful the streaming network is ... it's never going to have the same level of impact globally on every level as a blockbuster hit.' Private equity firms — which tend to be attracted to film and TV libraries because of the cash flow they generate — have retrenched a bit from their previous interest in Hollywood. But some groups have participated in recent deals, including RedBird Capital Partners, which is backing the Skydance bid for Paramount, and Apollo Global Management, which also made a play for Paramount in a joint bid with Sony Pictures Entertainment. Apollo has a minority stake in Legendary. Lionsgate has long been considered a potential acquisition target, particularly as it's one of few so-called mini-major studios left in the industry. The company acquired cable network Starz in 2016 for $4.4 billion to bulk up and better compete in the media ecosystem. But the business model for traditional television cratered amid the rise of streaming, and earlier this year, the two formally split into separate publicly-traded companies. Lionsgate merged its studio business with a special purpose acquisition company in a deal that valued its assets at $4.6 billion and gave it a way to raise new capital. The decoupling from Starz was seen as a way for Lionsgate to separate itself from the declining fortunes of the TV business and potentially be more attractive to buyers as a standalone studio, analysts said. Lionsgate also has a distribution arm, which could be enticing for a company like Legendary, which partners with other studios such as Warner Bros. to release its films. Village Roadshow, which has a library of 108 films including stakes in 'The Matrix' films and 'Mad Max: Fury Road,' went up for sale amid a bruising legal battle with Warner Bros. and after the pandemic and the dual writers' and actors' strikes of 2023 throttled an ambitious slate. Alcon, led by co-CEOs Broderick Johnson and Andrew Kosove, could be limited in what it can do with the properties, many of which were released by and co-financed with Warner Bros. Pictures. But Alcon still saw value in the assets to supplement its own content library. The Village Roadshow titles collectively generate an estimated $50 million annually, Alcon said. For David Ellison and his billionaire father, Oracle Corp. co-founder Larry Ellison, buying a legacy studio like Paramount is an opportunity to turn around an asset that has long suffered from poor corporate decision making and chronic underinvestment. Who else could be in the market for a studio or film library during this period of consolidation? Foreign buyers are a possibility, particularly those from the Middle East, analysts and experts said. Qatari broadcaster BeIN Media Group already owns a 51% stake in film and TV studio Miramax (Paramount Global owns the other half). Last year, Saudi Arabia launched a $100 million film fund to attract productions to the country. And Hollywood studios are recognizing the potential for new audiences and customer bases in the Middle East — earlier this year, Walt Disney Co. said it would open a new theme park in Abu Dhabi, United Arab Emirates. Though tech companies like Apple or Google are frequently discussed as potential buyers of legacy studios, the fact that none have yet embarked on a deal — with the exception of Amazon for MGM Studios — could indicate that they don't see it as a business priority, Hamilton said. In the end, the discussion about mergers and acquisitions indicates the volatility of the industry — and individual studios' realistic assessments about their own futures, said Corey Martin, managing partner and chair of Granderson Des Rochers' entertainment finance practice. 'I think that we're going to see further consolidation,' he said. 'You're already seeing the signs of some of these various parties coming to grips, being honest with themselves as companies and platforms about whether they're buyers or sellers — and to the extent you are a seller, how do you best position yourself to maximize shareholder value?'
Yahoo
21-06-2025
- Entertainment
- Yahoo
What Could Happen to ‘The Matrix,' ‘Wonka,' and ‘Mad Max' Franchises Now That They Have New Owners?
On Wednesday, Alcon Media Group won a bid for $417.5 million to acquire the Village Roadshow film library, which includes 108 titles and the rights to some major franchise films, including 'The Matrix,' 'Wonka,' 'Mad Max: Fury Road,' the 'Ocean's' films, the 'Sherlock Holmes' series, 'Joker,' 'Ready Player One,' and more. All those films and others were the product of a reliable and lucrative co-production and co-financing deal Village Roadshow had with Warner Bros. Pictures dating back to 1997, all before Village Roadshow's bankruptcy and an ugly legal fight that continues over the decision to put 'The Matrix Resurrections' onto HBO Max day-and-date with theaters back in 2021. More from IndieWire All 29 Pixar Movies Ranked, from 'Toy Story' to 'Elio' 'Bride Hard' Review: Rebel Wilson and Anna Camp Endure a Shamefully Bad Marriage with Simon West Perhaps inexplicably, Warner Bros. didn't win the rights to that library themselves, putting the studio in the unfortunate position to need to partner with a new company moving forward. So what happens to those franchises now? Alcon is behind several Denis Villeneuve films like 'Blade Runner 2049,' 'Prisoners,' and 'Arrival,' films like 'Insomnia' and 'The Blind Side,' and it also most recently made the 'Garfield' movie for Sony and is working on the 'Blade Runner 2099' series for Amazon. With the addition of the Village Roadshow library, it gives Alcon one of the largest film libraries for an independent film company (Lionsgate excluded), roughly 150 titles. While Alcon isn't today a partner with Warner Bros., it's possible they soon will be. Alcon acquired the Village Roadshow library, derivative rights, and cash flow with their bid. It's still just a 50 percent stake, but a press release announcing the news says the library generates roughly $50 million annually. Not too shabby. So to make any other follow-up or sequel based on one of these films in the library, both Warner Bros. and Alcon now have to agree upon it. Why then did Warner Bros. not pick up the Village Roadshow library itself? A source told IndieWire Alcon is really just getting the participations and the naked copyrights to those Village Roadshow films, and WB still owns the distribution rights to those franchises, so it decided not to pursue acquiring the library. Another source though says WB did make a bid — and was outbid — by Alcon. It stands to reason that WBD, with $37 billion still in debt, can't afford to throw around so much cash, even if it would pay off in the long term. Alcon once upon a time had a rare put deal with Warner Bros., one that produced as many as three films a year for smaller movies like 'Dolphin Tale,' but that was the old Warner Bros., and this is the David Zaslav-run Warner Bros. Discovery. Times have changed, and WBD may still have a say in the matter. Puck noted Thursday that Warner Bros. could contest the derivative rights to the Village Roadshow library, and that a hearing could take place this summer (Warner Bros. had no comment on rumors of a hearing). But if Warner Bros. can't win back the derivative rights in court, you'd imagine it and Alcon would have to come to some sort of deal if they ever wanted to make yet another 'Matrix' or 'Ocean's' film, both of which WB already has projects in the works. Would Warner Bros. ever turn the distribution rights to one of these big franchises over to another studio if the right offer came along and Alcon wanted to force its hand? Who knows. But we'll be surprised if this marriage lasts as long as the Village Roadshow one did. Best of IndieWire Guillermo del Toro's Favorite Movies: 56 Films the Director Wants You to See 'Song of the South': 14 Things to Know About Disney's Most Controversial Movie Nicolas Winding Refn's Favorite Films: 37 Movies the Director Wants You to See
Bloomberg
22-04-2025
- Business
- Bloomberg
Village Roadshow's $417.5 Million Stalking Horse Deal Approved
Village Roadshow Entertainment Group, the bankrupt production house behind The Matrix trilogy, won court approval to sell the rights to its film library to Alcon Media Group for $417.5 million, a deal that's still subject to better offers at a potential auction next month. Judge Thomas M. Horan approved the bankrupt company's stalking horse deal with Alcon, which will set a price for Village Roadshow's film library, according to a filing Tuesday. Alcon bested an earlier offer from Los Angeles-based investment firm Content Partners, though Content could still bid on the film library.
