Let’s Make A Deal: Who’s For Sale In Hollywood And For How Much?

Studios behind hits like Godzilla Vs. Kong, La La Land and 8 Mile are ready to be gobbled up — and their price-tags are surprising.

---

Working from a nondescript office building just north of downtown Atlanta, wealth advisor John Cary is preparing for a fresh run at Hollywood. Cary, a director for Tyler Perry Studios and chairman of Cross Creek Pictures, is sifting through a list of targets some 30 names long, all of them independent producers turned acquisition targets. 

“We’re early in discussions with a few folks,” says Cary, managing director at NextGen Capital. “We’re gonna sit at the table and ask, ‘What do you think you’re worth? What number would be attractive?’”

The answer? Probably a lot, as the arms race for content triggered by the success of streaming shows no sign of slowing. The industry will spend $225 billion on new programming worldwide this year, according to researcher Ampere Analysis, up $60 billion from five years ago. In the wake of Amazon’s $8.45 billion purchase of MGM Studios, actress Reese Witherspoon sold a majority interest in Hello Sunshine to a new media company backed by Blackstone Group for $900 million, at what one dealmaker says was double the multiple on cash flow such outfits were getting just 18 months ago. 

That’s put a fresh price tag on everything from Ari Emmanuel’s Endeavor Content and Lebron James’s SpringHill Company, to indie-film darling A24, while stirring talk about the potential of snagging red-hot shops like Blumhouse Productions. There’s avid interest in Ron Howard’s and Brian Grazer’s Imagine Entertainment.   

At stake is the lucrative power play between distributors and creators that the streaming revolution overturned. Hitmakers accustomed to decades of risk-free profit-share deals have been moping around since Netflix — followed by streaming competitors including Disney+ and Amazon — swooped into town brandishing a new kind of deal: lump sum buyouts that limit talent upside while adding value to their platforms. 

Witherspoon, who bet on herself when she created Hello Sunshine, was able to leverage the rights she held to female-focused stories including the films Gone Girl and Wild, and series that she sold to Hulu, Apple and HBO. The price tag for the five-year-old company — which reportedly fetched a premium of more than seven times projected revenue — hints at a soaring market for producers with a proven track record, since any cash flow Hello Sunshine sees is far less than the headline box office numbers that get reported. Those get slashed by the cost of repaying investors who financed the production, hefty marketing and promotion expenses, the sizable shares claimed by movie theaters and TV networks, as well as paying out profit- share deals with the directors, stars and producers who make it all happen.

“(Talent) sees enormous value for companies built off of their efforts and they’re not seeing an equity-like return on that,” says Kevin Mayer, who partnered with former Walt Disney chief operating officer Tom Staggs and Blackstone in the Hello Sunshine investment. “Now they're seeing ways they can have equity-type upside by creating their own companies and also being part of new scaled, independent companies.”

That leaves a dangling question mark over every outfit from Will Smith’s Westbrook Entertainment to Steven Spielberg’s hitmaker powerhouse, Amblin Entertainment. It could also put a top-dollar value on a shop like Perry’s, which does its own financing and thus owns its production outright, and has only one principal to pay, Perry, who writes, produces, directs and often stars in his own shows. The billionaire producer is not a seller, says Cary, but he could be a buyer. 

A clue to what others may be thinking may lie with Jason Blum, the horror dynamo behind Blumhouse: “He doesn’t have a sandwich board on himself,” according to one source before adding that he’s also not ruling anything out. 

Here’s a stab at what values are being floated for some of Hollywood’s top targets.  

Legendary Entertainment:

Greatest Hits: Godzilla vs. Kong, Pokémon Detective Pikachu, Mamma Mia: Here We go Again and Jurassic World: Fallen Kingdom 

$4 billion

The film production and co-financing company that set a pandemic global box office record with Godzilla vs Kong, has been quietly exploring its options. Dalian Wanda Group took control of Legendary in 2016 in a $3.5 billion transaction that at the time represented the largest China-Hollywood deal (though that price was widely viewed as inflated). More recently, Wang Jianlin, the Chinese billionaire who controls Wanda, has been shedding his international assets, including a stake in the luxury London hotel project One Nine Elms and most of his interest in AMC Theatres. Legendary also is believed to be searching for a suitor. The studio’s profitable and producing a string of recent hits, so it could fetch around $4 billion.

---

Blumhouse Productions

Greatest Hits: The Invisible Man, Paranormal Activity, Get Out, BlacKkKlansman, Halloween and The Purge

$2 billion (maybe more)

The maestro of the modern horror movie, Jason Blum’s company would make an attractive acquisition target for multiple buyers. His films and shows are produced on the cheap but land big, generating box office revenue of almost $4 billion over the past 15 years. The clock is running down on a first-look deal with Universal Pictures that ends in 2024, though the studio is also on the hook for a $400 million deal for Blum to create three new installments of The Exorcist franchise. “I can’t even imagine how much Blumhouse would be worth,” remarked one agent. 

---

A24

Greatest Hits: Minari, Moonlight, Uncut Gems, Eighth Grade

$3 billion

The independent film studio that produced or distributed a string of acclaimed films is similarly seeking a suitor — floating an asking price of up to $3 billion, according to Variety.  That number seems high, especially given the modest box office performance of its films, which would suggest a more grounded price tag of around $591 million. Though one rumored buyer, Apple, could well afford to pay a premium for prestige. The studio, launched with seed money from Guggenheim Partners, already produces films for Apple TV+, and Hollywood dealmakers say the acclaimed indie fits with Apple TV chiefs Jamie Erlicht’s and Zack Van Amburg’s positioning of the streaming service as a home for prestige content.

---

Millennium Media

Greatest Hits: Olympus Has Fallen, The Hitman’s Bodyguard, and Mechanic: Resurrection. 

$250 Million

The independent film studio was founded by Avi Lerner, a one-time barman and carpenter who began his career as a manager of Israel’s first drive-in theaters. He started off producing what one trade publication dubbed “low-budget schlock” such as Shark Attack and Crocodile through Nu Image film studio. His Millennium Films, founded in 1996, became a vehicle for more upscale fare, notably action films such as The Expendables franchise. Two sources say Lerner is looking for at least $250 million for the asset.

---

Imagine Entertainment

Greatest Hits: A Beautiful Mind, Apollo 13, The Da Vinci Code, 8 Mile, Arrested Development, 24

 $800 Million

The story-telling hitmaker tied to director Ron Howard and producer Brian Grazer has been attracting overtures from prospective buyers over the past year, according to one well-placed source, while a $100 million investment from media-focused merchant bank the Raine Group in 2016 has helped fund acquisitions of their own, including Jax Media (Emily in Paris, Russian Doll and Broad City) and a majority stake in documentary powerhouse Jigsaw Productions (The Investor: Out for Blood in Silicon Valley and Freakonomics). The reported $800 million price for Imagine appears understated, given the cash its library of popular films and TV shows likely generates. “It’s a pretty interesting platform for anybody who believes in premium IP,” says one source. “There’s a lot of interest in that one.”

---

SpringHill

Greatest Hits: The Shop, Self-Made: Inspired by the Life of Madam C.J. Walker 

$650-750 Million

Founded by one of the world’s most recognizable athletes, LeBron James, also is exploring an investment or sale of SpringHill Co., with Nike reportedly among the interested parties. The company he founded with his business partner, Maverick Carter, focuses on athlete-specific content — from movies and TV shows to podcasts, branded content and apparel. Last year, it raised $100 million from investors including Guggenheim Investments and the University of California’s UC Investments and joined with Warner Bros.’ to reboot Space Jam, while also producing films and original series for a variety of streaming platforms. “Whoever buys that is paying to get in business with LeBron,” said one industry insider.

---

Endeavor Content 

Greatest Hits: La La Land, Just Mercy, Hamilton and See.

$500 million

Endeavor Content also is beginning to court investors and floating a $500 million price tag. The unit of Endeavor was created to capitalize on the streaming revolution, financing and producing films and television series that could be sold to buyers hungry for original content. Since its founding in 2017, it has financed or sold more than 200 projects. But the firm, with its leading talent agency, agreed to sell off 80% of its stake in Endeavor Content as a condition of its agreement with the Writers Guild of America, which saw a potential for conflict.

VALUATION METHODOLOGY

Production companies sell for a multiple on cash flow, which is difficult to calculate without access to deal terms for series or the cash generated by film and TV libraries. To arrive at potential sale prices for the studios, Forbes used box office data from Comscore and BoxOfficeMojo to estimate annual revenue by using average theatrical ticket sales over five years. A multiple of 7.2 was applied, based on what Blackstone reportedly paid for Hello Sunshine. The estimates also reflect feedback from 19 executives, agents, investors and bankers. Only production companies actively being discussed by dealmakers are included.

DAILY COVER STORIES

ForbesHow Figma Became Design's Hottest Startup, Valued At $10 BillionBy Alex KonradForbesAre NFTs The New Napster? This Time The Music Industry Isn't Taking ChancesBy Michael del CastilloForbesSenators Use Campaign-Donor Money To Buy Their Own BooksBy Zach EversonForbesThe War In Afghanistan Cost America $300 Million Per Day For 20 Years, With Big Bills Yet To ComeBy Christopher HelmanForbesCovid's Forgotten Hero: The Untold Story Of The Scientist Whose Breakthrough Made The Vaccines PossibleBy Nathan Vardi

See More Daily Cover Stories