Merger and acquisition activity in the media business was already in high gear when Comcast announced this week that it was splitting the company in two, separating its broadband business from NBCUniversal.
Comcast stock went up on the news and the big question on investors’ minds: who will acquire NBCU? Wall Street has already started to place bets on what chunks NBCU or Comcast might sell off and which buyers will surface. Netflix, anyone?
I talked with Michael LaSalle of Shamrock Capital about these shake-ups. And while he didn’t want to comment directly on the upcoming split, he said these kinds of deals offer opportunities given big conglomerates start to sell off pieces that could grow quicker on their own.
More of LaSalle’s thoughts are below, as are several Wall Street voices talking about potential fallout from the Comcast spinoff plan.
THE DEEP DIVE
Shamrock’s Mike LaSalle Sees Growth in Live Experiences, Talent-Driven Businesses
Michael LaSalle, co-president and partner at Shamrock Capital, which has $7.4 billion in assets under management, still finds the entertainment sector compelling because it demands a certain level of attention to figure out where the growth lies.
“They [investors] want exposure to that, otherwise they’re missing out on a core part of the economy,” LaSalle told The Ledger. “But the industry is so dynamic that we believe you need sector expertise to be able to do it, otherwise you could miss opportunities or allocate to the wrong ones.”
Shamrock was founded by Roy Disney and used to hold the family stake in Disney and owned traditional media assets like TV stations. No longer.
- Shamrock Capital sees opportunity in real-life experiences as a growing media sector.
- Shamrock is also investing in talent through athlete-backed startups.
- Traditional media companies are looking for efficiency, rather than the growth investors seek.
- The current spate of M&A activity in the media sector could create opportunity for investors as high-growth businesses are bought and sold by big companies.
“That’s our heritage, and we hold those values with us. I think a lot of the traditional media assets are mainly efficiency plays versus pure growth theses. Though, we would be interested in potential investments around their transformation,” LaSalle said.
The current frenzy of M&A activity, highlighted this week by Comcast’s plan to spin off its media and entertainment assets and the creation of Versant last year, creates opportunities as big companies make decisions about what they need to grow and what assets are core to their businesses going forward.
“M&A can be part of strategic value creation,” he said. “Some of those more traditional businesses in our sectors have potential to be reinvented in very interesting ways. That would be something we’d be interested in.”
Shamrock focuses on private equity investments and the ownership and financing of content and media rights. For example, it bought the rights to Taylor Swift’s catalog for $300 million in 2020 and last year sold them back to the singer for about $360 million. Shamrock employs a thematic approach to investing in media, entertainment, content, communication, sports, marketing and education.
One theme is the growing power of experiential and real-life experiences.
“As consumers spend more of their lives online, the value of authentic, shared, real-world experiences continue to increase. Live events, sports, travel and immersive entertainment are becoming an increasingly important share of consumer entertainment spending because they offer something that cannot be replicated on a screen,” LaSalle said.
“We believe this trend is, somewhat paradoxically, being accelerated by advances in AI and digital engagement. As people spend more time interacting with platforms like OpenAI, Claude and other AI-powered technologies, the desire for genuine human connection and memorable in-person experiences only grows stronger,” he added. “At Shamrock, we are positioned on both sides of this secular shift, with investments that benefit from the continued digitization of content and technology, as well as businesses that enable, power, and monetize premium IRL experiences.”
Some of the businesses that fit this mold in Shamrock’s portfolio include live-events platform Gate 52, experiential agency and design firm De-Yan and Nth Degree, a trade event and marketing company. Shamrock also expects to make a new investment in the travel sector, which it expects to consolidate and scale.
A talent for talent
Another theme is to invest in talent. “We believe talent is going to have more power in the industry,” LaSalle said.
Examples of talent-focused businesses in the portfolio include Religion of Sports, a studio started by Tom Brady, Michael Strahan and Gotham Chopra; Excel Sports Management, which represents athletes including Caitlin Clark, Kyle Schwarber and Derek Jeter on and off the field; PR firm Lede and Linden Entertainment, which represents actors including Vin Diesel, Jennifer Garner, Eva Longoria, Ellen Pompeo and Rachel Weisz.
Shamrock this week made an investment in British soccer team Swansea City, along with Martha Stewart and Snoop Dogg. Financial terms were not disclosed.
“Shamrock is an established investor, playing a central part in the growth of numerous companies and brands globally for nearly half a century,” said Swansea owners Brett Cravatt and Jason Cohen. “Their involvement with Swansea City can assist the club in achieving its strategic business goals, while their expertise and knowledge within media, entertainment and sports sectors will be invaluable.”
DEAL SHEET
- Gray Media said it closed a private placement of $70 million worth of 7.25% senior secured first lien notes due 2033. Proceeds were used in part to fund the $50 million acquisition of America Spirit Media’s six television stations. The remainder will be used to buy back Gray preferred stock.
- Former Disney CEO Bob Iger and Thrive Capital founder Joshua Kushner are eyeing a bid for the NBA expansion team in Las Vegas, according to a Bloomberg report. Iger and Kushner are working with investment bankers on an offer that would be for a majority investment in the team by Thrive Eternal. Iger signed up as an adviser to Thrive after retiring from Disney.
- EchoStar’s Dish satellite TV unit filed for Chapter 11 bankruptcy protection and asked the court to approve a prepackaged restructuring plan. Dish had been unable to repay $2 billion in notes due July 1. EchoStar CEO Charlie Ergen said Dish would continue to deliver satellite TV service to customers.
- Getty Images called off its $3.7 billion merger with Shutterstock, which would have consolidated the photo marketplace. U.K. regulators ordered Shutterstock to sell its editorial business for the merger to be approved — a condition Getty decided not to accept.
- Italian tech company Bending Spoons, which acquired dotcom brands including AOL, Eventbrite and Vimeo, went public Wednesday in an IPO that valued the company at $18 billion. Shares closed Wednesday at $45.50 a share, up from the $29 IPO price.
WRAP 20 INDEX
Our index had a decent rebound this week despite the weaker June jobs report.
FINANCIAL ROUNDUP
Comcast Spinoff Sparks Acquisition Speculation
Comcast’s plan to separate itself into two companies, connectivity business Comcast and media business NBCUniversal sent Comcast shares up 20% and set off further M&A speculation. Here’s the reaction from Wall Street:
- Deutsche Bank upgraded Comcast to a buy with a target of $32 a share. Analyst Bryan Kraft noted that, during a time of change in the media and communications industry, there is clear value in being able to act on M&A opportunities as they might arise.
- Analyst Robert Fishman of MoffettNathanson noted that Warner Bros Discovery also thought it would be launching two growing companies when it announced a spinoff of its cable networks. “We now know how the WBD story played out,” he said. Understandably, investors will continue to question the three scenarios we started with about the future of NBCU: 1) holder, 2) seller, or 3) buyer.
- NBCU’s most coveted assets would be the Universal film and TV studios and Universal Parks & Resorts. Peacock and NBCU’s sports rights might also be in demand, Fishman said.
- The Gabelli Opportunities in Live and Sports ETF fund is a holder of Comcast stock because of its right to the NFL, Olympics and other sports properties. Chris Marangi, president and co-CIO of Value at Gabelli Funds said the fund will evaluate the newly separated entities. For its Live and Sports fund, NBCU “fits that mandate much more directly than broadband,” Marangi said, adding that “over time we do expect to see further consolidation among broadband companies.”
The Paramount-WBD Saga (Continued)
To get approval for its $110 billion acquisition of Warner Bros. Discovery from European regulators, Paramount Skydance said it will withdraw from its film distribution joint venture with Universal Pictures. The European Commission could sign off on the deal in the next few weeks. Meanwhile, the Culture Secretary in the UK is considering challenging the deal. The Competition and Markets Authority there is reviewing the impact of common ownership of Paramount and WDB assets on consumers.
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