Abandon IPO Leash Endeavor Casting For Next Movement

As agents, Mr. Emanuel and his colleagues stood up to get a share of this Hollywood, 10% at a time, by negotiating agreements for actors, producers, directors and writers. Over the next 24 years, Endeavor will become the largest Hollywood arts agency, representing stars such as Dwayne Johnson and Charlize Theron.

On Thursday, their ambition to become bigger was a problem when Endeavor postponed its initial public offering one day before the start of negotiations.

Although the company may try again later, this cancellation delays planning for several years and calls into question the agency's strategy against a changing Hollywood.

Over the past few years, Endeavor has spent billions of dollars moving from an ephemeral agency to represent clients like Adam Sandler and Matt Damon – who can fire their agents at any time – to a conglomerate in the US. Miss Universe contest, a high-level sports college and the UFC combat league.

The most controversial, Endeavor began producing his own movies and TV shows, an expansion that drew criticism from the Writers Guild of America.

"We have created a series of companies in the areas of streaming, audio, experiences, gaming and education to ensure that our customers and Endeavor are well positioned for all that the entertainment landscape will be in the future in the coming decades, "said Emanuel in his IPO. deposit.

The acquisition of these companies had the effect of increasing the debt of the company, which the IPO would help to reduce.

New capital from the IPO could also have strengthened the company's efforts to diversify and expand its content-producing business. Now, what Endeavor will do is unclear, because its long-term strategy requires fundraising.

A successful public offering could also have put some Endeavor lenders in a position to liquidate part of their assets. In 2014, private equity firm Silver Lake invested approximately $ 700 million to become a significant minority investor in Endeavor. Japanese Conglomerate

SoftBank Group

acquired 5% of the company for $ 250 million in 2016.

Earlier this week, Endeavor announced that it would offer fewer shares than expected, as the price of its target was lower than previously estimated. The company withdrew its bid on Thursday, partly because

Interactive Platoon
Inc.

The offer was disappointed in a tumultuous market for IPOs, according to people familiar with the subject.

Endeavor said in a statement that she "will continue to evaluate the timing of the proposed offer according to changing market conditions".

The company, along with other major Hollywood agencies, has begun to produce content as the entertainment industry looks very different from 1995, and the power of agencies that rely heavily on representation has faded.

Film contracts such as Jim Carrey's $ 20 million contract to play in the 1996 comedy "The Cable Guy" are very rare at the time. The studios focus more on mega franchises such as Marvel Studios comics or "Fast & Furious" episodes than on dramas and star-driven comedies. The search for such properties has reduced the power of a movie star because the audience is more likely to see episodes in series that they know, rather than actors that they recognize.

The volume of opportunities has also decreased. Major Hollywood studios released 127 films in 2017, 40% less than in 2006, according to the Motion Picture Association of America.

While the rise of streaming services has created a boom in television production, the fragmentation of viewing options has resulted in fewer syndicated broadcasts.

The reduction in the number of films and the disruption of television have been a problem for agencies like Endeavor, and few people thought that Wall Street would have much patience for an unpredictable business, forcing Endeavor and its competitors to look for sources of revenue. more stable.

Endeavor is not the only agency beyond Hollywood. Its main rival, Creative Artists Agency LLC, is no longer limited to representing stars such as Meryl Streep to become a company that manages sponsorship contracts, developed the famous comedy site Funny or Die and helped sell the rights stadium designation. United Talent Agency, in addition to representing actors such as Bryan Cranston, has interests in an investment banking company and a speaker division.

Endeavor has far exceeded the expenses of these two companies in its expansion. His two largest acquisitions, for the UFC mixed martial arts league and the IMG modeling and modeling agency, cost $ 6.4 billion. Last month, Endeavor was looking for an equity value of between $ 7 billion and $ 8 billion as part of its IPO, according to sources close to the terms.

Endeavor has postponed its intention to announce to the public at the beginning of the year, as it attempted to enter into an agreement to acquire On Location Experiences LLC, the upscale hotel and entertainment company. live events, for up to $ 700 million, the Wall Street Journal reported. The potential acquisition would help Endeavor's efforts to add value by diversifying its interests. No agreement has been announced.

The company's debt has accumulated over the past few years as the long-time talent agency has embarked on a spending spree, making more than 20 deals over the last decade, according to a stock market analyst.

Eric Handler,

from MKM Partners, who stated in a note to customers last week that Endeavor had "an interesting business model, but with serious questions".

Handler said the growth potential of Endeavor's assets appeared appealing, citing the UFC's potential to expand its brand internationally.

Write to Erich Schwartzel at [email protected]