The $900 million acquisition of Reese Witherspoon’s Hello Sunshine by private equity giant Blackstone is a big step toward the launch of a media holding company that will revolve around the three Cs: content, commerce and community.
Disney alums Kevin Mayer and Tom Staggs are guiding Blackstone’s investment in content ventures and will serve as co-CEOs of the unnamed holding company that will house Hello Sunshine and other banners. Mayer and Staggs told Variety on Monday that Hello Sunshine is the exemplar of the kind of production companies that they are shopping for at present.
“We want companies that are producing meaningful, category-defining content brands that resonate with their chosen audiences. We want to do that across multiple audience (sectors),” Mayer said. “There are a lot of those companies out there that would benefit from additional size and scale and to be linked up with like-minded media companies that have must-have content. We think there’s a big revenue lift that will come from tying some great companies together.”
Blackstone has committed to provide a $2 billion war chest for Mayer and Staggs — and as Staggs noted, that’s “just the start.” The pair would not comment on other acquisition targets, but it’s no secret that they have had discussions with Imagine Entertainment and are believed to have done so with LeBron James and Maverick Carter’s SpringHill production banner.
What is clear from talking to Mayer and Staggs is the scope of their ambition and their belief that the marketplace needs a strong independent content supplier. The pair are looking well beyond U.S. borders for deal prospects and business opportunities, pointing to strong demand for original streaming content extends to local and regional streamers as well.
“Around the world the voracious appetite continues unabated, which puts us into this arms-dealer positioning. We think it’s quite valuable,” Mayer said.
Hello Sunshine was a good place to start the shopping spree because the company’s activity reflects what Mayer and Staggs see as the future of successful media brands. Headed by CEO Sarah Harden, Hello Sunshine is laser-focused on generating content produced by and for women. The company benefits from Witherspoon’s profile and its track record in producing high-end TV and movies. It also has a direct-to-consumer commerce relationship with its most avid fans, and a strong social media presence that is a good platform to launch content and initiatives.
Hello Sunshine “is right in the bullseye of the vision that Kevin and I have for this company: Category-defining content that commands a marketplace premium,” Staggs said. Pointing to the “Reese’s Book Club” digital content hub, he added, “We can build social- and commerce-driven businesses around Reese’s Book Club. This is the crux of the forward-looking company that we’re trying to build.”
Hello Sunshine and other acqusitions will continue to operate as standalone entities, but it will eventually be housed in an unnamed holding company that Mayer and Staggs will lead. The venture that Blackstone is backing is separate from an unrelated Special Purpose Acquisition Vehicle arrangement that Mayer and Staggs set with other investors to acquire the Beachbody fitness firm earlier this year.
Mayer and Staggs have heard the skepticism in the market about the $900 million valuation of Hello Sunshine. It’s a refrain they know well from their days as top business development and operational executives at Disney under former CEOs Michael Eisner and Bob Iger.
“Tom and I have done a lot of deals over the years. Each and every one of them we were claimed to have overpaid: Pixar, Marvel, Lucasfilm,” Mayer said. “We’ll let our track record speak for itself.”
Added Staggs, “We feel really good about the value of what we’re getting here. We’re getting an extraordinary management team. Reese and Sarah Harden are as good as it gets.”
The deal terms call for Blackstone to buy out AT&T, Emerson Collective and other investors in Hello Sunshine since its formation in 2016. Blackstone is understood to be commiting $500 million in cash to the purchase. Witherspoon Harden and others will see some of their equity in Hello Sunshine converted to equity in Mayer and Staggs’ new venture. Witherspoon and Harden will also join the board of the holding company.
(Pictured: Kevin Mayer and Tom Staggs)