Speaker 1: Welcome to another episode of Strictly Business, the podcast where
Speaker 1: we talk with some of the brightest minds working in
Speaker 1: the media business today. I'm Andrew Wallenstein with Variety. The
Speaker 1: talk of Wall Street in recent years has been the
Speaker 1: rise of SPACs otherwise known as special purpose acquisition companies
Speaker 1: as an alternative to the traditional I p O. Well,
Speaker 1: there's no one better than today's guest to talk SPACs.
Speaker 1: Harry Sloan has launched and completed more of them than
Speaker 1: anyone else, and one of them, DraftKings, may be the
Speaker 1: most successful one of the hundreds out there, having delivered
Speaker 1: four hundred and fifty return on investment. But SPACs are
Speaker 1: a tricky business to say the least, particularly in the
Speaker 1: media and entertainment industries, where Harry certainly knows a thing
Speaker 1: or two, having enjoyed a long career in Hollywood, is
Speaker 1: the CEO of MGM, so you better believe he's also
Speaker 1: got some thoughts on that pending Amazon An acquisition. We'll
Speaker 1: be right back with Harry Sloan. Welcome back to the
Speaker 1: Strictly Business podcast where my guest is Harry Sloan. He's
Speaker 1: gone on from a successful Hollywood career to a second chapter.
Speaker 1: As a spack deal specialist both in and outside of
Speaker 1: the media business, I interviewed him on November four at
Speaker 1: the annual Techtainment Conference at Loyola Law School. I want
Speaker 1: you to give your sense of what the spack marketplace
Speaker 1: is right now as we talk in early November, because
Speaker 1: when you look at the data, it looks at while
Speaker 1: undoubtedly saw an explosion in these deals, that burst was
Speaker 1: really contained of the first quarter. You could see the
Speaker 1: numbers have come down, although October seems to be yielding
Speaker 1: fresh activity. So walk us through what you're seeing with
Speaker 1: the status this back market. Andrew Um, when we did DraftKings,
Speaker 1: we closed it in March of last year, in the
Speaker 1: middle of COVID March of there were about forties pacts.
Speaker 1: Today there's six Um. I think one thing has a
Speaker 1: lot to do with the other. I think success the
Speaker 1: DraftKings was the first big, very notice successful spac with
Speaker 1: the name brand, and I think that did trigger it.
Speaker 1: The six D spacts are looking for deals. Most of
Speaker 1: them won't find a deal. Many of them won't find
Speaker 1: a deal. If they don't find a deal in two years,
Speaker 1: whatever amount of money they raised. In the case of
Speaker 1: the Draft kings back, we had four under million. The
Speaker 1: case of our last spact, which bot King Cobra works
Speaker 1: one seven billion. It all has to be returned to
Speaker 1: the investors, so the spact sponsor has two years now.
Speaker 1: Sometimes the deals are down in the eighteen months a
Speaker 1: last two years, find it company to acquire file the
Speaker 1: appropriate UH prison patients and disclosures that the SEC haven't approved.
Speaker 1: Have the deal closed all in two years or money
Speaker 1: goes back. What do I think it's going to happen?
Speaker 1: With six hundred spects out there, A lot of them
Speaker 1: are not going to end well, uh, including the one
Speaker 1: that I think we're just talking about, which is the
Speaker 1: one acquiring the trump um agreement to launch uh social
Speaker 1: media or whatever they're actually trying to do. Well. We'll
Speaker 1: get to Trump in a second. UM. What I'm curious though,
Speaker 1: is also it seems like correct me if I'm wrong,
Speaker 1: that there's been some regulatory scrutiny with the SEC starting
Speaker 1: to pay more attention people on the hill paying more attention. UM.
Speaker 1: Has that not had a chilling effect here as we
Speaker 1: look at the numbers and see that that big spike
Speaker 1: that deals from March seems to have petered out in
Speaker 1: subsequent months. Well, the reason they petered out has nothing
Speaker 1: to do with the potential regulations. Potential regulations to to
Speaker 1: kicking in when the Biden administration took over, and also
Speaker 1: as you alluded to the Senate. But the which you
Speaker 1: were showing on that chart, which is that there's so
Speaker 1: many fewer spacts right now being launched, was because there
Speaker 1: was way too much speculation going on in the spack world,
Speaker 1: and there was in order to have fifty or hundred
Speaker 1: spacks a month, the hunded I saw in one month,
Speaker 1: you have to have buyers, you have to have money
Speaker 1: to invest, and the banks were lending incredible amount of
Speaker 1: money to hedge funds. Hedge funds were investing it in spacts.
Speaker 1: SPACs are all doing well, so they kept wanting to
Speaker 1: do that. It looked like easy money. But the more
Speaker 1: spacts there were, they more SPACs needed to find a deal.
Speaker 1: And when they actually find a deal, at that point,
Speaker 1: the investors in this back have the option of leaving
Speaker 1: their money in or taking it out. If they decided
Speaker 1: to leave it in, they actually have to come up
Speaker 1: with true capital as opposed to bank Yet anyway, there
Speaker 1: was crazy speculation going on there was other kinds of
Speaker 1: speculation which came from the market being so overheated. That's
Speaker 1: why there's less SPACs. Also, you know, if you try
Speaker 1: to go after a company to acquire it and take
Speaker 1: a public and a spack and you've got ten others
Speaker 1: back competing, you start seeing out the company way. So
Speaker 1: it was the marketplace that has caused the SPAC speculation
Speaker 1: and the overheated market to slow down. The regulatory side
Speaker 1: is another issue. And there's a bunch of lawyers here, um,
Speaker 1: and the congratulations Joe going to grade law school, Um,
Speaker 1: a lawyer point of view, the regulation, I think becomes interesting.
Speaker 1: What's going on the regulatory side is new SEC chairman.
Speaker 1: New SEC is appointed after Biden's elected, comes in at
Speaker 1: a time when there's a lot of concerns over spacts,
Speaker 1: the speculation I just talked about too much easy money
Speaker 1: flowing around. If you remember in January and February, there
Speaker 1: was a lot of talk in the government about these
Speaker 1: retail trading brokers, robin Hood and all those stocks like
Speaker 1: games Stop and a m C that we're trading at
Speaker 1: crazy molecules. Because there was some exercise and democracy or
Speaker 1: some excuse for people's and stimulus checks or for whatever reason,
Speaker 1: craziness around retail trading. Retail investors started buying spects. That
Speaker 1: was all going on, and the SEC said, wait a minute,
Speaker 1: we need to look at all of that. My view
Speaker 1: is that the SEC has announced several things that they
Speaker 1: want to look at with regardless of facts, none of
Speaker 1: which are the major issues they should be looking at.
Speaker 1: The SEC has said publicly, be aware of spects that
Speaker 1: have famous people. You know, there's a spect that the
Speaker 1: Shack has involved in. There's an expect that a Rod
Speaker 1: has involved in. There's fact that you know, be aware
Speaker 1: of that. Well, and what does that mean? Uh? The
Speaker 1: SEC has said we want to look at some very
Speaker 1: complicated warrant accounting. Well, I mean we weren't accounting was
Speaker 1: very technical. All the lawyers and accounts they're looking at
Speaker 1: her thinking, okay, this is just paperwork. The real concern
Speaker 1: about SPACs is the trading that goes on in the
Speaker 1: SPAC shares itself based on rumors and you know, uninformative
Speaker 1: announcements of deals that may or may not happen. And
Speaker 1: I couldn't have asked for a better example of what
Speaker 1: the SEC and and all the SEC lawyers need to
Speaker 1: think about, which has been demonstrated by this so called
Speaker 1: Trump's back. Um, all we've seen is a very general
Speaker 1: power point. There's almost nothing in there about That's back
Speaker 1: and what Trump's track record is and the other businesses
Speaker 1: and what's really in there. There's a promise that this
Speaker 1: spac is going to be able to launch social media
Speaker 1: with with Trump. What does that mean? There's there's very
Speaker 1: there's no detail whatsoever yet that stock has a spack
Speaker 1: was training a ten dollars traded his eyes a hundred
Speaker 1: and seventy dollars. It's still fifty eight dollars a year,
Speaker 1: which is six x on where this back was trading
Speaker 1: when it was announced. Three hundred million shares traded the
Speaker 1: first day, probably been five hundred million shares traded. Since
Speaker 1: this announcement or whatever it was, a league, twenty or
Speaker 1: thirty billion dollars has been invested in this stock at
Speaker 1: somewhere between fifty and hundred dollars a share. Now, if
Speaker 1: it doesn't work out, there's a lot of reasons that
Speaker 1: it might not work out. Not all of them do.
Speaker 1: The stock goes back to ten and people lose that
Speaker 1: twenty billion dollars And I'm gonna guess whether it's Trump's
Speaker 1: supporters or whether it's just kids who are trading on
Speaker 1: these retail platforms. It's not a group of people who
Speaker 1: would be in any position to lose that kind of money.
Speaker 1: It's not Fidelity, Wellington Franklin Fund Capital Group, it's not
Speaker 1: these trillion dollar mutual funds. It's a lot of individuals,
Speaker 1: patriotic Americans who think they're doing something good for either
Speaker 1: Trump for the Republicans. It's going to be a ship
Speaker 1: show if it falls apart. And that's the kind of
Speaker 1: thing the SEC should be looking at, not what they've
Speaker 1: announced so far. As far as Congress, we can get
Speaker 1: to that later if you want. Sure, Well, I guess
Speaker 1: what I'm wondering though, is given this frothy marketplace that
Speaker 1: you're describing, how does that impact your strategy, your approach.
Speaker 1: You've just completed a seventh deal, but is you know,
Speaker 1: do you need to sort of sit back and wait
Speaker 1: till things calm down before you try an eighth or ninth.
Speaker 1: I definitely want to pay attention to the regulatory environment.
Speaker 1: I think all we have now out of the SEC
Speaker 1: ears two weeks about things they're looking at. There isn't
Speaker 1: anything they're looking at that would deter me or would
Speaker 1: defer those of you out there that are thinking about
Speaker 1: being involved in fact for wanting to do them. Um,
Speaker 1: there's nothing going on. I'm other than they're looking into
Speaker 1: it in the Senate. Um, I don't smell that there's
Speaker 1: going to be regulations that make Trump that sorry, that
Speaker 1: makes sense, an audium slip that makes spects, um impossible.
Speaker 1: So no, I mean, I think we'll be okay. Um,
Speaker 1: I don't. I don't anticipate anything coming out of the
Speaker 1: regulatory side. I do anticipate a lot more sanity and
Speaker 1: less speculation amongst back investors, and therefore much less spects.
Speaker 1: Will there be six hundred a year from now? No,
Speaker 1: will it be two? Will be a lot less, it
Speaker 1: will it'll be way less important than it is now.
Speaker 1: So let's go to the Congress side of this equation.
Speaker 1: Elizabeth Warren has been particularly out front. Um, certainly this
Speaker 1: is I feel like it's just the beginning in terms
Speaker 1: of the kind of scrutiny that's going to come from
Speaker 1: Capitol Hill. What do you think, Um, it's too early
Speaker 1: to tell. Um, it's really more in the per view
Speaker 1: of the SEC to make sure that investors understand what
Speaker 1: they're getting involved in, which is a disclosure, which is
Speaker 1: like all the various documents, whether it's the S one
Speaker 1: which is an IPO document, or a SPOT which is
Speaker 1: a merger, both are involved in this back. For those
Speaker 1: of you that are you know, looking at the technical
Speaker 1: side of this back begins as a regular way I
Speaker 1: p O and S one, and when it makes a
Speaker 1: deal to acquire company, it files an S four, which
Speaker 1: is a simple merger has to be voted on the shareholders.
Speaker 1: It's within those documents that the SEC has plenty of
Speaker 1: opportunity to make changes. But I don't anticipate changes they're
Speaker 1: gonna hurt that are gonna hurt legitimate, um honest SPAC sponsors.
Speaker 1: As far as as far as the Congress is concerned,
Speaker 1: there's no reason right now to believe that there's any
Speaker 1: particular legislative action. Also, there's so much going on in
Speaker 1: other areas, you know, whether it's the build back America
Speaker 1: or whether it's the the infrastructure bail and means what
Speaker 1: the priorities in the in the Congress right now don't
Speaker 1: seem to be looking at regulating spects are really much
Speaker 1: wall street regulation. God, it's interesting looking at your track
Speaker 1: record in the spack market because so many different kinds
Speaker 1: of companies. You started out with, you know, delivering WiFi,
Speaker 1: two airlines, the Indian satellite business, media plays. Uh, not
Speaker 1: surprising coming from you, but then you kind of went
Speaker 1: in some very interesting directions with sports betting, synthetic biology.
Speaker 1: What is it? You know, what is it in terms
Speaker 1: of what you look for in a company that makes
Speaker 1: it a good spack target. Good question. Yeah, during the
Speaker 1: spack sterea, and I think maybe it's still the case today.
Speaker 1: There is a view among many people that companies are
Speaker 1: better off going public through this back process again by
Speaker 1: merging into US back as opposed to regular way I
Speaker 1: p O. You know, I don't feel that way. I
Speaker 1: think most deals are still better off going regular way.
Speaker 1: I p O. If for no other reason that the
Speaker 1: spec sponsors we add friction, we take you a nice,
Speaker 1: healthy piece of the company for doing it, and if
Speaker 1: we're not adding credible value, it doesn't make sense to
Speaker 1: do that. Um, there are at least two categories that
Speaker 1: I would say that make more sense for a spect
Speaker 1: Let's let's talk about DraftKings. To start with DraftKings could
Speaker 1: not go public regular way, and it needed money. DraftKings
Speaker 1: could not go public regular way because on its own,
Speaker 1: because its story would have been raised more money. Use
Speaker 1: it for marketing fandueling. DraftKings are being their brains out publicly.
Speaker 1: There's a view out there that just giving them more
Speaker 1: money is going to spend on marketing. They needed a
Speaker 1: different story. The story that made sense for them was
Speaker 1: a transformative acquisition to buy a company called sp Tech,
Speaker 1: which was their tech supplier, so they would be able
Speaker 1: to save to the market. We're not going to compete
Speaker 1: on how much money we spend an advertising and marketing,
Speaker 1: how many commercials you guys all see right now on
Speaker 1: the on the World Series or on football. We're going
Speaker 1: to compete because we're gonna have the best products. We're
Speaker 1: gonna have the best technology. We're gonna have in game betting,
Speaker 1: for example, where you know, if if I'm thinking of
Speaker 1: Aaron Rodgers right now, because the COVID bit of Aaron Rodgers,
Speaker 1: you know has a ball in the two minute drill,
Speaker 1: you can bet right during the game on whether or
Speaker 1: not he's gonna score a touchdown or a field goal.
Speaker 1: You can bet on on whether a kick to be successful,
Speaker 1: so products that would be good that how they were
Speaker 1: going to compete anyway. In order to do that, they
Speaker 1: had to acquire sp tech. So what they were doing
Speaker 1: was two companies were going public at the same time.
Speaker 1: You can't do that as a regular way. I you know,
Speaker 1: you have to um, you have to have consolidated financials,
Speaker 1: you have to share operating history, you have to show
Speaker 1: the synergies. It would have taken your only way to
Speaker 1: take two companies public at the same time. In this
Speaker 1: case DraftKings and Specht thro uspact. Now basically this back
Speaker 1: just buy both companies, So a three way merger two
Speaker 1: companies who want to get together. That makes sense in respect.
Speaker 1: The other one is what we did with Gego Synthetic Biology,
Speaker 1: and it's what we call a category of one company.
Speaker 1: So most companies are not category of one. Most company
Speaker 1: have several other businesses who compete with them. Whatever the
Speaker 1: industry is, whether it's automnosetails, whatever it is, there are
Speaker 1: many what you call cops comparables. So if you take
Speaker 1: a company public, you can value it based on its
Speaker 1: performance against someone else. However, if you have a company,
Speaker 1: and this comes often often of the out of the
Speaker 1: tech world, which is we call category one. There is
Speaker 1: no one else doing what they're doing. There's no way
Speaker 1: to value them versus other companies in the market. Right
Speaker 1: if we were taking variety in public Andrew, we could
Speaker 1: value it against by Reporter, we could value against other
Speaker 1: publishing companies, of value against New York Times, Washington Post,
Speaker 1: all these public companies, Synthetic Biology. The only company of
Speaker 1: scale out there is get Go Bioworks. So if you
Speaker 1: take it public regular way, the way a regular way
Speaker 1: i PO goes is the company goes down in the
Speaker 1: road show, it meets with investors, it sits down with
Speaker 1: Capital Group of Fidelity or Willington. It's been sporty five
Speaker 1: minutes going through its business and its valuation, and Thursday
Speaker 1: at four o'clock everybody has to share their car. Examput
Speaker 1: comes by DAN. A spact doesn't work that way. The
Speaker 1: process of selling two investors a SPAC merger is much
Speaker 1: more involved. You go to the investors, there's no time limit,
Speaker 1: there's no forty five minute meeting. You can have as
Speaker 1: long a meeting as you want. You can have a
Speaker 1: follow up meeting, you can have a phone coll and
Speaker 1: CFO DraftKings perfect example of this. When we took DraftKings
Speaker 1: public two years ago, there was there was only sports
Speaker 1: spending allowed in one state, New Jersey, but the Supreme
Speaker 1: Court had passed it had had invalidated the federal law
Speaker 1: which had prohibited sports betting and said no state by
Speaker 1: state can allow sports betting. So each state had to
Speaker 1: go through some kind of regulatory process. How long would
Speaker 1: that take? California, New York, Florida, Texas, the four biggest
Speaker 1: states two years later, still don't have sports pidding. We
Speaker 1: may never have sports meeting in California. Depends on whether
Speaker 1: you think the influ onto the tribes who control betting
Speaker 1: and casinos are going to be able to prevent it.
Speaker 1: Florida it's the seminal of Youse. I mean, you don't know.
Speaker 1: Texas it's the it's the churches who are opposing it.
Speaker 1: So how does an investor decide two years ago, when
Speaker 1: only one state had sports betting, what was the value
Speaker 1: of a sports betting? How big is the business going
Speaker 1: to be? We call the TAM total addressable market? How
Speaker 1: big a share is the draftings? So you needed someone
Speaker 1: in our case to put together projection. Okay, within one
Speaker 1: year six stays, here's one you think within two years
Speaker 1: of twelve stays. Here's what the business books of the maturity.
Speaker 1: You can't do that in a regular way i P.
Speaker 1: You can't make five year projections. You can't make one
Speaker 1: year projections because you take on liability. So in aspect
Speaker 1: you can provide much more information. You can give long
Speaker 1: term projections. The investors don't have to believe them. They
Speaker 1: can say, you know what, let's have the CFO come
Speaker 1: in and see us. We think he's full of ship.
Speaker 1: We're not going to buy the stock. But you're able
Speaker 1: to go through a long process. And so for a
Speaker 1: company that's a category of one where it's a drafting
Speaker 1: or whether it's a game coincynthetic biology, or skills the
Speaker 1: company of skilled gaming, which is which is video games
Speaker 1: like the sports, but casually sports you can play against
Speaker 1: other people for money. Those are companies. There's no other
Speaker 1: company like them. There's no cocks. They make sense to
Speaker 1: goose as back. We're going to take a quick break,
Speaker 1: but we'll be right back with Harry Sloan. And we're
Speaker 1: back with Harry Sloan, who's talking about spack deals. He's
Speaker 1: done out of his equal equity partner's outfit. Talking about
Speaker 1: the media business, you know, you are are far from
Speaker 1: alone in terms of people in the media world being
Speaker 1: active in the spack space. We're seeing all sorts of
Speaker 1: activity from from people like uh uh tadd Bully, Joe
Speaker 1: I and Ello from CBS, gregma Fee from Liberty. What
Speaker 1: do you think it is about the media and entertainment
Speaker 1: space that makes it sort of spack friendly? Didn't know
Speaker 1: there's a lot of Kevin Mayer and Tom Staggs. Yeah,
Speaker 1: I think they've done I think they've done two SPACs.
Speaker 1: Todd just announced he's doing any vivid seats to think
Speaker 1: the Draft Kings may be invested in. Um. Yeah, Look,
Speaker 1: I think SPACs are covering every aspect every industry. I
Speaker 1: mean there's a hundred biotech SPACs. A year ago there
Speaker 1: were no biotech spacts. Uh. SPACs have become the flavor
Speaker 1: of the month for biotech. Um, I think you haven't
Speaker 1: really become the flavor yet for entertainment. There's been a
Speaker 1: few deals. It's against my partner, Jeps, against him, my
Speaker 1: great partner for many years. Um. You know he has
Speaker 1: a background in entertainment. He was he ran CBS he
Speaker 1: ran Sony Pictures eleven years ago, and he had I
Speaker 1: launched our first spac. We specifically said we were the
Speaker 1: first ones actually specifically said that we're targeting companies in
Speaker 1: the met We're all generalists, they're financial people, but we
Speaker 1: had both come out of the entertainment Industry's funny that
Speaker 1: we um. I was in my late fifties, he was
Speaker 1: in maybe his mid fifties. I've been running MGM at
Speaker 1: the time. He had been running something else, and and
Speaker 1: we had said to investors, we said, look, we'll find
Speaker 1: a company, but we both run public companies. If something
Speaker 1: goes wrong, uh, you know, we could step in and
Speaker 1: run the company. And that was a terrible, terrible marketing
Speaker 1: approach because the companies we then want to acquire be worried,
Speaker 1: you know, would they with the founders and the and
Speaker 1: the CEOs lose their job because Jeff or I would
Speaker 1: actually we're trying to do it just to get a
Speaker 1: job for ourselves. So we got quickly off of that
Speaker 1: and never you know, even talked about it, nor haven't
Speaker 1: jumped into any companies into the management. But we targeted
Speaker 1: media entertainment and what we said then this is two
Speaker 1: thousand eleven, we had said that traditional media entertainment, television, movies,
Speaker 1: cable telling, Asian satellite, all of that stuff, there was
Speaker 1: no great growth. The only growth in those days was
Speaker 1: going to be digital. It was one pot over two point.
Speaker 1: I don't know what it was. So we sent to
Speaker 1: the investors and we raised that spect. We said what
Speaker 1: kind of deal you're looking for, and said, well, if
Speaker 1: it's in the US, there's nothing in traditional media that
Speaker 1: you could I p O, meaning that would have this
Speaker 1: kind of growth. So if we did something in the US,
Speaker 1: we would do something in what was then called new
Speaker 1: media digital media. However, if we're going to do traditional media,
Speaker 1: we'll do it outside the US and some of high
Speaker 1: growth market that hasn't been you know, over overbuilt already.
Speaker 1: So we go to an emerging territory like an India
Speaker 1: or in Indonesia, and in those cases you could do
Speaker 1: satellite or cable, and ironically I've worked out that way.
Speaker 1: The first fact we did was a company called Globally Entertainment,
Speaker 1: which provided Wi Fi connections for airlines and content. So
Speaker 1: we bought the biggest beny that controlled content supply. The
Speaker 1: airlines had all the airlines and contract and a company
Speaker 1: that had the technology to provide Wi Fi via satellite.
Speaker 1: So now you take WiFi by granted, you know, granted
Speaker 1: on airlines and you get all your movies that way.
Speaker 1: But ten years ago it was a very beginning business.
Speaker 1: So our first back, as we said, if we do
Speaker 1: something domestically this was mainly domestic, we would do something
Speaker 1: in new media. You couldn't get any more new media
Speaker 1: in two thousand and eleven. Then then WiFi of the
Speaker 1: airlines it's still rest very well established. Uh and technically
Speaker 1: if you're trying to sign on when you're on a flight.
Speaker 1: And the second spectam we did actually we took a
Speaker 1: satellite TV company traditional media public but in India an
Speaker 1: emerging territory, so this traditional media is going to be
Speaker 1: a high growth emerging territory. In the US, it had
Speaker 1: to be new media. So it doesn't it doesn't sound
Speaker 1: as if you think, say, you know, SPACs could have
Speaker 1: a uniquele in reshaping a media and entertainment business that
Speaker 1: that seems to be going through some pretty big changes
Speaker 1: right now. Um, you know, I think our next back,
Speaker 1: if we do one, um might look along those lines.
Speaker 1: I do think the cards are going to be reshuffled.
Speaker 1: I think there's gonna be some orphan companies that come
Speaker 1: out of these big mergers as they continue to go on.
Speaker 1: UM you know, an example would be the one of
Speaker 1: the great I p o s of this year was
Speaker 1: Warner Media was what was not word It was that
Speaker 1: Warner Music, which during the time Warner merger was an
Speaker 1: orphaned asset. They didn't think much of you know, music
Speaker 1: industry in those days, and lend a lot and they
Speaker 1: bought it for like three billion dollars and they took
Speaker 1: a public this year for thirty billion dollars. You'd find
Speaker 1: something like that, an asset that out of one of
Speaker 1: these mergers that doesn't necessarily belong or you get a
Speaker 1: company like a T and T Time Warner where they're
Speaker 1: investing themselves, you know, Soldborner Media, for example, to Discovery.
Speaker 1: There may be some opportunities. Those are also very very
Speaker 1: big deals, and you would need a very very big
Speaker 1: spac um and there are there aren't any right now.
Speaker 1: Are The biggest one was the one we had um
Speaker 1: Sore with one point seven billion. It did a fifteen
Speaker 1: billion dollar deal. As I may have mentioned earlier, the
Speaker 1: biggest one out there now is maybe a billion. They
Speaker 1: could do a five to ten billion our deal. Those
Speaker 1: big media deals could be bigger than that, so possible.
Speaker 1: Particularly it's our aspect, which could probably raise a big
Speaker 1: enough fund to be able to do a bigger deal.
Speaker 1: It sounds like what you're describing with these potential orphans
Speaker 1: and the opportunities there spacks sort of step into the
Speaker 1: mold that private equity has been in previous years. They've
Speaker 1: they've been sort of the white knights that have rescued
Speaker 1: some distressed companies. Yeah, TPG came in and picked up
Speaker 1: direct TV, right, Um, you're absolutely right. SPAC is somewhere
Speaker 1: between Late States private investment and I p O. So
Speaker 1: one thing that public investors don't like is these private companies,
Speaker 1: especially in the tech world. Um, we saw this with
Speaker 1: with app Lovin, We saw it with Roadblocks recently, the
Speaker 1: last private round would be done in case the Roadblocks
Speaker 1: is like a four billion valuation by the time they
Speaker 1: did their I p O is forty, So in one year,
Speaker 1: the public investors had to pay forty billion dollars, whereas
Speaker 1: the private investors were investing in four and the public
Speaker 1: investors are saying, we need to get in sooner. Spac
Speaker 1: actually is a way to take those companies public sooner.
Speaker 1: In the case of private equity, You're absolutely right, spack
Speaker 1: is an alternative. So if a company is looking to
Speaker 1: spin off an asset like Warner the Warner Music in
Speaker 1: those days, um or Direct to You was spinning off
Speaker 1: a q T, spinning off direct TV, they look at
Speaker 1: private equity, they look at selling it to TPG, as
Speaker 1: they did in this case, but they also look it's past.
Speaker 1: I'm also curious what you think of the fate that
Speaker 1: has uh the fallen MGM, which of course you used
Speaker 1: to run and now m Amazon could be scooping up.
Speaker 1: Did you ever forst see that kind of acquisition When
Speaker 1: I was running MGM, I didn't see the tech companies,
Speaker 1: but they weren't in streaming because I I I only
Speaker 1: read MGM two through two thousand and ten. There was
Speaker 1: a period of time, though, I'm guessing it was about
Speaker 1: five or six years ago, seven years ago, when the
Speaker 1: tech companies came to Hollywood and they really did kick
Speaker 1: the tires on MGM. They kicked tires on lions Gate,
Speaker 1: they the tires on Sony Pictures, a lot of the
Speaker 1: sort of you know, uh, standalone production and library companies.
Speaker 1: Apple was was in town. Amazon was in town. Google
Speaker 1: was in town. Microsoft. Remember, they all came through and
Speaker 1: for whatever reason, there were no deals. And I think
Speaker 1: what's happened is the more of these big platforms for streaming.
Speaker 1: You know, So now you've got Apple and you've got
Speaker 1: this plus, you've got Netflix, and you've got Amazon Prime
Speaker 1: and you've got their amount of Plus and you've got Stars,
Speaker 1: and you know that there's a there's a shortage of
Speaker 1: content and if you don't have a historical library like
Speaker 1: Disney had, and even they didn't have enough, that's why
Speaker 1: they acquired Fox. You do need to look at the
Speaker 1: MGMs and Alliance Gates and the ponies, because there's just
Speaker 1: not enough. There's not enough library, there's not enough bault,
Speaker 1: there's not enough deep library to fill the streaming platforms.
Speaker 1: So no, I didn't anticipate it when I was an MGM,
Speaker 1: was too early. I didn't see it take place when
Speaker 1: they kicked the tires five or six years ago and
Speaker 1: said no thanks. And I do see it being the
Speaker 1: trend now. I mean, I I mean my opinion that
Speaker 1: the best TV library out there by far is CBS,
Speaker 1: and I don't know why Apple doesn't just buy that
Speaker 1: they or or or any or or Google if they
Speaker 1: decided to go back in streaming business, but they may not,
Speaker 1: or or Amazon. So I would I would think that,
Speaker 1: I would think Sony, I would think lions Gate all
Speaker 1: all our good ideas for them to acquire. And I
Speaker 1: think in two years you'll see one of those deals
Speaker 1: get done, maybe all of them with a tech cover. Yeah.
Speaker 1: Now if Amazon gets turned down, I mean there's a possibility.
Speaker 1: The you know what happens with these mergers is those
Speaker 1: of you that I am I trust students. They're either
Speaker 1: assigned to the f TC, the Federal Trade Commission, or
Speaker 1: the d o J, the Department of Justice. And I
Speaker 1: think the Amazon acquisition of MGM is it f TC.
Speaker 1: And I think the FTC chairman did she write her master's,
Speaker 1: her doctoral thesis on breaking up Amazon. So and maybe
Speaker 1: for that reason it's not there. Maybe I don't know
Speaker 1: where it is its d o J. But if that
Speaker 1: isn't allowed to take place, and I think it should,
Speaker 1: If that isn't allowed to take place, that would put
Speaker 1: a question mark around all this. But again, so nys TPS,
Speaker 1: lions Gate, MGM, you know, all of them should be
Speaker 1: consolidated into the big platforms. I don't see the big
Speaker 1: Standalon's so you see consolidation coming. No surprise there. What
Speaker 1: do you think of the so called streaming wars that
Speaker 1: were enveloped in right now from Netflix on down? Uh?
Speaker 1: Did you ever foresee a time where the business would
Speaker 1: be in a position like this and and and how
Speaker 1: do you think it's going to play out? Uh? Well,
Speaker 1: did I ever think that the majority of people in
Speaker 1: the world would be watching all of their content on there,
Speaker 1: over the internet, whether whatever device, whether it's the computer
Speaker 1: or whether it's the TV. I've only started thinking that
Speaker 1: probably when you started thinking that was just the last
Speaker 1: three or four years, when we realized that, you know,
Speaker 1: being able to watch shows whenever you wanted them without commercials,
Speaker 1: and all those advantages are just so clear. Um. I
Speaker 1: didn't think until the incredibly successful launch of Disney Plus
Speaker 1: that everybody would be doing it, or even then, everybody
Speaker 1: has to do it. Um, So I may have missed
Speaker 1: that one. I wouldn't have anticipated it happening this fast
Speaker 1: and this fast all over the world. Is not just
Speaker 1: that these guys are cutting into the traditional networks ABC, CBS,
Speaker 1: NBC's audience, even though those players are off streaming. It's
Speaker 1: happening everywhere every one of the TV network stocks in
Speaker 1: the world, whether it's I t V and UK or
Speaker 1: Telesinko and Spain or anywhere in the world, every every
Speaker 1: traditional television, satellite, cable, everyone else's stocks just you know,
Speaker 1: hurt um. So it's happened fast. Everywhere we're streaming has
Speaker 1: has taken over. You know, As far as what it
Speaker 1: would look like a what I anticipate what it would
Speaker 1: look like. I could not have anticipated the amount of
Speaker 1: new content. I could not have anticipated that we'd have
Speaker 1: a scenario now where Netflix is spending sixteen billion dollars
Speaker 1: alone every year on content. That's more than all four
Speaker 1: networks combined, plus HBO and Showtime five years ago. And
Speaker 1: on top of that, Disney spending what ten or twelve billion,
Speaker 1: and Amazon spending ten billion, and Apple plus. I mean,
Speaker 1: it never could have anticipated that, you know, spending on
Speaker 1: production would go from fifteen billion to fifty or sixty
Speaker 1: billion in the last several years. So you're you're well
Speaker 1: into this second career now in in spack Land, and
Speaker 1: I'm curious how you got here and what you learned
Speaker 1: in your Hollywood days that sort of led the way
Speaker 1: to where you are now. Well, look, I always like
Speaker 1: public companies, um my so called Hollywood days. I mean,
Speaker 1: the first company that we created and took to public
Speaker 1: was New World Entertainment five before most of these students
Speaker 1: were born. That was a successful public stock. Uh and
Speaker 1: we sold it in nine eighty nine to run Proman.
Speaker 1: The next two sps broadcasting was TV Stations outside the US.
Speaker 1: Took that pub but sold it to KKR and Premier
Speaker 1: A two thousand five. And then I ran MGM, and
Speaker 1: I was working for private equity. And I can't blame
Speaker 1: it on private equity, but the company was so leveraged
Speaker 1: that when two thousand and eight came around in the
Speaker 1: financial crisis, you know, it had to be restructured. It
Speaker 1: was a failure. Um and I didn't really like working
Speaker 1: for private equity. UM I did much better and I
Speaker 1: enjoyed it much more working at public companies. And uh
Speaker 1: So after MGM, it's now two thousand and ten. I'm
Speaker 1: you know, I think I was still chairman until the
Speaker 1: beginning of eleven or I forget what it was. But
Speaker 1: when I got through with that, I looked back at
Speaker 1: my career and said, I've had two public companies were
Speaker 1: extremely successful. I've been in a private equity company that
Speaker 1: you know, it was really hard for me to constuate
Speaker 1: and wanted if I stayed there, would I have sold
Speaker 1: it for eight billion dollars to Amazon? I don't know,
Speaker 1: but it's not restructured like one point five so to me, Um,
Speaker 1: you know, I wasn't able to do what I would
Speaker 1: have liked to have done there. So then I hear
Speaker 1: about SPACs in two thousand and ten. I'm told you
Speaker 1: could raise money on your good looks or on your
Speaker 1: on your traffic, on your track record, and uh, and
Speaker 1: buy a company. And I wanted to run another company
Speaker 1: I want to be involved in as another company. What
Speaker 1: were my options? I could dust up my resume and
Speaker 1: go to boards and you know, try and apply for
Speaker 1: a job. That's not very attractive. Um. I could try
Speaker 1: and buy a company, but the size company that I
Speaker 1: could afford to buy I didn't meet my appetite of
Speaker 1: the kind of company I wanted to run. After MGM
Speaker 1: and SPS, A new world all that, and then I
Speaker 1: heard are these facts that you can raise write a
Speaker 1: bunch of cash and use that leverage it up. You
Speaker 1: could raise two three we raise too edit on our
Speaker 1: first one by a billion dollar company, and even wouldn't
Speaker 1: necessarily run up, but could have control over it. And
Speaker 1: that's what attracted me to it. It was looked at
Speaker 1: me to be the best options. And I like public markets.
Speaker 1: I like public public markets because if investors don't like
Speaker 1: what you're doing, they sell your stock and they go away. UM.
Speaker 1: In private actor, if they don't like what you're doing,
Speaker 1: they sell the company right out from under you, or
Speaker 1: they fire you. I just don't think it's a management
Speaker 1: friendly UM model. I think it's a fair weather model.
Speaker 1: I think when things are going well, um, they're looking
Speaker 1: to sell the company. When things aren't looking well, they're
Speaker 1: firing the management and looking to a dump the company.
Speaker 1: So I just, you know, public just much much more
Speaker 1: attractive to me to control public companies, where I think
Speaker 1: you get a fairersh jac from relatively docile institutional investors.
Speaker 1: Got it one year from now. I'm curious if we're
Speaker 1: talking again, Uh, do you expect to add X number
Speaker 1: of new spack deals to the marketplace or you're you're
Speaker 1: just tending to the seven you've got going uh, give
Speaker 1: us a preview. UM. As far as planning the seven
Speaker 1: I have going, you know, some of them have been
Speaker 1: acquired at the moment, there's only that's the ones that
Speaker 1: are going to DraftKings. I'm I'm vice chairman, lead director Skills,
Speaker 1: I'm director Income the director. So there's only three that
Speaker 1: I have an ongoing role with. The others have either
Speaker 1: been merged into another company, or they've been sold or
Speaker 1: or something happened different with the company. UM. I think personally,
Speaker 1: I think personally a year from now, I'm too old
Speaker 1: to be, you know, out doing a job as a
Speaker 1: as a chairman or a CEO. And when we rang
Speaker 1: the bill two weeks ago with Ginko, UM, that was
Speaker 1: the first time in thirty seven years that I was
Speaker 1: at chairman or CEO of public company. So I think
Speaker 1: it's gonna be words. UM, I think it's gonna be
Speaker 1: putting deals together. But I think I've seen my last
Speaker 1: chairman and CEO. The last back which I was chairman
Speaker 1: and CEO is probably the last one you know that active.
Speaker 1: This has been another episode of Strictly Business. Tune in
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