WEBVTT - SPAC Speculation in Hollywood and Beyond From Harry Sloan 0:00:08.000 --> 0:00:11.280 Welcome to another episode of Strictly Business, the podcast where 0:00:11.280 --> 0:00:13.400 we talk with some of the brightest minds working in 0:00:13.400 --> 0:00:17.599 the media business today. I'm Andrew Wallenstein with Variety. The 0:00:17.680 --> 0:00:19.799 talk of Wall Street in recent years has been the 0:00:19.920 --> 0:00:24.239 rise of SPACs otherwise known as special purpose acquisition companies 0:00:24.640 --> 0:00:27.760 as an alternative to the traditional I p O. Well, 0:00:27.960 --> 0:00:30.560 there's no one better than today's guest to talk SPACs. 0:00:31.120 --> 0:00:34.040 Harry Sloan has launched and completed more of them than 0:00:34.080 --> 0:00:37.320 anyone else, and one of them, DraftKings, may be the 0:00:37.360 --> 0:00:40.919 most successful one of the hundreds out there, having delivered 0:00:40.960 --> 0:00:45.200 four hundred and fifty return on investment. But SPACs are 0:00:45.240 --> 0:00:48.120 a tricky business to say the least, particularly in the 0:00:48.159 --> 0:00:51.800 media and entertainment industries, where Harry certainly knows a thing 0:00:51.880 --> 0:00:54.760 or two, having enjoyed a long career in Hollywood, is 0:00:54.800 --> 0:00:58.000 the CEO of MGM, so you better believe he's also 0:00:58.040 --> 0:01:01.560 got some thoughts on that pending Amazon An acquisition. We'll 0:01:01.560 --> 0:01:13.480 be right back with Harry Sloan. Welcome back to the 0:01:13.480 --> 0:01:16.760 Strictly Business podcast where my guest is Harry Sloan. He's 0:01:16.800 --> 0:01:20.080 gone on from a successful Hollywood career to a second chapter. 0:01:20.560 --> 0:01:23.640 As a spack deal specialist both in and outside of 0:01:23.640 --> 0:01:27.000 the media business, I interviewed him on November four at 0:01:27.040 --> 0:01:32.120 the annual Techtainment Conference at Loyola Law School. I want 0:01:32.120 --> 0:01:36.240 you to give your sense of what the spack marketplace 0:01:36.520 --> 0:01:39.399 is right now as we talk in early November, because 0:01:39.400 --> 0:01:42.000 when you look at the data, it looks at while 0:01:43.040 --> 0:01:47.760 undoubtedly saw an explosion in these deals, that burst was 0:01:47.840 --> 0:01:50.480 really contained of the first quarter. You could see the 0:01:50.560 --> 0:01:54.200 numbers have come down, although October seems to be yielding 0:01:54.280 --> 0:01:57.840 fresh activity. So walk us through what you're seeing with 0:01:58.040 --> 0:02:03.120 the status this back market. Andrew Um, when we did DraftKings, 0:02:03.440 --> 0:02:06.840 we closed it in March of last year, in the 0:02:06.840 --> 0:02:12.320 middle of COVID March of there were about forties pacts. 0:02:12.919 --> 0:02:16.080 Today there's six Um. I think one thing has a 0:02:16.080 --> 0:02:17.679 lot to do with the other. I think success the 0:02:17.800 --> 0:02:23.000 DraftKings was the first big, very notice successful spac with 0:02:23.040 --> 0:02:26.280 the name brand, and I think that did trigger it. 0:02:27.080 --> 0:02:30.040 The six D spacts are looking for deals. Most of 0:02:30.080 --> 0:02:32.840 them won't find a deal. Many of them won't find 0:02:32.880 --> 0:02:35.040 a deal. If they don't find a deal in two years, 0:02:35.480 --> 0:02:37.760 whatever amount of money they raised. In the case of 0:02:38.000 --> 0:02:40.320 the Draft kings back, we had four under million. The 0:02:40.360 --> 0:02:43.359 case of our last spact, which bot King Cobra works 0:02:43.600 --> 0:02:46.240 one seven billion. It all has to be returned to 0:02:46.240 --> 0:02:50.440 the investors, so the spact sponsor has two years now. 0:02:50.480 --> 0:02:52.280 Sometimes the deals are down in the eighteen months a 0:02:52.560 --> 0:02:57.360 last two years, find it company to acquire file the 0:02:57.400 --> 0:03:03.160 appropriate UH prison patients and disclosures that the SEC haven't approved. 0:03:03.240 --> 0:03:05.280 Have the deal closed all in two years or money 0:03:05.280 --> 0:03:07.680 goes back. What do I think it's going to happen? 0:03:07.680 --> 0:03:09.840 With six hundred spects out there, A lot of them 0:03:09.840 --> 0:03:12.680 are not going to end well, uh, including the one 0:03:12.720 --> 0:03:14.400 that I think we're just talking about, which is the 0:03:14.440 --> 0:03:22.080 one acquiring the trump um agreement to launch uh social 0:03:22.120 --> 0:03:25.079 media or whatever they're actually trying to do. Well. We'll 0:03:25.080 --> 0:03:29.600 get to Trump in a second. UM. What I'm curious though, 0:03:29.680 --> 0:03:32.519 is also it seems like correct me if I'm wrong, 0:03:33.280 --> 0:03:38.200 that there's been some regulatory scrutiny with the SEC starting 0:03:38.240 --> 0:03:42.960 to pay more attention people on the hill paying more attention. UM. 0:03:43.040 --> 0:03:45.600 Has that not had a chilling effect here as we 0:03:45.640 --> 0:03:48.480 look at the numbers and see that that big spike 0:03:48.600 --> 0:03:52.040 that deals from March seems to have petered out in 0:03:52.120 --> 0:03:56.920 subsequent months. Well, the reason they petered out has nothing 0:03:56.920 --> 0:04:00.080 to do with the potential regulations. Potential regulations to to 0:04:00.240 --> 0:04:04.400 kicking in when the Biden administration took over, and also 0:04:04.760 --> 0:04:08.480 as you alluded to the Senate. But the which you 0:04:08.800 --> 0:04:12.040 were showing on that chart, which is that there's so 0:04:12.080 --> 0:04:16.920 many fewer spacts right now being launched, was because there 0:04:16.960 --> 0:04:20.120 was way too much speculation going on in the spack world, 0:04:20.200 --> 0:04:23.360 and there was in order to have fifty or hundred 0:04:23.400 --> 0:04:25.839 spacks a month, the hunded I saw in one month, 0:04:26.120 --> 0:04:27.800 you have to have buyers, you have to have money 0:04:27.800 --> 0:04:31.640 to invest, and the banks were lending incredible amount of 0:04:31.640 --> 0:04:35.680 money to hedge funds. Hedge funds were investing it in spacts. 0:04:35.960 --> 0:04:38.640 SPACs are all doing well, so they kept wanting to 0:04:38.680 --> 0:04:41.680 do that. It looked like easy money. But the more 0:04:41.760 --> 0:04:46.359 spacts there were, they more SPACs needed to find a deal. 0:04:46.839 --> 0:04:50.200 And when they actually find a deal, at that point, 0:04:50.240 --> 0:04:54.120 the investors in this back have the option of leaving 0:04:54.120 --> 0:04:57.039 their money in or taking it out. If they decided 0:04:57.080 --> 0:04:59.000 to leave it in, they actually have to come up 0:04:59.040 --> 0:05:02.000 with true capital as opposed to bank Yet anyway, there 0:05:02.040 --> 0:05:05.360 was crazy speculation going on there was other kinds of 0:05:05.400 --> 0:05:09.240 speculation which came from the market being so overheated. That's 0:05:09.240 --> 0:05:14.000 why there's less SPACs. Also, you know, if you try 0:05:14.040 --> 0:05:17.040 to go after a company to acquire it and take 0:05:17.040 --> 0:05:19.279 a public and a spack and you've got ten others 0:05:19.360 --> 0:05:22.760 back competing, you start seeing out the company way. So 0:05:22.880 --> 0:05:26.600 it was the marketplace that has caused the SPAC speculation 0:05:26.680 --> 0:05:30.560 and the overheated market to slow down. The regulatory side 0:05:30.640 --> 0:05:33.839 is another issue. And there's a bunch of lawyers here, um, 0:05:33.960 --> 0:05:38.359 and the congratulations Joe going to grade law school, Um, 0:05:38.560 --> 0:05:41.360 a lawyer point of view, the regulation, I think becomes interesting. 0:05:41.760 --> 0:05:45.520 What's going on the regulatory side is new SEC chairman. 0:05:45.600 --> 0:05:49.560 New SEC is appointed after Biden's elected, comes in at 0:05:49.560 --> 0:05:52.880 a time when there's a lot of concerns over spacts, 0:05:53.279 --> 0:05:56.360 the speculation I just talked about too much easy money 0:05:56.360 --> 0:06:00.480 flowing around. If you remember in January and February, there 0:06:00.560 --> 0:06:03.320 was a lot of talk in the government about these 0:06:03.360 --> 0:06:07.880 retail trading brokers, robin Hood and all those stocks like 0:06:07.960 --> 0:06:10.560 games Stop and a m C that we're trading at 0:06:10.600 --> 0:06:14.440 crazy molecules. Because there was some exercise and democracy or 0:06:14.520 --> 0:06:17.839 some excuse for people's and stimulus checks or for whatever reason, 0:06:18.160 --> 0:06:23.760 craziness around retail trading. Retail investors started buying spects. That 0:06:23.839 --> 0:06:26.240 was all going on, and the SEC said, wait a minute, 0:06:26.240 --> 0:06:29.559 we need to look at all of that. My view 0:06:29.720 --> 0:06:33.360 is that the SEC has announced several things that they 0:06:33.360 --> 0:06:35.960 want to look at with regardless of facts, none of 0:06:36.040 --> 0:06:38.520 which are the major issues they should be looking at. 0:06:39.200 --> 0:06:42.560 The SEC has said publicly, be aware of spects that 0:06:42.640 --> 0:06:44.920 have famous people. You know, there's a spect that the 0:06:45.040 --> 0:06:47.800 Shack has involved in. There's an expect that a Rod 0:06:47.839 --> 0:06:50.599 has involved in. There's fact that you know, be aware 0:06:50.600 --> 0:06:52.760 of that. Well, and what does that mean? Uh? The 0:06:53.200 --> 0:06:55.720 SEC has said we want to look at some very 0:06:55.760 --> 0:06:58.960 complicated warrant accounting. Well, I mean we weren't accounting was 0:06:59.040 --> 0:07:01.919 very technical. All the lawyers and accounts they're looking at 0:07:01.960 --> 0:07:05.600 her thinking, okay, this is just paperwork. The real concern 0:07:05.680 --> 0:07:10.440 about SPACs is the trading that goes on in the 0:07:10.600 --> 0:07:17.239 SPAC shares itself based on rumors and you know, uninformative 0:07:17.240 --> 0:07:20.840 announcements of deals that may or may not happen. And 0:07:20.880 --> 0:07:24.680 I couldn't have asked for a better example of what 0:07:25.440 --> 0:07:28.320 the SEC and and all the SEC lawyers need to 0:07:28.360 --> 0:07:31.360 think about, which has been demonstrated by this so called 0:07:31.400 --> 0:07:36.360 Trump's back. Um, all we've seen is a very general 0:07:36.400 --> 0:07:40.880 power point. There's almost nothing in there about That's back 0:07:41.120 --> 0:07:44.200 and what Trump's track record is and the other businesses 0:07:44.240 --> 0:07:47.280 and what's really in there. There's a promise that this 0:07:47.440 --> 0:07:51.239 spac is going to be able to launch social media 0:07:51.400 --> 0:07:55.680 with with Trump. What does that mean? There's there's very 0:07:55.720 --> 0:07:59.920 there's no detail whatsoever yet that stock has a spack 0:08:00.080 --> 0:08:02.400 was training a ten dollars traded his eyes a hundred 0:08:02.400 --> 0:08:05.200 and seventy dollars. It's still fifty eight dollars a year, 0:08:05.280 --> 0:08:09.000 which is six x on where this back was trading 0:08:09.000 --> 0:08:12.560 when it was announced. Three hundred million shares traded the 0:08:12.560 --> 0:08:16.480 first day, probably been five hundred million shares traded. Since 0:08:16.560 --> 0:08:21.240 this announcement or whatever it was, a league, twenty or 0:08:21.320 --> 0:08:25.640 thirty billion dollars has been invested in this stock at 0:08:25.680 --> 0:08:28.640 somewhere between fifty and hundred dollars a share. Now, if 0:08:28.680 --> 0:08:31.440 it doesn't work out, there's a lot of reasons that 0:08:31.480 --> 0:08:33.200 it might not work out. Not all of them do. 0:08:34.440 --> 0:08:37.800 The stock goes back to ten and people lose that 0:08:38.040 --> 0:08:42.640 twenty billion dollars And I'm gonna guess whether it's Trump's 0:08:42.640 --> 0:08:45.400 supporters or whether it's just kids who are trading on 0:08:45.440 --> 0:08:48.440 these retail platforms. It's not a group of people who 0:08:48.520 --> 0:08:51.320 would be in any position to lose that kind of money. 0:08:51.320 --> 0:08:56.040 It's not Fidelity, Wellington Franklin Fund Capital Group, it's not 0:08:56.120 --> 0:08:59.480 these trillion dollar mutual funds. It's a lot of individuals, 0:09:00.040 --> 0:09:03.440 patriotic Americans who think they're doing something good for either 0:09:03.480 --> 0:09:06.200 Trump for the Republicans. It's going to be a ship 0:09:06.240 --> 0:09:08.600 show if it falls apart. And that's the kind of 0:09:08.600 --> 0:09:12.120 thing the SEC should be looking at, not what they've 0:09:12.120 --> 0:09:15.079 announced so far. As far as Congress, we can get 0:09:15.080 --> 0:09:18.880 to that later if you want. Sure, Well, I guess 0:09:18.920 --> 0:09:23.600 what I'm wondering though, is given this frothy marketplace that 0:09:23.640 --> 0:09:28.120 you're describing, how does that impact your strategy, your approach. 0:09:28.200 --> 0:09:31.920 You've just completed a seventh deal, but is you know, 0:09:32.320 --> 0:09:34.000 do you need to sort of sit back and wait 0:09:34.080 --> 0:09:36.800 till things calm down before you try an eighth or ninth. 0:09:37.760 --> 0:09:41.520 I definitely want to pay attention to the regulatory environment. 0:09:42.200 --> 0:09:45.120 I think all we have now out of the SEC 0:09:45.240 --> 0:09:48.520 ears two weeks about things they're looking at. There isn't 0:09:48.520 --> 0:09:52.320 anything they're looking at that would deter me or would 0:09:52.360 --> 0:09:54.640 defer those of you out there that are thinking about 0:09:54.679 --> 0:09:58.520 being involved in fact for wanting to do them. Um, 0:09:58.559 --> 0:10:02.000 there's nothing going on. I'm other than they're looking into 0:10:02.080 --> 0:10:05.880 it in the Senate. Um, I don't smell that there's 0:10:05.920 --> 0:10:10.400 going to be regulations that make Trump that sorry, that 0:10:10.800 --> 0:10:15.880 makes sense, an audium slip that makes spects, um impossible. 0:10:16.360 --> 0:10:19.640 So no, I mean, I think we'll be okay. Um, 0:10:20.520 --> 0:10:24.720 I don't. I don't anticipate anything coming out of the 0:10:24.760 --> 0:10:29.760 regulatory side. I do anticipate a lot more sanity and 0:10:29.880 --> 0:10:35.000 less speculation amongst back investors, and therefore much less spects. 0:10:35.160 --> 0:10:37.120 Will there be six hundred a year from now? No, 0:10:37.600 --> 0:10:41.719 will it be two? Will be a lot less, it 0:10:41.720 --> 0:10:44.280 will it'll be way less important than it is now. 0:10:45.440 --> 0:10:48.239 So let's go to the Congress side of this equation. 0:10:48.520 --> 0:10:53.640 Elizabeth Warren has been particularly out front. Um, certainly this 0:10:53.760 --> 0:10:58.320 is I feel like it's just the beginning in terms 0:10:58.360 --> 0:11:00.199 of the kind of scrutiny that's going to come from 0:11:00.240 --> 0:11:04.400 Capitol Hill. What do you think, Um, it's too early 0:11:04.440 --> 0:11:08.240 to tell. Um, it's really more in the per view 0:11:08.280 --> 0:11:11.640 of the SEC to make sure that investors understand what 0:11:11.679 --> 0:11:14.320 they're getting involved in, which is a disclosure, which is 0:11:14.360 --> 0:11:17.240 like all the various documents, whether it's the S one 0:11:17.280 --> 0:11:19.560 which is an IPO document, or a SPOT which is 0:11:19.559 --> 0:11:22.880 a merger, both are involved in this back. For those 0:11:22.880 --> 0:11:25.120 of you that are you know, looking at the technical 0:11:25.160 --> 0:11:28.480 side of this back begins as a regular way I 0:11:28.520 --> 0:11:30.839 p O and S one, and when it makes a 0:11:30.880 --> 0:11:33.520 deal to acquire company, it files an S four, which 0:11:33.520 --> 0:11:36.640 is a simple merger has to be voted on the shareholders. 0:11:37.000 --> 0:11:40.800 It's within those documents that the SEC has plenty of 0:11:40.840 --> 0:11:45.640 opportunity to make changes. But I don't anticipate changes they're 0:11:45.640 --> 0:11:52.720 gonna hurt that are gonna hurt legitimate, um honest SPAC sponsors. 0:11:53.160 --> 0:11:56.040 As far as as far as the Congress is concerned, 0:11:56.920 --> 0:11:59.960 there's no reason right now to believe that there's any 0:12:00.120 --> 0:12:04.679 particular legislative action. Also, there's so much going on in 0:12:04.720 --> 0:12:07.200 other areas, you know, whether it's the build back America 0:12:07.320 --> 0:12:10.360 or whether it's the the infrastructure bail and means what 0:12:10.600 --> 0:12:14.160 the priorities in the in the Congress right now don't 0:12:14.160 --> 0:12:17.360 seem to be looking at regulating spects are really much 0:12:17.800 --> 0:12:23.920 wall street regulation. God, it's interesting looking at your track 0:12:24.000 --> 0:12:28.360 record in the spack market because so many different kinds 0:12:28.360 --> 0:12:32.840 of companies. You started out with, you know, delivering WiFi, 0:12:32.880 --> 0:12:39.040 two airlines, the Indian satellite business, media plays. Uh, not 0:12:39.160 --> 0:12:41.480 surprising coming from you, but then you kind of went 0:12:41.480 --> 0:12:46.640 in some very interesting directions with sports betting, synthetic biology. 0:12:47.120 --> 0:12:50.079 What is it? You know, what is it in terms 0:12:50.120 --> 0:12:52.800 of what you look for in a company that makes 0:12:52.840 --> 0:12:59.360 it a good spack target. Good question. Yeah, during the 0:12:59.440 --> 0:13:02.880 spack sterea, and I think maybe it's still the case today. 0:13:02.920 --> 0:13:06.880 There is a view among many people that companies are 0:13:06.920 --> 0:13:10.840 better off going public through this back process again by 0:13:10.880 --> 0:13:14.200 merging into US back as opposed to regular way I 0:13:14.320 --> 0:13:17.440 p O. You know, I don't feel that way. I 0:13:17.480 --> 0:13:20.360 think most deals are still better off going regular way. 0:13:20.360 --> 0:13:23.079 I p O. If for no other reason that the 0:13:23.160 --> 0:13:27.120 spec sponsors we add friction, we take you a nice, 0:13:27.160 --> 0:13:30.280 healthy piece of the company for doing it, and if 0:13:30.280 --> 0:13:33.080 we're not adding credible value, it doesn't make sense to 0:13:33.120 --> 0:13:37.640 do that. Um, there are at least two categories that 0:13:37.679 --> 0:13:40.640 I would say that make more sense for a spect 0:13:41.920 --> 0:13:47.120 Let's let's talk about DraftKings. To start with DraftKings could 0:13:47.160 --> 0:13:51.800 not go public regular way, and it needed money. DraftKings 0:13:51.840 --> 0:13:56.640 could not go public regular way because on its own, 0:13:57.040 --> 0:14:00.640 because its story would have been raised more money. Use 0:14:00.720 --> 0:14:04.960 it for marketing fandueling. DraftKings are being their brains out publicly. 0:14:05.240 --> 0:14:07.320 There's a view out there that just giving them more 0:14:07.400 --> 0:14:10.400 money is going to spend on marketing. They needed a 0:14:10.400 --> 0:14:14.800 different story. The story that made sense for them was 0:14:14.840 --> 0:14:19.240 a transformative acquisition to buy a company called sp Tech, 0:14:19.320 --> 0:14:22.800 which was their tech supplier, so they would be able 0:14:22.840 --> 0:14:25.320 to save to the market. We're not going to compete 0:14:25.760 --> 0:14:28.760 on how much money we spend an advertising and marketing, 0:14:28.800 --> 0:14:30.960 how many commercials you guys all see right now on 0:14:31.000 --> 0:14:34.920 the on the World Series or on football. We're going 0:14:34.960 --> 0:14:37.600 to compete because we're gonna have the best products. We're 0:14:37.600 --> 0:14:40.800 gonna have the best technology. We're gonna have in game betting, 0:14:40.840 --> 0:14:43.880 for example, where you know, if if I'm thinking of 0:14:43.920 --> 0:14:46.640 Aaron Rodgers right now, because the COVID bit of Aaron Rodgers, 0:14:46.960 --> 0:14:48.720 you know has a ball in the two minute drill, 0:14:49.160 --> 0:14:51.320 you can bet right during the game on whether or 0:14:51.320 --> 0:14:53.760 not he's gonna score a touchdown or a field goal. 0:14:53.800 --> 0:14:56.840 You can bet on on whether a kick to be successful, 0:14:57.040 --> 0:15:00.360 so products that would be good that how they were 0:15:00.360 --> 0:15:03.080 going to compete anyway. In order to do that, they 0:15:03.080 --> 0:15:05.520 had to acquire sp tech. So what they were doing 0:15:05.800 --> 0:15:09.800 was two companies were going public at the same time. 0:15:10.600 --> 0:15:13.200 You can't do that as a regular way. I you know, 0:15:13.280 --> 0:15:16.840 you have to um, you have to have consolidated financials, 0:15:17.200 --> 0:15:19.280 you have to share operating history, you have to show 0:15:19.280 --> 0:15:21.960 the synergies. It would have taken your only way to 0:15:21.960 --> 0:15:25.000 take two companies public at the same time. In this 0:15:25.040 --> 0:15:29.200 case DraftKings and Specht thro uspact. Now basically this back 0:15:29.360 --> 0:15:33.440 just buy both companies, So a three way merger two 0:15:33.560 --> 0:15:36.920 companies who want to get together. That makes sense in respect. 0:15:37.000 --> 0:15:39.920 The other one is what we did with Gego Synthetic Biology, 0:15:40.480 --> 0:15:43.160 and it's what we call a category of one company. 0:15:43.680 --> 0:15:48.280 So most companies are not category of one. Most company 0:15:48.400 --> 0:15:51.800 have several other businesses who compete with them. Whatever the 0:15:51.920 --> 0:15:56.560 industry is, whether it's automnosetails, whatever it is, there are 0:15:56.640 --> 0:16:00.160 many what you call cops comparables. So if you take 0:16:00.200 --> 0:16:03.360 a company public, you can value it based on its 0:16:03.440 --> 0:16:07.560 performance against someone else. However, if you have a company, 0:16:07.840 --> 0:16:09.800 and this comes often often of the out of the 0:16:09.840 --> 0:16:12.920 tech world, which is we call category one. There is 0:16:13.080 --> 0:16:16.480 no one else doing what they're doing. There's no way 0:16:16.560 --> 0:16:20.320 to value them versus other companies in the market. Right 0:16:20.720 --> 0:16:23.400 if we were taking variety in public Andrew, we could 0:16:23.440 --> 0:16:26.480 value it against by Reporter, we could value against other 0:16:26.560 --> 0:16:29.880 publishing companies, of value against New York Times, Washington Post, 0:16:29.960 --> 0:16:34.400 all these public companies, Synthetic Biology. The only company of 0:16:34.480 --> 0:16:38.920 scale out there is get Go Bioworks. So if you 0:16:39.080 --> 0:16:42.120 take it public regular way, the way a regular way 0:16:42.120 --> 0:16:45.040 i PO goes is the company goes down in the 0:16:45.160 --> 0:16:47.880 road show, it meets with investors, it sits down with 0:16:48.000 --> 0:16:51.600 Capital Group of Fidelity or Willington. It's been sporty five 0:16:51.680 --> 0:16:56.720 minutes going through its business and its valuation, and Thursday 0:16:56.760 --> 0:16:59.120 at four o'clock everybody has to share their car. Examput 0:16:59.480 --> 0:17:03.320 comes by DAN. A spact doesn't work that way. The 0:17:03.520 --> 0:17:09.200 process of selling two investors a SPAC merger is much 0:17:09.320 --> 0:17:14.080 more involved. You go to the investors, there's no time limit, 0:17:14.440 --> 0:17:16.640 there's no forty five minute meeting. You can have as 0:17:16.680 --> 0:17:18.600 long a meeting as you want. You can have a 0:17:18.720 --> 0:17:21.080 follow up meeting, you can have a phone coll and 0:17:21.160 --> 0:17:25.120 CFO DraftKings perfect example of this. When we took DraftKings 0:17:25.200 --> 0:17:28.719 public two years ago, there was there was only sports 0:17:28.720 --> 0:17:33.040 spending allowed in one state, New Jersey, but the Supreme 0:17:33.119 --> 0:17:37.720 Court had passed it had had invalidated the federal law 0:17:38.080 --> 0:17:41.040 which had prohibited sports betting and said no state by 0:17:41.119 --> 0:17:44.560 state can allow sports betting. So each state had to 0:17:44.600 --> 0:17:47.800 go through some kind of regulatory process. How long would 0:17:47.840 --> 0:17:53.040 that take? California, New York, Florida, Texas, the four biggest 0:17:53.080 --> 0:17:56.159 states two years later, still don't have sports pidding. We 0:17:56.240 --> 0:17:58.840 may never have sports meeting in California. Depends on whether 0:17:58.880 --> 0:18:02.480 you think the influ onto the tribes who control betting 0:18:02.600 --> 0:18:05.280 and casinos are going to be able to prevent it. 0:18:06.000 --> 0:18:08.680 Florida it's the seminal of Youse. I mean, you don't know. 0:18:08.920 --> 0:18:11.639 Texas it's the it's the churches who are opposing it. 0:18:12.080 --> 0:18:16.159 So how does an investor decide two years ago, when 0:18:16.240 --> 0:18:19.320 only one state had sports betting, what was the value 0:18:19.760 --> 0:18:21.919 of a sports betting? How big is the business going 0:18:21.960 --> 0:18:25.400 to be? We call the TAM total addressable market? How 0:18:25.480 --> 0:18:28.320 big a share is the draftings? So you needed someone 0:18:28.440 --> 0:18:32.000 in our case to put together projection. Okay, within one 0:18:32.119 --> 0:18:35.359 year six stays, here's one you think within two years 0:18:35.400 --> 0:18:38.600 of twelve stays. Here's what the business books of the maturity. 0:18:38.920 --> 0:18:40.480 You can't do that in a regular way i P. 0:18:40.680 --> 0:18:43.400 You can't make five year projections. You can't make one 0:18:43.520 --> 0:18:47.240 year projections because you take on liability. So in aspect 0:18:47.520 --> 0:18:50.560 you can provide much more information. You can give long 0:18:50.680 --> 0:18:54.040 term projections. The investors don't have to believe them. They 0:18:54.080 --> 0:18:56.159 can say, you know what, let's have the CFO come 0:18:56.200 --> 0:18:57.800 in and see us. We think he's full of ship. 0:18:57.880 --> 0:18:59.880 We're not going to buy the stock. But you're able 0:19:00.040 --> 0:19:02.320 to go through a long process. And so for a 0:19:02.400 --> 0:19:04.680 company that's a category of one where it's a drafting 0:19:05.400 --> 0:19:08.639 or whether it's a game coincynthetic biology, or skills the 0:19:08.720 --> 0:19:12.399 company of skilled gaming, which is which is video games 0:19:12.480 --> 0:19:15.480 like the sports, but casually sports you can play against 0:19:15.520 --> 0:19:19.040 other people for money. Those are companies. There's no other 0:19:19.160 --> 0:19:22.359 company like them. There's no cocks. They make sense to 0:19:22.440 --> 0:19:27.920 goose as back. We're going to take a quick break, 0:19:27.960 --> 0:19:38.560 but we'll be right back with Harry Sloan. And we're 0:19:38.600 --> 0:19:41.640 back with Harry Sloan, who's talking about spack deals. He's 0:19:41.720 --> 0:19:45.760 done out of his equal equity partner's outfit. Talking about 0:19:45.800 --> 0:19:49.520 the media business, you know, you are are far from 0:19:49.560 --> 0:19:52.600 alone in terms of people in the media world being 0:19:52.680 --> 0:19:55.159 active in the spack space. We're seeing all sorts of 0:19:55.240 --> 0:20:01.000 activity from from people like uh uh tadd Bully, Joe 0:20:01.080 --> 0:20:05.159 I and Ello from CBS, gregma Fee from Liberty. What 0:20:05.240 --> 0:20:08.200 do you think it is about the media and entertainment 0:20:08.280 --> 0:20:11.800 space that makes it sort of spack friendly? Didn't know 0:20:11.840 --> 0:20:14.360 there's a lot of Kevin Mayer and Tom Staggs. Yeah, 0:20:15.480 --> 0:20:17.560 I think they've done I think they've done two SPACs. 0:20:17.760 --> 0:20:20.880 Todd just announced he's doing any vivid seats to think 0:20:20.920 --> 0:20:25.280 the Draft Kings may be invested in. Um. Yeah, Look, 0:20:25.320 --> 0:20:30.760 I think SPACs are covering every aspect every industry. I 0:20:30.800 --> 0:20:33.840 mean there's a hundred biotech SPACs. A year ago there 0:20:33.880 --> 0:20:37.280 were no biotech spacts. Uh. SPACs have become the flavor 0:20:37.280 --> 0:20:39.600 of the month for biotech. Um, I think you haven't 0:20:39.720 --> 0:20:42.600 really become the flavor yet for entertainment. There's been a 0:20:42.640 --> 0:20:45.280 few deals. It's against my partner, Jeps, against him, my 0:20:45.320 --> 0:20:48.159 great partner for many years. Um. You know he has 0:20:48.200 --> 0:20:51.159 a background in entertainment. He was he ran CBS he 0:20:51.280 --> 0:20:54.320 ran Sony Pictures eleven years ago, and he had I 0:20:54.480 --> 0:20:58.560 launched our first spac. We specifically said we were the 0:20:58.600 --> 0:21:02.240 first ones actually specifically said that we're targeting companies in 0:21:02.320 --> 0:21:06.399 the met We're all generalists, they're financial people, but we 0:21:06.520 --> 0:21:08.920 had both come out of the entertainment Industry's funny that 0:21:09.000 --> 0:21:12.440 we um. I was in my late fifties, he was 0:21:12.480 --> 0:21:14.960 in maybe his mid fifties. I've been running MGM at 0:21:14.960 --> 0:21:17.240 the time. He had been running something else, and and 0:21:17.359 --> 0:21:19.880 we had said to investors, we said, look, we'll find 0:21:19.920 --> 0:21:22.840 a company, but we both run public companies. If something 0:21:22.920 --> 0:21:25.320 goes wrong, uh, you know, we could step in and 0:21:25.400 --> 0:21:28.800 run the company. And that was a terrible, terrible marketing 0:21:28.840 --> 0:21:32.000 approach because the companies we then want to acquire be worried, 0:21:32.480 --> 0:21:34.359 you know, would they with the founders and the and 0:21:34.440 --> 0:21:36.480 the CEOs lose their job because Jeff or I would 0:21:36.760 --> 0:21:38.280 actually we're trying to do it just to get a 0:21:38.359 --> 0:21:41.040 job for ourselves. So we got quickly off of that 0:21:41.160 --> 0:21:43.400 and never you know, even talked about it, nor haven't 0:21:43.480 --> 0:21:47.680 jumped into any companies into the management. But we targeted 0:21:47.760 --> 0:21:50.720 media entertainment and what we said then this is two 0:21:50.760 --> 0:21:58.520 thousand eleven, we had said that traditional media entertainment, television, movies, 0:21:59.160 --> 0:22:04.359 cable telling, Asian satellite, all of that stuff, there was 0:22:04.480 --> 0:22:06.800 no great growth. The only growth in those days was 0:22:06.840 --> 0:22:09.440 going to be digital. It was one pot over two point. 0:22:09.480 --> 0:22:11.520 I don't know what it was. So we sent to 0:22:11.560 --> 0:22:14.440 the investors and we raised that spect. We said what 0:22:14.560 --> 0:22:16.760 kind of deal you're looking for, and said, well, if 0:22:16.800 --> 0:22:20.320 it's in the US, there's nothing in traditional media that 0:22:20.400 --> 0:22:22.200 you could I p O, meaning that would have this 0:22:22.320 --> 0:22:24.920 kind of growth. So if we did something in the US, 0:22:25.040 --> 0:22:27.320 we would do something in what was then called new 0:22:27.440 --> 0:22:32.600 media digital media. However, if we're going to do traditional media, 0:22:33.119 --> 0:22:35.520 we'll do it outside the US and some of high 0:22:35.600 --> 0:22:39.960 growth market that hasn't been you know, over overbuilt already. 0:22:40.119 --> 0:22:43.280 So we go to an emerging territory like an India 0:22:43.359 --> 0:22:45.280 or in Indonesia, and in those cases you could do 0:22:45.359 --> 0:22:49.040 satellite or cable, and ironically I've worked out that way. 0:22:49.080 --> 0:22:52.920 The first fact we did was a company called Globally Entertainment, 0:22:53.480 --> 0:22:58.680 which provided Wi Fi connections for airlines and content. So 0:22:58.800 --> 0:23:02.080 we bought the biggest beny that controlled content supply. The 0:23:02.119 --> 0:23:05.200 airlines had all the airlines and contract and a company 0:23:05.240 --> 0:23:08.280 that had the technology to provide Wi Fi via satellite. 0:23:08.680 --> 0:23:11.800 So now you take WiFi by granted, you know, granted 0:23:12.280 --> 0:23:14.240 on airlines and you get all your movies that way. 0:23:14.520 --> 0:23:17.240 But ten years ago it was a very beginning business. 0:23:17.760 --> 0:23:20.639 So our first back, as we said, if we do 0:23:20.840 --> 0:23:23.800 something domestically this was mainly domestic, we would do something 0:23:23.840 --> 0:23:26.160 in new media. You couldn't get any more new media 0:23:26.160 --> 0:23:28.560 in two thousand and eleven. Then then WiFi of the 0:23:28.600 --> 0:23:34.320 airlines it's still rest very well established. Uh and technically 0:23:34.400 --> 0:23:36.600 if you're trying to sign on when you're on a flight. 0:23:37.200 --> 0:23:39.840 And the second spectam we did actually we took a 0:23:40.240 --> 0:23:44.639 satellite TV company traditional media public but in India an 0:23:44.640 --> 0:23:47.840 emerging territory, so this traditional media is going to be 0:23:47.920 --> 0:23:51.199 a high growth emerging territory. In the US, it had 0:23:51.280 --> 0:23:55.360