With IMG and UFC under its belt Endeavor finally files for IPO
Endeavor, the former Hollywood talent agency that has developed into a global entertainment, sport and content company since its acquisition of IMG, the international sports and entertainment company, has, as was widely expected, filed for an initial public offering.
The company, which said it will list on the New York Stock Exchange, is filing to raise $100 million, having reported a profit of $231 million on $3.6 billion in revenue for 2018.
The company recorded sales growth of about 20 per cent, having lost $173.2 million the previous year. However, it again reported a net loss of $152.6 million in the first three months of 2019 and its cash on hand fell below $500 million. It said that it could use some of the funds raised to pay off part of its $4.6 billion of debts or to acquire other assets.
In the filing, Ari Emanuel, Endeavor’s chief executive, said: “Content is no longer defined solely by the traditional categories on which our businesses were founded. Television, movies and live events have been joined by others including podcasts, experiences, social media, multiplayer video games and esports.”
“Wherever you are in the world and whatever way you define content, Endeavor is likely playing a role.”
Emanuel added: ““As the entertainment industry moves toward a closed ecosystem model with less transparency, our clients and businesses need more insight, resources and solutions than ever before. We believe being a public company will only further accelerate our ability to look around corners and open up new categories and opportunities for those in the Endeavor network.”The company was valued at $6.3 billion, including debt, in August 2017, according to Bloomberg. More than 70 per cent of its 2018 revenue came from creating or licensing original content, according to documents filed with the US Securities and Exchange Commission.
Endeavor becomes the first of the ‘big four’ Hollywood talent agencies to go public, with Creative Artists Agency (CAA), United Talent Agency (UTA) and International Creative Management (ICM Partners) all trading as private businesses.
Canada Pension Plan Investment Board invested $400 million in the company in 2017, while Silver Lake, the private equity company, SoftBank Group Corp. and Singapore’s sovereign wealth fund are also investors. The listing could enable some of the company’s investors, including Silver Lake, to sell their stakes.
However, the company recently returned a $400-million investment from Saudi Arabia in protest at the alleged state-sponsored murder six months before of dissident journalist Jamal Khashoggi in the Saudi consulate in Istanbul.
The return of the money, at the behest of Emanuel, effectively put an end to the agency’s involvement in Saudi Arabia.
Many observers had expected Endeavor to go public at some point, having acquired IMG for $2.3 billion in 2013, and completed the $4-billion acquisition of mixed martial arts promoter UFC in 2016.
Formerly known as WME, the acquisition of Forstmann Little, IMG’s former owner, to create WME-IMG in 2013 brought IMG full circle back to its roots as a (sports) talent representation agency formed by founder Mark McCormack when he agreed a pioneering deal in 1960 to represent US golfer Arnold Palmer, thus arguably kick-starting the recognition of sport as an industry in its own right.
Forstmann Little acquired IMG for $750 million in 2004 after the unexpected death of McCormack. Ted Forstmann, the founder of Forstmann Little, himself died in 2011.
As early as 2014, it was reported that the acquisition could prompt the merged group to launch an IPO to service the debt it had taken on to complete the acquisition.
In 2017, WME-IMG created Endeavor as a new holding company, recalling the name of the Endeavor Talent Agency, which took over the much larger William Morris Agency in 2009 to form WME, before merging with IMG in 2013.
At the time, Endeavor said that its family includes: “WME, a leading global entertainment agency representing a powerful client roster across motion picture, television, sports, music, books, digital and theater; IMG, a global leader in sports, events, media and fashion; UFC, the world’s premier professional mixed martial arts (MMA) organization; Droga5, Cannes Lions Independent Agency of the Year; Professional Bull Riders; The Miss Universe Organization; and Frieze, a leading arts and media company.
Last month, Endeavor was reported to be close to acquiring On Location Experiences, the former NFL hospitality business whose owners include Bruin Sports Capital, the international media, sports, marketing and branded lifestyle investment company led by George Pyne, formerly a senior executive with IMG.
On Location generated about $600 million in revenue and $55 million in earnings before interest, taxes, depreciation and amortization, a person familiar with the matter told Bloomberg in December. About 40 per cent of the profit is related to the NFL, with 40 per cent coming from other sports and 20 per cent from music and travel, the person said.