The Raine Group is a dealmaker that Hollywood people come throughout often. As an investor, the service provider financial institution, launched in 2009 by former Goldman Sachs banker Joe Ravitch and UBS banker Jeff Sine, owns stakes in such media, leisure and associated sector powerhouses as Rob Howard and Brian Grazer’s Think about, Spanish-language media titan TelevisaUnivision, TV manufacturing firm Propagate, music streaming service SoundCloud, and sports activities betting firm DraftKings.

In the meantime, the checklist of purchasers of its advisory enterprise, starting from mergers and acquisitions, divestitures and personal capital elevating to strategic recommendation, reads like a who’s who. Over time, they’ve included the likes of Common Footage, when it struck a slate co-financing take care of China’s Excellent World Footage, Endeavor, together with on its $775 million sale of an 80 % stake in Endeavor Content material to South Korean large CJ ENM, WWE, for instance on its merger with Endeavor’s UFC, CJ ENM on its funding in SkyDance Media and the Roald Dahl Story Co. on its sale to Netflix.

With excessive inflation and different macroeconomic clouds affecting the TV promoting market, Hollywood giants slicing prices as they appear to push their streaming providers nearer to profitability, and lots of shares below strain amid investor skepticism, dealmaking within the media and leisure area has been challenged. However many on Wall Avenue predict additional consolidation forward.  

On this context, The Hollywood Reporter spoke to Raine companions Erik Hodge, who leads the corporate’s L.A. workplace and its efforts within the leisure and content material area, and Jason Schretter, Raine’s London-based head of Europe, Center East, and Africa. They shared their insights and takes on the present deal setting, the agency’s enlargement in Silicon Valley and in worldwide markets, what’s subsequent for Hollywood M&A, and their tackle the alternatives for Raine’s portfolio corporations.

Within the media and leisure industries, there was a deal increase, which appears to have slowed down. Do you might have any big-picture ideas on the place we stand and whether or not the sector deal increase has come to an finish, as some argue?

Hodge: There are challenges, however there have at all times been challenges, and there are alternatives. Relying on individuals’s expectations, there are nonetheless alternatives for offers to get accomplished, particularly in leisure. You do have all of the macro challenges, whether or not it’s rates of interest and the advert market all the way down to the best way the world has modified its views on streaming, and now a writers’ strike. However on the finish of the day, nice content material creators discover a strategy to reduce by means of. And that extends to the deal setting.

Schretter: Out of London, I do all of the sectors. I associate with Erik on leisure stuff, after which sports activities and music stuff. So it goes throughout. I’d say it’s sector-specific. Simply taking sports activities, we haven’t seen a slowdown in any respect. In truth, there was an acceleration of exercise. Music is the same dynamic the place persons are simply keen to enter it. I believe the sooner, extra growth-focused, the issues that that you must see develop earlier than they discover full traction, that stuff has been slower. However with spectacular administration groups doing the fitting factor, there may be nonetheless a market. It’s simply that persons are slightly bit extra picky.

Jason, you talked about sports activities. Amongst others, Raine ran the public sale of English Premier League membership Chelsea FC that led to final yr’s sale to a gaggle led by Todd Boehly [a part-owner of THR], Clearlake Capital, and others. And the corporate just lately suggested sports activities leisure powerhouse WWE on its merger with Endeavor’s UFC. Why is sports activities such a sizzling sector?

Schretter: I believe it’s, we’ve been on a run with Chelsea and now Manchester United, Inter [Milan], and Olympic Lyonnais. It’s been an thrilling time, and I believe it’s pushed by two issues. Primary is COVID put a highlight on the truth that [sports] is the one factor that individuals want of their lives. It’s actually embedded, it’s one thing that individuals rushed again to as soon as they had been in a position to, and it in all probability received them by means of powerful instances throughout that interval. In good instances and unhealthy instances, sports activities appears to be the one factor that continues to do nicely.

The opposite factor is, I believe there may be nonetheless a rising maturity and professionalism of sports activities that’s persevering with to develop. That’s pushed by staff homeowners and league homeowners and everybody actually saying that a few of these issues will be accomplished higher. From the U.S. perspective, if you have a look at what a few of the high leagues have accomplished, whether or not it’s the NFL or the NBA: world effort, actual advertising, straight realizing prospects – these are the issues that different leagues and groups try to duplicate. And for entrepreneurs accustomed to these sectors, whether or not it’s from a media angle or a sports activities angle, or no matter angle, they see alternatives to successfully take these and switch them into greater than only a staff. It’s a social community, it’s a commerce platform, it’s quite a lot of issues all below this envelope of a sports activities staff or league.

You might have additionally talked about music as a continued space of deal exercise. Any ideas on what’s driving that and any latest Raine music offers you want to spotlight?  

Schretter: The continued progress of streaming and the rise of the unbiased artist creates new funding alternatives in content material and platforms throughout the music {industry}. Prior to now yr alone, we’ve been concerned in a number of industry-leading transactions, together with the sale of [hip-hop label] High quality Management to [South Korean music giant] Hybe, the muse of [former Apple Music top executive] Larry Jackson’s music platform Gamma and [private equity firm] Francisco Companion’s acquisition of Kobalt Music Publishing.

Erik has talked concerning the rise of streaming. Jason has talked about the COVID pandemic. Do you imagine that “content material is king” remains to be one key mantra within the {industry}? And are there any basic mantras or issues which have modified amid all of the upheaval of latest years?

Hodge: I’ve by no means actually considered it as a monarchy. In some cases, the content material is, in some cases, the viewers is, in some cases, the distribution platform is [king]. It’s form of totally different for several types of content material and totally different conditions within the ecosystem. All that being stated, nice, nice, nice content material, and that’s a small proportion, will at all times have huge quantities of worth – sports activities IP, the true, true, true franchises. However I’ve at all times been reluctant to crown one or the opposite the king. I believe it’s an ecosystem, and there’s relative worth that shifts round relying on the scenario.

Are there any rising areas, say AI or the metaverse, that you just guys and Raine total have been spending extra time on? And the way huge a deal are they?

Hodge: I’d consider AI as a possible enabling instrument at this level which may simply assist in both the artistic course of or the content material discovery course of. I don’t suppose it’s a alternative. I believe it’s a instrument. After which I consider issues like NFTs, the metaverse as simply further avenues of both monetization or engagement. I’ve at all times been reluctant to consider both AI or Web3 because it pertains to leisure as ends in themselves.

If you have a look at metaverses typically, I’ve at all times held the view that nice IP individuals need to stay with in some kind or vogue and have interaction with past the film, past the tv present, past similar to that preliminary second. And something that offers them a chance to do that may be actually attention-grabbing and will be closely monetizable. In order that’s how I have a look at Web3.

On the AI aspect, it’s all about effectivity, whether or not it’s serving to a author, I do know that’s a sizzling subject, ideate, create a greater screenplay in a extra form of frictionless setting, or serving to a suggestion engine match demand and provide of content material – these are at this level instruments that I believe might in the end simply make the ecosystem extra environment friendly.

Schretter: Yeah, I simply need to double-click on one factor. AI and metaverse aren’t the factor, it’s a method to a factor. So that you must have some type of substance to what you are promoting mannequin, and which may be enabled, amplified, accelerated by AI or the metaverse as a method. However after we see alternatives all through our enterprise which can be fronting AI because the occasion, these are issues we are likely to keep away from, as a result of I don’t suppose we actually have a terrific sense of whether or not that as a standalone has lasting energy. However now we have seen some superb companies which can be utilizing these instruments to drive their initiatives, which is thrilling.

Raine has lengthy had a worldwide focus. Are there any areas of the world the place you see explicit or rising alternatives for Raine?

Schretter: In case you have a look at our web site sufficient, you will notice the way it goes from level to level, and also you’ll see further dots forming on the worldwide map. We’ve been very pragmatic about these, however are actually attempting to go after what we see as markets with big alternative, the most recent two being Paris – we imagine there’s much more give attention to continental Europe and need to actually be certain now we have a presence on the bottom that we are able to act upon – and Singapore, a market that we most just lately launched and that we’re very enthusiastic about. We see issues in these markets that we perceive from being in additional mature markets however are actually on the fringe of turning into one thing particular. So now we have made an effort, however I don’t suppose we’re essentially accomplished there.

Erik and I simply spent per week within the Center East, and we had double-digit conferences over the course of per week. We’re more and more enthusiastic about these being markets that aren’t simply sources of capital, however even have the potential to be creating and creating corporations and content material and leisure and issues which can be going to be useful for our ecosystem. The hope, from our perspective, is that that does bleed down into Africa as nicely. We’ve seen early steps of that. Frankly, for the scale of which we are likely to become involved, it could nonetheless be slightly bit early, however not for lengthy. We’re going to be spending much more time there over the course of the following, let’s name it, 12-18 months.

I bear in mind, Erik, you labored on a Common slate financing take care of a Chinese language firm a number of years in the past. Does China nonetheless current alternatives?

Hodge: I’d say China has been much less of a spotlight for us, simply given the political local weather and the flexibility to truly do offers there. Bilateral U.S.-China offers, Hollywood-China offers, they’re simply not occurring proper now. China remains to be a large market with an infinite quantity of customers and there are some unimaginable corporations there. That was a part of the considering behind increasing Raine into Singapore as a result of that may be a place the place China is interacting with different Asian corporations. We nonetheless need publicity to China. It’s simply that the times of Hollywood, China, and the direct relationship have actually modified.

There are different areas, like Korea, the place the market is extraordinarily thrilling. Take a look at offers like Endeavor Content material and CJ ENM, which we had been instrumental in, Wattpad and [South Korean internet conglomerate] Naver, which we had been instrumental in. These are examples of simply the dialogue that’s occurring between Korea and Hollywood. It’s a really thrilling place to be doing enterprise.

Raine’s portfolio corporations embrace Think about Leisure, TelevisaUnivision, Propagate, SoundCloud, and DraftKings, amongst others. I wished to ask you about a few them. What’s your tackle the place Think about stands and what’s subsequent for it? There appears to be recurring chatter a couple of potential change in possession or investments or fundraising…

Hodge: Think about is among the greatest manufacturers on this planet of content material creation, they usually at all times get quite a lot of calls – generally they interact, generally they don’t. A few of that noise has been round for the final a number of years. I’m extra optimistic concerning the enterprise than I’ve ever been simply given the platform that they’ve constructed. After we invested [in 2016], it was very centered on broadcast tv and theatrical movie by means of offers at Common and Fox. In the present day, they’ve a really, very, very broad content material providing that extends to documentaries, lower-budget content material by means of our acquisition of Jax [Media], high-end documentaries by means of our acquisition of [Alex Gibney’s] Jigsaw [Productions]. We’ve elevated the management by including individuals like Steve Shikiya [as chief operating officer], and Justin Wilkes [who was promoted to president of Imagine early this year from his previous roles as chief strategy officer of Imagine and president of Imagine Documentaries and Brands]. And that core engine of nice high-end premium IP that Brian [Grazer] and Ron [Howard] have pushed during the last almost 40 years remains to be in place. So I’m very excited concerning the prospects for the corporate. How that interprets into offers is form of a secondary consideration.

How about TelevisaUnivision and its upside?

Schretter: After we made that funding, we invested on a development that we had actually centered on ceaselessly, which is that this progress of the facility of the Spanish language-focused client inside North America. The merger of the U.S. and Mexico [businesses] by means of TelevisaUnivision was one thing that, after we first began Raine as an organization, wouldn’t have been thought potential. Because of TelevisaUnivision [CEO] Wade [Davis] and the management there, they’ve accomplished an incredible job bringing these corporations collectively. It is a phase of the market that isn’t totally served by the large streamers. So TelevisaUnivision uniquely has the potential to go and serve this viewers with issues like streaming and different issues which have been taken with no consideration. We’re simply actually excited. Every thing appears to be entering into the fitting path, and even with a few of the advert market ups and downs, the corporate remains to be performing nicely, which is nice. I don’t suppose each U.S. media firm can say that proper now.

The rest you want to emphasize?

Schretter: I’d simply emphasize: the enterprise shouldn’t be in a shutdown, closed-for-business mode. We aren’t seeing that in any respect. We nonetheless see quite a lot of alternatives, each for consumers, sellers, and traders.

Hodge: The best way we work as a staff is very, extremely, extremely differentiated. I believe Jason covers Europe on the highest degree of anybody who’s doing it on this area. I believe the identical about my colleagues who cowl Asia or India. And I believe we now have the most effective, if not one of the best, sports activities franchises, the most effective, if not one of the best, music franchises, and gaming and leisure.