Jul 6, 2022 - Economy

Peter Chernin forms new content studio with $800 million investment

Peter Chernin. Photo: Drew Angerer/Getty Images

Peter Chernin, the veteran media executive turned investor, on Wednesday announced that he's created a new global content studio called The North Road Company with $800 million in outside funding.

Why it matters: Streamers are struggling to get their hands on enough original content, and independent production companies like North Road can help meet that need.

  • Streaming changed the business dynamics for studios by allowing them to get paid upfront from distributors via licensing deals. This has made them a more reliable bet for investors.

Details: North Road aims to be one of the largest, independent global production companies, supplying an array of scripted and non-scripted content across genres for TV and film distributors. It combines three existing production studios:

  • Chernin Entertainment, Chernin's existing scripted studio that's responsible for films like "The Greatest Showman" and "Ford v Ferrari," plus TV series like "See" and "Truth Be Told" on Apple TV+.
  • Red Arrow Studios' U.S. assets, which include some of Netflix's top reality shows, like "Love Is Blind" and "Ultimatum."
  • Words + Pictures, a non-scripted production company formed in 2021 by Chernin, former ESPN producer Connor Schell and The Chernin Group co-founder Jesse Jacobs.

Chernin is chairman and CEO of North Road and Jacobs serves on the company's board. Executives from the existing and acquired studios are mostly all staying put.

The big picture: While overall private equity investment is slowing, money keeps pouring into Hollywood production companies.

  • Candle Media, a new media rollup company led by former Disney executives Tom Staggs and Kevin Mayer, has received billions in financing by Blackstone to acquire a number of major Hollywood production studios, including Faraway Road Productions, Hello Sunshine, Moonbug Entertainment and a minority stake in Westbrook Inc.

By the numbers: North Road acquired Red Arrow Studios' assets on June 30. A source familiar with the transaction said the deal was valued at $180 million, which valued Red Arrow at roughly 4.9x its EBITDA of $41.2 million.

  • Providence Equity Partners is investing up to $500 million of equity to support North Road’s expansion, according to a statement. Apollo Advisors provided $300 million of debt financing.

The bottom line: North Road launches with a huge set of intellectual property and a team of seasoned executives, making it pretty formidable.

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