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BFD Expert Voices - Media Deals

BFD Expert Voices

"AI is freaking out the investment community," music attorney Lisa Alter says while describing how music-related deals have gotten more complicated over the years. She dined with Kerry this month as part of our "1 big meal" interview series.

Why she matters: As an attorney specializing in complex transactions in the music industry, Alter has advised buyers and sellers on major music acquisitions including the catalogs of Stevie Nicks, James Brown and Whitney Houston. Her firm completed more than 200 deals worth more than $6 billion over the past two years.

🛍️ Why we chose the restaurant: Mark's Off Madison near Madison Square Park. Alters said her "go-to lunch spot" at her old office was Freds at Barneys. Coincidentally, the same chef opened this restaurant next to her new office after the department store closed.

🥚 What we ate: She drank iced tea and ate the Palm Beach Salad (mixed greens, shrimp, hearts of palm, avocado, cherry tomatoes, hard-boiled egg). I drank iced coffee and ate Penne Al Cefalu (garlic roasted broccoli, cauliflower, Romanesco).

Have you incorporated language about AI in your deals?

We're looking at that now. If you're buying the rights to an artist, you don't want the artist to be able to separately license their persona for an AI. That would potentially dilute the acquisition for the buyer, so that's something they're starting to try and grab — you can't do it without their permission, or if you do it, they get to participate. It's like the next step from re-record.

My colleague Dan Primack recently wrote about Taylor Swift and re-recordings' impact on deals. Have you protected against those?

If a buyer is buying the rights from an artist, then yeah. The Taylor Swift case is different. I wasn't involved in it at all. The company bought from her label, but she was not a part of that transaction, so there was no way that the buyer could have protected itself from the re-records because they would have had to get that protection directly from Taylor Swift.

If you're buying directly [from an artist], whether it was sound recordings or income stream, then they could have a provision.

Why do you think so many music rights deals are happening now?

I think it's the investment community, the money, waking up to the fact that music is one of [America's] strongest national assets.

Starting around the early 2000s, before the market crashed, we started to see the investment community get interested — buying copyrights, buying songs. With the crash, everything pulled back.

By 2017, there was so much more money and interest rates were low and [with termination rights] big-name, legacy songwriters started to get their songs back. And the capital gains tax has been relatively low, which made it favorable to the artist. There was the fear capital gains tax might go up so then there was a real push to sell.

It can take three [weeks] or three months. Thirty days is a fairly tight turnaround, but it's doable. It depends how straightforward it is. If you're buying 100 songs from someone who's owned the rights his whole life, that can be easy.

I think what's going to start happening is some amalgamation of content owners. A lot of funds have sprung up. A lot of these smaller funds are in it for the short term. I think you're going to see consolidation in the market.

🏖️ 1 fun fact: Alter says she loves spending time at the beach, especially in Seaview, Fire Island, where her family has summered for generations.

Alter's parents went to Fire Island on an early date and bought a home there a few years later. Alter says she technically met her husband on the beach in Fire Island but actually got to know him months later.

1 big meal: Music attorney Lisa Alter

illustration of Lisa Alter of Courtesy of Alter, Kendrick & Baron on a tablecloth background

Music attorney Lisa Alter. Illustration: Tiffany Herring/Axios; Photo: courtesy of Alter, Kendrick & Baron, LLP

Lionsgate is in the lead to acquire eOne, the Hasbro-owned television and film studio behind titles including "The Rookie" and "Yellowjackets," Deadline reports.

Why it's the BFD: Hasbro purchased eOne for $4 billion in 2019, and any new owner of the studio will be folding in a 6,500-plus title content library, Michael Flaherty reports.

Of note: What it won't include is top family brands like Peppa Pig and PJ Masks, which have been folded into Hasbro's wider merchandising operations.

Details: Potential suitors for the studio have emerged since Hasbro signaled it was going to shed the business. Companies such as Legendary and Go Digital, as well as private equity firm CVC, have been named in various news articles as interested parties. 

Deadline said in yesterday's article that Lionsgate "has established pole position" to acquire eOne, citing sources. 

Lionsgate did not immediately respond to a request for comment. Hasbro declined to comment. 

Catch up quick: In 2021, Hasbro sold eOne's music business to private equity firm Blackstone for $385 million.

Lionsgate in lead to acquire Hasbro's eOne studio

2. The BFD: Lionsgate opens to eOne

Illustration of a collage featuring an old TV, parts of dollar bills, and a TV test pattern.

Following a brutal sell-off in the first half of 2022, Netflix has managed to claw its way back into investors' hearts, but its streaming peers face major challenges during Q2 earnings season, which kicks off this week.

Why it matters: Disney, Warner Bros. Discovery, Paramount and Comcast promised investors that their budding streaming services would be profitable beginning in 2024. Now that the clock is ticking, reality is starting to set in, Sara and Tim write.

Driving the news: With the simultaneous writers and actors strikes shutting down Hollywood, a bleak ad market and a subscription slowdown, entertainment giants are scrambling to figure out how to sell their streaming visions to Wall Street.

Peacock said yesterday it would raise its prices for the first time since it launched in 2020, joining the majority of its peers that have raised prices in recent months to help get to profitability.

Disney said last week it would possibly sell its non-core assets, including most of its cable channels and ABC. CEO Bob Iger, whose contract was recently extended until 2026, says he now plans to buy the remainder of Hulu from Comcast to bolster the company's streaming strategy.

Paramount's parent company is reportedly in talks with creditors to refinance its debt, due to heightened financial uncertainty.

3. Streaming's doomsday clock

Illustration of a TV, cellphone, monitor, scissors, coins, and cursor arranged randomly around a play button within a circle made from a streaming progress bar 

Looking for a deal story? Search the Axios Pro Deals Tracker beta.

• Futureverse, a Los Angeles-based AI and metaverse technology and content startup, raised $54m in Series A funding led by 10T Holdings, with Ripple also participating. https://axios.link/3XYAwpj

• Integrated Media Company, a New York-based private equity firm, has agreed to buy Toon Boom Animation, a Montreal-based 2D animation software company, from Canadian cartoon company Nelvana for C$147.5m. https://axios.link/3Dg1mzA

• Stagwell acquired Tinsel Experiential Design, a New York-based marketing and design studio that has worked with Sony Music Entertainment, GitHub, Pfizer and Uber. https://axios.link/3pSAy5E

• ⚽ 49ers Enterprises, the investment arm of the San Francisco 49ers, completed its majority takeover of English soccer club Leeds United after the English Football League approved the sale of the team from Andrea Radrizzani. https://axios.link/3pWz767 

• ⚾ Liberty Media stockholders approved the split-off of the Atlanta Braves yesterday, rolling the team and its real estate development, The Battery, into a separate publicly traded company named Atlanta Braves Holdings. https://axios.link/44H8EII

• ⚾ Diamond Sports Group walked away from its media rights deal with the Arizona Diamondbacks. https://axios.link/3NV6K01

• OpenAI signed a two-year deal with the American Journalism Project, providing $5m of grants and $5m worth of credits for access to its tech products to local news outlets, Sara reports. https://axios.link/3OiqXOH

4. Deal flow

• Anjali Sud, CEO of Vimeo since 2017, was named CEO of Tubi, Fox's streaming service. https://axios.link/44wKPU4

• Keily Blair, chief strategy and operations officer of OnlyFans, was named CEO after Ami Gan stepped down. Matt Reeder, deputy general counsel, was promoted to COO and Sue Beeby, vp of communications, to chief communications officer. https://axios.link/3PWCGE1

• John Harris, co-founder of Politico, is returning to the Axel Springer-owned outlet as global EIC, replacing Matt Kaminski, who will transition to editor-at-large on Aug. 31. https://axios.link/44uPsxT

• Alexandre Fonseca, chairman of Altice USA and co-CEO of Altice Group, suspended himself from all executive and non-executive duties at the company after a corruption probe launched by authorities in Portugal. https://axios.link/3pLxsjV

• Zinhle Essamuah was named an official co-anchor for "NBC News Daily" from 2 pm to 4pm ET. https://axios.link/43vqkFO

• ProSiebenSat.1, the German media group, is cutting around 400 roles, about 10% of its workforce. https://axios.link/43vGSh1

5. Movin' on up (or out)

⚽ In Manchester United bidding war, Ratcliffe's $16 billion fortune might not be enough (Bloomberg)

"A member of Qatar's royal family, Sheikh Jassim Bin Hamad J.J. Al Thani, is offering to buy Manchester United outright for about £5 billion ($6 billion). Ratcliffe, meanwhile, is initially only seeking a majority stake — a less appealing offer that has upset some minority shareholders," Benjamin Stupples, David Hellier and Sabah Meddings report. 

📺 Behind the slow-motion implosion of regional sports networks (THR) 

"Recall that before there were RSNs, local broadcast stations carried all the local team games," Moody's senior vice president Neil Begley told Alex Weprin. "But [local stations] are also being pinched by declining pay TV losses and they would need to get higher affiliate fees than they currently receive to cover much of the licensing costs to the teams."

🚫 No stars, no red carpets: How Hollywood strikes could disrupt the summer box office (Variety)

"If SAG-AFTRA and film companies remain at odds by the end of the summer, movies may start to move back on the calendar, according to studio insiders. And with productions on hold indefinitely, several major titles set for 2024 and beyond could miss their release dates," Rebecca Rubin writes. 

6. Channel surfing

Illustration of a surfer with a television in the place of his head.

📺 Situational awareness: The Coalition for Local News, made up of more than 600 local broadcast stations, is urging the FCC to close a legal loophole for live TV streaming companies, Sara Fischer and Maria Curi report.

@tim_bays: "Knock at the Cabin" on Peacock. Dave Bautista continues to have the most unexpected post-wrestling career.  

@kerrymflynn: "What We Do in the Shadows" on Hulu. The vampires of Staten Island are back with season 5!

✏️ Thanks to Michael Flaherty for editing and Katie Lewis for copy editing this newsletter.

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July 18, 2023

1 big meal: Music attorney Lisa Alter