Hollywood Gets Ready for IPO Blitz Led by Univision, CBS Radio and, Possibly, Vice
STX Entertainment, Toronto's Thunderbird Films, music streamer Spotify and social media powerhouse Snap are also among the companies that could decide to go public.
The dearth of entertainment companies filing for initial public offerings might finally be reversed in 2017, with big names like Univision Communications and CBS Radio having filed for and STX Entertainment and Snap sending signals about potential stock market listings.
Many companies weighing an IPO have been scared off by a turbulent time for media and entertainment stocks, with many affected by changing consumer habits in how they digest movies and television these days. The threat of cord-cutting alone sent shares of powerhouses like Disney, Viacom and others gyrating during the past few years.
But, with analysts sensing a recovery, public offerings are expected to follow. "A strong stock market is generally good for IPOs," says Matt Kennedy, analyst at Renaissance Capital, a manager of IPO-focused Exchange Traded Funds.
"No media and entertainment companies have gone public in the U.S. since July 2014, when radio operator Townsquare Media raised $92 million," says Kennedy. "2016 was the worst market in terms of the number of IPOs since 2009. … Several companies delayed IPOs to 2017, so it is looking pretty good" going into the new year.
Here is The Hollywood Reporter's look at possible entertainment and media IPOs of 2017 in the U.S. and beyond.
Observers expect the radio unit of CBS Corp. to go public in the early parts of 2017 and then be split off. CBS Corp. chairman and CEO Leslie Moonves told the UBS Global Media and Communications Conference in New York in December that the IPO would happen in the first quarter of 2017.
"Everything is going as planned," he told the conference. "We’re very pleased." Moonves also said that CBS Radio president Andre Fernandez was "doing the road show [for the IPO], and there’s very positive feedback."
CBS explored various options for divesting its radio arm last year, including a sale. Analysts said the IPO filing in the summer was a sign that the company didn't feel it would get the price tag it deserves in a sale.
CBS Radio operates 117 radio stations in 26 markets, including WINS and WFAN in New York and KCBS and KROQ in Los Angeles. The company could be worth about $2.9 billion, according to Bloomberg Intelligence estimates last year.
CBS Radio revenue for the first nine months of 2016 amounted to $898 million, down slightly from $907 million for the same period of 2015. Its full-year 2015 loss amounted to $136.5 million on $1.2 billion in revenue.
The IPO comes as CBS Corp. is focusing on its higher-growth TV and other businesses, with the separation further boosting the revenue percentage the company gets from its non-advertising activities. "At the same time advertising is growing, our non-advertising revenue is growing even faster," Moonves said on the company's third-quarter earnings conference call late in 2016. "In fact, this type of revenue is growing so fast that this quarter advertising represented just 43 percent of our overall revenue. That's the lowest percentage we've ever had for any quarter in our history. And as we separate our radio business next year, this is a trend that will only continue."
Telsey analyst Thomas Eagan likes the strategy behind the radio IPO. "Separating the slower-growth radio division will enable CBS to grow fiscal year 2017 by 3.3 percent, 65 percent faster than with the radio operations," he wrote in a recent report.
Spanish-language media giant Univision Communications, which was taken private in 2007, has been gearing up for a potential IPO for a year and a half, but has so far not pulled the trigger amid Wall Street jitters related to cord-cutting and other challenges facing the TV industry, as well as market volatility, according to analysts.
The company filed a registration statement with the U.S. Securities and Exchange Commission in July 2015, followed by a preliminary prospectus early last year. Univision has not priced the shares, nor has it said how much it intends on raising in its IPO, but reports have cited a possible $1 billion fundraising target.
Current investors include Thomas H. Lee Partners, Providence Equity Partners, Madison Dearborn Partners, TPG Capital and Saban Capital Group.
Market watchers say the company's digital acquisitions, including deals for a stake in The Onion and for the takeover of Gawker Media's sites, have boosted the company's digital reach, which is seen as a way to possibly impress investors. The company also recently unveiled that it was laying off 200-250 employees, including many from its Fusion unit, which it fully acquired last year after operating it as a joint venture with Disney since 2013, streamlining its business ahead of a possible IPO.
"They seem to be cleaning house" and setting the stage for a possible IPO, says Kennedy. The FCC also helped in another step towards the IPO with its decision to allow Mexican TV giant Televisa, which is an investor in and key programming partner for Unvision, to increase its stake in the company to as much as 49 percent.
Youth-focused media company Vice, led by CEO Shane Smith, is widely expected to decide this year whether to go for an IPO or possibly sell to a bigger company.
"We're having a very good year and at some point we're going to be priced out of the market," Smith told CNBC last year. "So we'll be too expensive."
Walt Disney's stake in the firm last year led to chatter that the entertainment giant could ultimately acquire the company outright. "It makes sense for them and it makes sense for us," Smith told THR last summer. But he only described a sale and an IPO as possible scenarios, leaving all options open.
Viacom CEO Bob Bakish in December ruled out a play for part of Vice. Disney has not expressed any desire or unveiled any plans to increase its stake. 21st Century Fox also owns a 5 percent stake in Vice.
In 2015, Vice was in its latest deal with Disney valued at more than $4 billion. Analysts cite Vice's distinctive and strong brand and popularity with millennials as key selling points in the case of an IPO.
Snap Inc., the parent company of Snapchat, is preparing for an IPO as early as March at a valuation of $25 billion or higher, according to reports in October. They also mentioned that the company has confidentially, but not publicly, filed for such a move. The company was valued at approximately $18 billion when it last raised more funding.
CEO Evan Spiegel has made strides to grow the company's business, diversifying into physical goods with its Spectacles, which record 10 seconds of video that can then be posted to Snapchat. The company also recently unveiled a new advertising platform designed to automate ad inventory sales through third parties, which analysts say could boost ad revenue growth.
Reports have previously said that the company would generate revenue of $250 million-$350 million in 2016 and as much as $1 billion by 2017.
"It is one of the most valuable private tech startups," says Kennedy, adding that investors have compared the company to Facebook. "It attracted so much private capital that people will be interested in it."
Music streaming powerhouse Spotify was valued at $8 billion-plus in a 2015 funding round and debt raise last year. An IPO would take another music-related company public, but some analysts have highlighted that the stock of rival Pandora has been struggling amid investor questions about the firm's outlook.
Plus, Spotify has been losing money, meaning that investors must be convinced of putting money into the company if it goes public. Bloomberg has reported that Spotify could do so during the second half of 2017.
"2017 will build upon an upbeat 2016, in which the major labels saw streaming drive total revenue growth," Mark Mulligan, a media and technology analyst focused on music, wrote on his blog late in 2016. "This stirred the interest of big financial institutions, companies that had previously avoided the music industry like the plague. These institutions are now seriously assessing whether the market is finally ready to pay attention to."
He added: "The implication of all of this is that if Spotify’s IPO is successful, expect a flow of investment into a new wave of streaming services."
Film and TV studio STX, whose 2016 theatrical releases included Bad Moms and The Boy, is eyeing an initial public offering in Hong Kong, chairman and CEO Robert Simonds told the South China Morning Post in November. He did not detail the possible size of an IPO and a potential timeline.
"The business itself is sustaining, and the last round of financing gave us the capital we needed to expand all the other businesses besides movies," the paper cited Simonds as saying.
In that most recent fundraising round in August, Chinese online giant Tencent and Hong Kong telecom firm PCCW bought stakes in the Los Angeles-based studio. Previous investors include Chinese private equity firm Hony Capital.
In 2015, STX struck a landmark co-financing and distribution agreement with Chinese film company Huayi Brothers, which marked one of the first major investments by a Chinese company in a Hollywood studio film slate.
An IPO in Asia makes sense for a company with investors in the region, according to market watchers. "Hong Kong deals do get U.S. investor interest and vice versa, especially for a U.S.-based company," Kennedy tells THR. "But the focus is typically on investors from the listing area."
The Toronto-based film and TV production and distribution company (which last year touted a deal with Netflix for the Beatles-inspired animated kids series Beat Bugs, on which it is a co-producer and an investor) has also been eyeing a possible IPO.
The company has a catalog of more than 500 hours of Canadian and U.S. TV content and also is involved in the sequel to Ridley Scott’s 1982 sci-fi hit Blade Runner, starring Harrison Ford and Ryan Gosling. Thunderbird owns 50 percent of the underlying rights and licensed the film rights to Alcon Entertainment.
“We’ve got a solid foundation of intellectual property, assets and shareholders, and we are in what we’d call a state of readiness to go public," CEO Tim Gamble told Bloomberg News last February. "We’re prepared to, if we think it’s a good opportunity."
He also signaled an IPO could come by early 2018, without providing a specific timeline.
Don't count on the new media company, known for helping to popularize listicles and for being popular with millennials, to go public in 2017. But executives there have talked about plans to go public, with observers expecting it could happen in 2018.
NBCUniversal in 2016 made a second $200 million investment in the firm, valuing BuzzFeed at around $1.7 billion. The two companies also revealed plans to intertwine their advertising sales and production activities. The company was on target to bring in $250 million-plus in revenue in 2016, up from around $170 million in 2015, The Wall Street Journal reported late in the year, citing sources familiar with the situation.