STX's Merger Plan With Eros Touts "Risk-Mitigated" Films, Streaming Ambition

Jennifer Lopez stars in HUSTLERS - Publicity_h 2019
Courtesy of STXfilms

An investor presentation adds more detail to the combined Hollywood and Bollywood firm that will trade on the New York Stock Exchange.

STX Entertainment and Eros International are pitching a merged company to investors by highlighting the firms' access to top Hollywood and Bollywood talent, their global distribution footprint and their ambition to build a competitive global streaming service.

In a U.S. Securities and Exchange Commission filing Monday, the companies included an investor presentation for the newly titled Eros STX Global Corporation, which will trade on the New York Stock Exchange pending regulatory approvals. 

The pitch touted a "risk-mitigated approach to filmmaking," a refrain that may be in line with STX's six-year run as an indie studio home to mid-budget fare boasting star power. The presentation listed a model film that would cost $29 million to produce, but be offset by $14 million in international sales, $6 million in tax credits and $2 million in co-financing.

While STX directly distributes stateside and in the U.K., its distribution partners abroad in other territories include Village Roadshow, VVS Films and Golden Village, among others in 150-plus territories. In 2020 alone, STX plans to release 40 feature films.

The companies said that their access to Hollywood and Bollywood talent would create more opportunities in the U.S., China and India. STX listed 14 Hollywood A-listers in its talent relationships section, including Jennifer Lopez, Cardi B, Elizabeth Banks, Chadwick Boseman, Amy Schumer and Matthew McConaughey. Eros noted relationships with Shah Rukh Khan, Priyanka Chopra Jonas, Kabir Khan and Akshay Kumar, among others.

The companies suggested that they are "uniquely positioned" to target the Chinese market, noting previous Bollywood and Hollywood hits including STX’s 2017 Jackie Chan actioner The Foreigner, which grossed $81 million in the country. Eros' listed partners in the market include China Film Group and the Shanghai Film Group Corp., while STX touts relationships with Tencent, Huayi Bros. and Alibaba. 

Scaling up the streaming platform Eros Now with STX content was listed as a priority to investors. The streamer has rights to 12,000 films and boasts 26.2 million paid subscribers as well as 188 million registered users. Its pitch noted that Eros Now has distribution partnerships in place with Apple, NBCUniversal, Microsoft and YouTube. STX, meanwhile, currently has five scripted and six unscripted shows in production as well as deals with Showtime, Netflix and Hulu.

As for its cost-savings proposition, STX and Eros say that $50 million in synergies will be saved in two years from the deal’s closing date "stemming from integration and scale benefits, optimization of global content distribution and enhanced monetization of the Eros Now platform."

The company is backed by $125 million in new equity funding from TPG, Hony Capital and Liberty Global. The merged firm will be led by Eros' Kishore Lulla, who will be executive co-chairman, and STX's Robert Simonds, co-chairman and CEO.