When it Raines, it pours money for WME Entertainment, whose stake in Joe Ravitch’s and Jeff Sine’s still relatively new Raine boutique investment bank is beginning to pay off. I’ve learned that Raine has raised $300 million for a private equity fund to invest in all sorts of media — from content providers like global comic book brands to sports leagues to “really anything but not to make movies or television”, according to my sources. WME not only owns a very sizeable stake in the Raine parent company but has an investment in the private equity vehicle. I’ve also learned that WME has the option to represent those companies that receive Raine investments under what’s being termed a “preferred relationship”. WME internally is positioning the new fund as beneficial to its clients who could be put to work with the companies which receive Raine investments and expand. It also, as always whenever Hollywood agencies branch out, triggers conflicts of interest issues.
For Raine to raise such a big amount already, and eyeing a total $500M, is quite a trick considering how hard it has been for Wall Streeters in the aftermath of the financial crisis. (KKR just tried to raise $200M for CAA and couldn’t.) A letter to investors has gone out from The Raine Group explaining about the new fund which continues the firm’s focus on advising and investing in sports, media, digital media, and entertainment.
I broke the news on April 8, 2009, about Raine’s formation and close ties to WME, Ari Emanuel, and his close pal Teddy Forstmann. At the time, the company didn’t have a name: it subsequently adopted Raine, an amalgamation of Ravitch’s and Sine’s surnames with the “e” on the end for their close pal Emanuel’s. As I reported, the new company was to be run separately from Endeavor, and it has been been after those first few months when Ravitch and Sine operated out of Endeavor’s NYC offices. When Endeavor took over the William Morris Agency, the subsequent WME continued its partnership with Raine. And it will take over office space in WME’s Beverly Hills headquarters as its West Coast offices. It also has an office in Beijing.
Much of the investment in Raine so far has come from overseas, especially foreign government investment funds from the Chinese, Singapore, and Abu Dhabi regimes. According to news reports in March, the oil-rich emirate’s Mubadala Development Co said it would buy a 9% stake in The Raine Group to tap investment opportunities in media, entertainment and sports. Jeff Sine said in a statement at the time, “Having a strong capital partner such as Mubadala is an exciting way for us to position our business globally.” The deal came on the last day of a media summit which Emanuel attended. in fact, he has been a frequent visitor to Abu Dhabi in the past year. The Emirati capital which is investing heavily to establish itself as a regional media hub in the Middle East. The city-state, which serves as the capital of the United Arab Emirates federation, recently established a government-backed media zone and set up a company to produce and finance feature films. Mubadala’s COO said the Raine deal would give the company opportunities to invest further in the digital media, entertainment and sport sectors. “Their ambition, expertise and vision are precisely the traits we seek in our partners,” he was quoted as saying at the time.
And of course sitting on Raine’s advisory board are wealthy individuals like Teddy Forstmann, owned of IMG which Raine advised on a recent sports deal with India’s giant Reliance conglomerate (the same company that invested in DreamWorks 2.0), bigtime private equity player and sports team owner Ray Chambers, Japanese media company SoftBank founder Masayoshi Son, Netscape founder Marc Andreessen, and ex-Viacom brass Tom Freston, and others. Forstmann is a close pal of Emanuel’s, and at one time there was talk of Raine and WME joining with Teddy to set up a rival investment conference to Allen & Co’s in Sun Valley every July. (Forstmann Little and Co already host a hush-hush annual conference that brings together bigwigs in business, politics, and media in Aspen every September. Ari’s brother Rahm, the White House chief of staff, was a featured speakers last year.)
Joe Ravitch was a heavy hitter as co-head of Goldman Sachs’s media investment banking and, as news reports said at the time of his departure, a ubiquitous player in the world of media, telecommunications and sports deals. He was a driving force behind a number of media deals there, including the creation of the YES television network, the formation of the NBA China joint partnership, and the sale of the New Jersey Nets and Seattle Supersonics basketball clubs. Before moving to NYC in 2000, he headed Goldman’s Asian media and telecom practice. At the same time that Goldman lost Ravitch in March 2009, the Swiss bank UBS lost Jeff Sine, its vice chairman of media and communications investment banking. That practice included a variety of big media deals including Sundance Channel’s sale to Cablevision’s Rainbow Media, Time Warner’s merger with AOL, Liberty Media’s deal with Sirius XM, and Charter Communication’s restructuring. Sine’s resignation came after UBS cut its bonus pool by 80% in 2008.
Since it’s inception, Raine has been advising and investing in companies, like Playboy’s attempt to take itself private, Demand Media’s announced IPO, Flash Entertainment’s stake in the Ultimate Fighting Championship league (which WME controls).
It’s clear that everyone is scratching each other’s backs. As for Emanuel, he’s continuing what Lew Wasserman and Mike Ovitz and Richard Lovett have been trying to do for years: find ways for talent agencies to diversify beyond the traditional commissioning business to create revenue and not run afoul of the Hollywood guilds. So the agencies have invested in everything from advertising to sports-repping to marketing to modeling to jeans-making. In fact, before WME and Raine ever got together, CAA already was working in the high finance area. It became a co-owner of Evolution Media Capital, a film finance venture headed by a group of Merrill Lynch bankers including Bob Stanley, the former head of media and sports structured finance group there who ran point on raising $1 billion in Summit Entertainment financing and $250M for Marvel Entertainment.