STX Entertainment, founded in 2014 as a star-driven movie operation, is merging with India’s Eros International to form a new, publicly traded media company with operations across film, TV, streaming and other areas.
The all-stock deal will give the new entity, Eros STX Global Corporation, a “revamped” capital structure, according to the official announcement. Key elements of that funding include $125 million of incremental equity from new and existing STX Entertainment equity investors TPG, Hony Capital and Liberty Global and a $350 million JP Morgan-led credit facility. On a pro forma basis, revenue for Eros STX in 2019 is $600 million.
With a stock listed on the New York Stock Exchange, Eros STX will aim to produce and distribute a mix of Bollywood and Hollywood content. The companies expect their merger to close by the end of June.
In addition to film and TV, Eros operates significant streaming operations. It has more than 188 million users of Eros Now, including more than 26 million paid subscribers, with a library of 12,000-plus films across Hindi and regional languages. The main film library of Eros numbers about 3,000 titles.
The new company’s management team will consist of Kishore Lulla, Executive Co-Chairman; Robert Simonds, Co-Chairman and CEO; Andrew Warren, CFO; Rishika Lulla Singh and Noah Fogelson, Co-Presidents; and Prem Parameswaran, head of corporate strategy.
Adam Fogelson will continue to serve as Chairman of STX Motion Pictures Group, with Pradeep Dwivedi continuing to serve as CEO of operations in India.
STX has had a couple of breakout movie releases with Bad Moms and Hustlers, and handled distribution on 2019 smash The Upside, but has faced a challenging climate with changing release windows and the pressure of making mid-budget films. As a company, it sought in recent years to branch into television and digital with limited success, producing shows for BET, E!, National Geographic and Quibi, among others.
STX pursued a public offering on the Hong Kong stock exchange in 2018 but abandoned that plan, citing adverse market conditions.
As it was taking its first steps in Hollywood, STX was shadowed by comments by Fogelson in 2016 New Yorker feature story. Having had a long run in senior management at Universal prior to taking the reins at STX, the exec expressed the view that STX had cracked the code on efficiently marketing and distributing wide releases featuring A-list talent. Over the years STX has operated as a stand-alone company, though, true blockbusters have accounted for a small fraction of its 34 releases. Even if many of those films turned a profit, hitting singles and doubles wasn’t what Fogelson said he had set out intending to do.
Here is Simonds’ internal memo to the staff of STX:
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