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:
Dear STX Family,
Today marks an important and exciting day for our company. I’m very happy to let you know that we have just announced an agreement to combine forces with Eros International, the leading Indian film studio and OTT platform driving Bollywood. Eros is simply the most important film company in India. After the transaction closes, expected by the end of June, the combined company will be called Eros STX Global Corporation and will trade on the NYSE, where Eros is traded today. Together with Eros, we will realize our ambition to be a global powerhouse in entertainment, digital media and OTT. You can find a copy of the press release we issued
here.
The combination will create the first independent media company with the expertise and creative cultures of Hollywood and Bollywood, while also leveraging the important inroads both companies have made into the Chinese market. Together we will have the relationships, management expertise and resources to create new content addressing the largest and most attractive global markets and will be backed by some of the most sophisticated investors in the media space.
As some of you already know, Eros has the largest library of Indian films with 3,000 titles and its OTT platform Eros Now is the leading SVoD platform for Indian content with 12,000 digital rights. The combined company will collaborate with key partners like Apple, Amazon, Microsoft NBCUniversal and Google/YouTube, and continue the our cost-effective, star-driven development, production and distribution models each company is known for today. We couldn’t be more excited about what the future holds.
The combined company will be led by executives from both companies. I will serve as Co-Chairman and Chief Executive Officer of the new company alongside Eros International’s current CEO, Kishore Lulla who will be the Executive Co-Chairman. Kishore is a giant in the Indian media world and has played a key role in shaping the country’s entertainment market for decades. Andy Warren will be the CFO of the combined entity. I’m also thrilled to announce that Noah Fogelson will serve as Co-President of the new company, alongside Rishika Lulla Singh, who currently serves as Chairman of Eros Digital. The combined company will be headquartered in both Burbank and Mumbai.
This combination is truly an example of two great companies coming together to create a powerful force in the global entertainment space. With this new capital and our global film and digital businesses we are well positioned to create and distribute content globally, that will allow audiences to consume our premium content when, where and how they prefer.
As always, thank you for your continued focus on the exciting work we do. This news is due in no small part to the incredible work and dedication that each of you contribute to our company every day. As we expand into the most important markets around the world, I’m excited to see what our team is capable of achieving.
Thank you,
Bob
