Saturday marks the official 10-year anniversary of the William Morris Agency-Endeavor merger into WME. Coincidentally, WME is marking the anniversary with its parent Endeavor filing for an IPO, an illustration of how far the company has gone in a decade.
In 2009, Endeavor was a”client-rich” mid-size agency with big ambitions. It set its sights on the much bigger, “cash rich” WMA, which had a steady cash flow from its lucrative music touring department, the legacy profits from decades of premium TV packaging fees, and its strong nonscripted-TV roster.
After the Endeavor leadership assumed control over its bigger rival in a stunning takeover, they had money to play with as the combined entity, WME, boasted annual revenues estimated at $325 million. For them, it was just the opening move on a complex chess board.
In 2012, WME took in investment from private equity firm Silver Lake. Overall, Silver Lake would put $700 million into the agency in exchange for a significant minority stake and seats on its board. Japanese conglomerate Softbank also paid $250 million for 5% of the company in 2016.
As it was taking on new investors, WME was using the influx of cash to make significant investments of its own. The first major one was IMG, which the company bought for $2.4 billion in 2014, giving it access to sports, fashion and other business areas.
In 2016, WME parent Endeavor moved deeper into sports with its $4 billion acquisition of the Ultimate Fighting Championship. Soon after came lucrative multi-year rights deals with ESPN (a switch from the UFC’s longtime broadcast home at Fox). The company also acquired Professional Bull Riders Tour, a smaller-scale deal at $100 million but also a clear signal Endeavor wanted to not only take a cut of what athletes make but also control TV rights, licensing and other revenue streams.
Other acquisitions along the way have included the Miss America Pageant and NeuLion, a streaming service provider reeled in last year for $250 million.
By 2018, with the UFC, PBR and other operations continuing to throw off cash, more than two-thirds of the company’s annual revenue came through its Entertainment & Sports division. Representation — which includes the traditional agency side — brought in $1.3 billion.
Last week, Endeavor dropped a 387-page filing with the SEC that lays out detailed financial information as a step toward staging an IPO, likely in the next couple of months. The offering aims to set a market value in the high-single-digit billions, though the company has not yet specified pricing. In March 2018, Endeavor was valued at about $4 billion.
A publicly traded Endeavor will mark a dramatic new chapter for the company, which would have not been possible without the WMA deal 10 years ago.
“The merger between WMA and Endeavor resulted in the new entity, WME, becoming the most powerful agency in the world,” one industry insider said. “Endeavor never would’ve done that without the assets, without the scale and without the receivables of WMA.”