Bidders For Endeavor Content Narrowed To Short List As Parent Posts Strong Quarterly Earnings – Update

Endeavor

UPDATED with Endeavor Content comment:  As the sale of Endeavor Content draws nigh, executives from parent company Endeavor said conversations are ongoing with bidders that have been narrowed down to a short list.

The upcoming sale of the scripted film and television content business was prompted by a prolonged standoff with the WGA after the Guild, which said agencies owning production was a conflict of interest and had writers fire their agents. Endeavor is able to can keep “non-restricted” businesses of Endeavor Content including some non-scripted, advisory and film financing and other lines.

UFC-owner Endeavor earlier today reported a surge in revenue and profit for the September quarter and raised its guidance for the year as live events, sponsorships and representation rebounded. In a conference call with analysts, Endeavor execs declined to break out revenue for Endeavor Content, but asserted that the unscripted business, which will stay a part of the company under an agreement with the Writers Guild, is thriving.

Profit margins in the business segment where the content business has been reported should increase after the sale is finalized, CFO Jason Lublin said. “We also think the representation segment should be simpler to evaluate without the challenges of determining production and episodic delivery timing in the segment,” he added.

PREVIOUSLY: Endeavor swung to a profit last quarter on sales up more than 60% to nearly $1.4 billion last quarter as business surged in the wake of Covid. The company, which went public in April, posted a net profit of $63.6 million from a $21.8 million loss the year before.

The stock was trading lower all session but bounced in late trading after the numbers, up 1.13%.

“We continue to capitalize on the elevated demand for premium content and live events coming out of the pandemic,” said CEO Ariel Emanuel. “Given our unique positioning within the sports and entertainment industry and our ability to leverage powerful secular content trends, we see no signs of this momentum waning through the end of the year.”

Of its three main business units, UFC-led owned sports properties saw revenue of $288 million– down $10.6 million on a one-time $25 million contract termination fee and more events being held this year than last, partly offset by strong growth across live events.

The events, experiences & rights segment sales rose by $62 million to $446 million on higher event and sports media production revenue related to the return of live events with audiences, as well as the addition of the recently acquired NCSA within our IMG Academy business. This was partially offset by a decrease in media rights revenues.

And representation saw revenue surge by $481 million to $664 million on favorable comps with last year when most television and film productions and touring events came to a halt due to Covid. Growth here was primarily attributable to a significant increase in Endeavor Content project deliveries and agency client commissions.

Endeavor Content is in the process of being sold off as a freestanding production entity. In September, WME launched WME Independent, a division to broker domestic and international film sales and film financing consulting services. It will be headed by Deborah McIntosh and Alex Walton, both of whom were most recently at Endeavor Content, which spearheaded those deals for years.

Those deals had for years been steered under Endeavor Content. Last February, Endeavor joined other agencies in signing a franchise agreement with the Writers Guild. The pact caps ownership of production capabilities and was conceived to head off criticism that agencies were self-dealing by owning productions and then taking fees for selling them to distributors.

Execs are holding a conference call at 4:30 pm ET and may give some update on the sale process. At the last earnings call in August, they said they were receiving “a lot of incoming interest.”

Dade Hayes contributed to this report.

This article was printed from https://deadline.com/2021/11/endeavor-ari-emanuel-wme-1234874683/