🍋 Private Equity's Hollywood Nightmare

Why private equity megafunds' investment in film production backfired, plus $BTC hit another record high.

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“[Successful tech] businesses are very hard to start and very hard to kill.” — Brian Norgard

Good Morning! Economists are increasing their long-term inflation expectations, which could spell trouble for the Fed. Choice Hotels gave up its $8 billion hostile takeover of rival firm Wyndham. Reddit wants to raise almost $750 million in its upcoming IPO. Blame it on Gen-Z’s behavior, but the workplace etiquette industry is booming. And Bitcoin topped $72k for the first time as its rally builds steam. Plus, how to make small talk with anyone, and a former Google recruiter on the interview mistakes that made him rescind offers.

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Private Equity’s Hollywood Nightmare

Some of the largest private equity megafunds Blackstone, Apollo Global Management, and Bain Capital dove headfirst into Hollywood over the past couple of years. They bet that streaming services like Netflix and Disney+ would spark a massive boom for Hollywood sound stages. 

But in 2024, they’re wondering if they bet the wrong horse. Many streaming companies like Disney and Netflix are restructuring - slashing costs, reducing stage occupancy and lease space.

During the pandemic, every developer scrambled to build more production space. Los Angeles grew its production space by 50% and New York saw its growth by 30%. But they were left in the dust by Georgia, which saw its production facilities grow 100-fold since 2010. And these private equity firms helped back a lot of this new construction.

But the industry is starting to feel some headwinds. And the private equity industry is feeling the squeeze in its returns, too. One Blackstone-backed project found that just 38% of Atlanta’s city stages had any action this past February. And in New York, signings for film and TV shows have fallen 85%.

Despite the current oversupply and economic pressures, some investors remain optimistic, focusing on prime locations and long-term demand.

Takeaway: It didn’t help that studios are still recovering from last year’s strikes and the post-pandemic production hangover, which led to layoffs and budget costs. Private equity firms are confronting the harsh reality that demand does not match the streaming industry's aspirations for perpetual expansion. Is this a sign of future trends or merely a dip in the world of content creation? Only time will tell.


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Top Reads

  • Long-term inflation expectations rise, spelling possible trouble for the Fed (CNBC)

  • Choice Hotels surrenders its $8 billion hostile takeover of Wyndham (YF)

  • Reddit to raise nearly $750 million in upcoming IPO (CNBC)

  • The workplace etiquette industry is booming (CNN)

  • Bitcoin tops $72,000 for the first time as rally builds steam (YF)

  • This ratio shows how workers still have the upper hand (Axios)

  • Wall Street braces for another potential inflation surprise (YF)

  • SVB's collapse was a boon for these new kids on the block (Axios)

  • Pfizer is betting big on cancer drugs to turn business around (CNBC)

  • How ByteDance could save TikTok from a U.S. ban (Axios)


Markets Rundown

Stocks closed lower ahead of a key inflation print.

Movers & Shakers

  • (+) Bally’s Corporation ($BALY) +28% after hedge fund Standard General made a buyout proposal for the casino operator.

  • (+) Duolingo ($DUOL) +4% after JPMorgan initiated coverage at overweight for the language learning company.

  • (–) New York Community Bancorp ($NYCB) -5% after another volatile trading day after Steve Mnuchin rescued the community bank.

Private Dealmaking

  • EQT Corp. bought Equitrans Midstream, a pipeline operator, for $5.4 billion

  • Wiz, an Israeli cloud company, raised $800 million

  • Fullcast, a revenue ops software provider, raised $34 million

  • Oleria, an employee access security startup, raised $33 million

  • Carewell, an online retailer, raised $24.7 million

  • Reach Security, a cybersecurity startup, raised $20 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.


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Americans Live Further Away From Work Than Ever Before

Average distance from work by earnings group

Source: Axios


Worst Day

“Your worst day is a chance to show your best qualities, to stand out, and to learn an enormous amount about yourself.

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Source: Farnam Street


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