Are special purpose acquisition companies ready to disrupt the media space? — Deadline disruptors
Special purpose acquisition firms, known as SPACs, have been all the rage in the investment world for the past two years and have taken over the media space, but is the trend slowing?
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Known as “blank check corporations,” SPACs are publicly traded investment vehicles that raise capital solely to acquire existing businesses. They are often led by a well-known personality and are considered a simpler alternative to going public via an IPO. They can also offer ordinary investors the opportunity to take advantage of the strong growth that some companies experience in their early years. At the same time, of course, a disappointing start can register significant losses.
In some cases, SPACs will be announced with specific investment goals in mind, such as when Virgin Galactic achieved a successful SPAC merger in 2019 and started a trend of similar efforts over the past two years. On other occasions, the SPAC will launch without disclosing specific goals, instead offering investors insight into its broader strategy.
Deadline Disruptors in Cannes: read them all here
Last year, former Reliance Entertainment CEO Shibasish Sarkar, one of the biggest names in the Indian media landscape, left the company to start his own SPAC, International Media Acquisition Corp. $230 million IPO on the Nasdaq in August. In an interview with Deadline in December, Sarkar said he was targeting acquisitions in three areas and would complete the first deals before the July 2022 deadline. “We want to be active in three areas: production companies , whether film, television or animation – to create the largest content creation company in India; the exhibition space, where the goal is to be a significant player in the industry, the third or the fourth largest; and the opportunity to take a significant position in a streaming platform,” says Sarkar.
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Also last year, Iris Knobloch, former president of WarnerMedia in Europe (and announced new president of the Cannes Film Festival), left the company after 25 years to launch a $300 million SPAC through Euronext Paris with the billionaire’s backing. French Francois-Henri. Pinault’s Artemis. Called I2PO, the company is the first of its kind to target the European entertainment and leisure industries. “Europe is home to many strong companies with high potential in this sector, which with the infusion of capital, resources and expertise from I2PO will have the support needed to take their business to the next level,” Knobloch said at the time. “I see a huge opportunity to consolidate a fragmented market and go beyond Europe to other markets.”
I2PO recently confirmed its first deal: a merger deal to take French music streaming service Deezer public at a valuation of $1.1 billion. Pinault described the move as an opportunity to “develop Deezer as the leading independent music streaming platform through strong positions in selected key markets.”
However, there have been many cautionary tales in the SPAC space over the past 12 months.
Former Disney executive couple Kevin Mayer and Tom Staggs, along with retired basketball star Shaquille O’Neal, raised $350 million for their SPAC Forest Road Acquisition Corp II in March this year. last, and quickly struck a merger deal to take fitness companies The Beachbody Company and Myx Fitness Holdings public. After an initial rebound, the combined entity has since fallen 80% in value and is struggling to recover, serving as a warning that such big-money deals can also turn sour.
Digital media company Buzzfeed went public via the SPAC merger in December, but its share price underperformed. Following an earnings report in the first quarter of this year that fell short of what the company promised investors when it launched its SPAC, pressure from those who had bought shares led to cuts to Buzzfeed’s news division, some reportedly urged CEO Jonah Peretti to shut down the Pulitzer. Fully award-winning news crew.
In turn, Buzzfeed’s example appears to have deterred several other digital media companies from pursuing their own proposed SPACs. Long-running chatter about Vox Media and Vice Media going public through SPAC has died down in recent months.
There may have been choppy waters for SPACs over the past year, but the trend looks set to continue. OnlyFans, the social media platform famous for its adult content, has been in talks about going public via a SPAC merger, while Asian funding bigwig Jason Wong, known as “the godfather of SPACs” in Asia, recently predicted that Hong Kong could see at least 40 blank investment vehicles launched in the city in 2022.
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