At last year’s Cannes Film Festival, coming off a wave of film sales and a glossy profile in Variety, IM Global founder Stuart Ford turned to his team and let them know he was ready to sell the media company he spent nearly a decade establishing.
“I realized we’d never be shinier and prettier,” Ford said. “And if we were going to do a deal, now was the time to do it.”
So began a furious period of speed dating with potential investors that culminated this Thursday with the news that Donald Tang’s Tang Media Partners has acquired majority ownership of the international sales and production finance business. The deal closed in December, but in addition to due diligence, Ford spent the past five months hammering together a new television production joint venture with China’s Tencent. That will also be backed by Tang Media Partners and Reliance Entertainment, the India-based media investor that was IM Global’s majority owner before selling part of its stake to Tang’s company. Reliance will retain a minority position in IM Global.
The deals are worth $200 million, and though Ford won’t say what other companies were looking under IM Global’s hood, he jokes that he did “a lot of dating before getting married” to Tang Media Partners. Even as he looked to find new investors, Ford was eager to achieve continuity. He is particularly pleased that Reliance decided to reinvest part of their profits from the sale of their IM Global stake in the new television joint venture with Tencent.
“Of everyone who approached us [Tang Media Partners] and its partners clearly had the most to offer in strategic and financial capability,” said Ford. “Donald (Tang) also then quickly struck up a good rapport with the Reliance guys and in the space of a few months we collectively figured out a deal structure that allowed Reliance to not only remain as a meaningful stakeholder in the business they’d helped build but also to reinvest further in us via the TV venture.”
In recent years, China has become more deeply enmeshed in the Western film business. China’s Fosun Group invested in former Warner Bros. film chief Jeff Robinov’s Studio 8, while Chinese companies such as Hony Capital and the Huayi Bros. are involved with STX Entertainment. Last March, former Disney film head Dick Cook landed $500 million in film financing from China-based Film Carnival for his new family film production and distribution company.
While once again demonstrating China’s thirst for Hollywood content, Ford believes the deals between Tang Media Partners, Tencent, and IM Global is different from those earlier pacts. Under Ford, a former Miramax executive, IM Global has moved into television, music, and management. It sells foreign rights to movies, as well as gets involved in producing them. IM Global isn’t a studio in the traditional sense, Ford argues, it’s a content hub, that is aligned somewhere between the business’ traditional North American base and burgeoning foreign markets in Latin America and Asia that are fueling the entertainment industry’s growth.
“These investors have gotten their head around Hollywood content and production and they now understand and want to be a player in the global business,” said Ford. “They know that we understand the value of all sorts of content and how it fits into the growing spider web of digital distribution platforms globally.”
The other element of the pact that is unique is that Tencent, Tang Media Partners, and IM Global have reached one of the first television slate financing deals. Together they will back a series of primarily English-language programming that is designed for the global market. Slate deals have been commonplace on the film side for years, where the likes of Legendary and Relativity got their start backing a string of studio productions, but they are rare in the television business.
“It’s always hard to assess the impact of an innovation,” said Lindsay Conner, a partner at Manatt, Phelps & Phillips, who negotiated the deal. “If it succeeds, it will be replicated a number of times. These parties have created for the first time a co-financing structure on the TV side that could work.”
As part of the deal, Ford has signed a new five-year contract to remain as CEO and retains a minority stake in the company. In the past, IM Global has flirted with an initial public offering, and despite Tang’s investment, Ford said that remains an option. The company is focused on growth, he said, and will be looking for additional capital.
“This doesn’t preclude anything,” said Ford. “We have no fixed game plan in terms of liquidity events.”
“This gives us great momentum,” he adds.