News that Propagate was acquiring Electus raised some eyebrows among industry insiders Tuesday morning as it was no secret that there was strain between Silverman and Electus CEO Chris Grant and COO Drew Buckley by the time Silverman left Electus in 2016 and joined Propagate shortly afterward. Silverman founded Electus in 2009 with backing from Barry Diller’s IAC, on the heels of his exit from NBC after a rocky two-year tenure as head of entertainment.
Silverman emphasized that Propagate jumped at a prime opportunity to grow its business once Electus went on the block. Buckley also downplayed the history of tension among the once-and-future partners.
“It’s business,” Silverman told Variety. “From my perspective I’m looking at it as the CEO of Propagate and does (Electus) bring value to our company. Can we be better positioned for the future and drive a more accelerated pipeline of production around the world. This deal does those things.”
Buckley noted that Silverman and Electus executives have been in steady contact even after Silverman’s departure because they remained in business together on numerous shows, notably CW’s “Jane the Virgin.” “The communication flow has always been there,” Buckley told Variety. “That never went away.”
Electus hired investment bank ACF to shop the company some months ago. As the process wound down, it became clear that Propagate was the most aggressive and willing to pay the highest price — said to be about $35 million, per a knowledgeable source — in part because Silverman knew the company and its assets so well. Entertainment One was also among the companies that was in the hunt for Electus.
Propagate swooped in late in the sale process and closed the deal inside of about four weeks, with executives working round the clock until the transaction was formally signed by all sides on Sunday night.
“I tried to remain analytical about it and not make it a personal thing,” Silverman said. “But I’d always been sad about losing my connection to that asset when I exited. The ability to go back into business with all of those people drove the speed of our deal.”
Electus brings to Propagate an international TV distribution arm, production banners including Notional (home of Food Network’s ubiquitous “Chopped” and other shows) and a majority interest in Artists First, the management-production company formerly known as Principato-Young Entertainment. Silverman noted that he tried to set up a deal to buy 3 Arts Entertainment when he was still at Electus because he saw the potential of being in the talent representation business at a time when artists have more avenues than ever to directly reach consumers, and thus to become brands unto themselves.
IAC’s reluctance to back the 3 Arts deal and other ventures that Silverman wanted to pursue was another factor in his exit from Electus, Silverman said. After landing at Propagate, Silverman’s relationship with Joe Ravitch at the Raine Group merchant bank helped bring to Propagate the kind of capital that allowed them to scoop up Electus. Propagate at present has a handful of shows percolating, including the CW’s revival of “Charmed,” Netflix’s docu-drama “Haunted” and Amazon’s “Lore.”
Bolting on Electus’ domestic production activity and international reach will help Propagate raise its profile as an alternative for the creative community to the enormous media companies shaping up amid a wave of consolidation in media at all levels. Electus will continue to operate as an autonomous entity under Grant and Buckley, just as Artists First will under the direction of CEO Peter Principato.
“The six or seven global behemoths have a lot of power and control over the market,” Silverman said. “It’s important to have scale as an independent, to make sure everyone treats you fairly.”
Buckley credited Silverman and Owens as “master packagers” who will undoubtedly generate compelling opportunities for the combined entity. Electus on its own has a slew of buzzy projects on deck for 2019, he said.
“Betting on great talent, storytellers and creatives is something we all believe in,” Buckley said. “There’s an entrepreneurial spirit that started with Ben that you will see a lot of.”
A larger question facing Propagate as it ramps up is how it will fare in the land of giants at a time when the biggest platforms are generally insisting on ownership of content as the price of getting on — and staying on — the air. Silverman acknowledged that the environment is tough for indies, which adds to the pressure to be creative in resourceful in putting together properties and deals.
“Each show is different,” he said. “We used to have a template for our deals that we would just send to networks. Now every single time you’re negotiating the deal from scratch. (Rights issues) depend on each individual project, and we have a system built to exploit those rights. As long as you have the ability to say ‘No’ you will eventually find your way to a deal.”
Moreover, Propagate is still in the market for acquisitions. The most important factor driving the willingness to invest in content is the demand for content. Even the largest platforms will be aggressive in chasing a hot show from an outside supplier.
“We’re bullet makers in their arms race,” Silverman said. “As long as we invest in the best content we will have the rights we need to make good deals. This is still a good business for independent producers.”
(Pictured: Ben Silverman, Drew Buckley)