Ryman Hospitality Properties, the Nashville-based parent company of the Grand Ole Opry, has struck a deal to sell a 30% stake in its entertainment operations to investment firm Atairos and NBCUniversal.
The transaction values Ryman Hospitality’s Opry Entertainment Group unit at about $1.4 billion in total. Atairos and NBCUniversal will invest approximately $293 million in Opry Entertainment Group (OEG), which consists of the weekly “Grand Ole Opry” stage show and media rights, Nashville’s famed Ryman Auditorium, the legendary Nashville radio station WSM-AM and a 50% stake in TV channel Circle, the streaming home of “Grand Ole Opry.” The pact calls for Atairos to invest another $30 million in OEG down the road if certain performance targets are met.
The deal amounts to a sky-high valuation of 17 to 18 times OEG’s projected 2022 adjusted earnings before interest, taxes, appreciation and amortization of $80 million-$88 million. And that is a sign of the feverish M&A marketplace for sui generis IP assets. From its debut in 1925 on WSM, “Grand Ole Opry’s” role in establishing country music as an American art form cannot be overstated. OEG’s vault includes 11,000 hours of “Grand Ole Opry” content, among other shows that adhere to what Ryman executives call the “country lifestyle” audience.
Circle launched in 2020 as a joint venture with Atlanta-based Gray Television. The channel has broad national distribution as a digital multicast network and as an ad-supporting streaming channel carried by Peacock, Roku and Samsung TV Plus, among others. It’s also carried as a traditional cable channel carried by select MVPDs.
The agreement with Atairos, which is headed by former Comcast chief financial officer Michael Angelakis, and NBCUniversal came about after Ryman Hospitality executives began fielding call after call of prospective buyers for the assets.
Colin Reed, Ryman Hospitality chairman and CEO, said the company was not interested in an outright sale, but knew that there was more to be done in media.
“We knew there were lots of organizations out there that can help bring the expertise to the table that we lack to help us grow,” Reed told Variety.
Ryman Hospitality’s core business is running large hotels and convention centers. But through its ownership of the Ryman Auditorium, executives realized the company was able to craft unique offerings for artists and fans alike. Ryman Hospitality was also motivated to change the structure of the OEG group because the parent firm operates as a real estate investment trust (or a REIT), which use far different accounting standards for recognizing revenue and earnings than media companies. Now, OEG will have more flexibility to operate as a traditional entertainment venture.
“We are very focused on ways in which we can accelerate the connection between the artist and the consumer,” Reed said. “We wanted to find a partner that shared the same vision for this company to be a global leader in country lifestyle and live entertainment.”
The OEG assets involved in the deal also encompass Ole Red, Ryman Hospitality’s growing line of restaurant and clubs run as a joint venture with country superstar Blake Shelton. At present there are five Ole Red locations, including outposts in Nashville and Orlando, Fla. Also in the deal is Block 21, an entertainment and retail complex in Austin, Tex., that Ryman Hospitality is in the process of acquiring for about $260 million.
“OEG’s dynamic collection of entertainment venues, digital content and iconic country music brands provide a strong foundation for continued growth as a fully-integrated country lifestyle platform,” said Atairos chairman-CEO Angelakis. “We are excited to partner with the [Ryman Hospitality] and OEG teams to explore new content distribution strategies and support their ambition of becoming the leading player in country lifestyle live entertainment and media content.”
Ryman Hospitality chief Reed will serve as executive chairman of OEG in addition to remaining chairman and CEO of Ryman Hospitality. Atairos partners Alex Evans and Jackson Phillips will join OEG’s board of directors, which will be comprised of four Ryman Hospitality directors and two Atairos reps. Atairos is a partner with NBCUniversal and receives much of its investment capital from NBCUniversal parent Comcast. Atairos is putting in $278 million while NBCU will invest up to $15 million.
“We look forward to exploring opportunities to leverage our media, technology and content creation expertise to help OEG accelerate its plans and bring its iconic brands, as well as artists and storied cities, to music lovers worldwide,” said David Pietrycha, executive VP of strategy and business development for NBCUniversal.
Ryman Hospitality began the process of searching for a strategic partner last year. Executives had a series of rapid-fire meetings with suitors over a three-month period. In time it became clear that Atairos and NBCU were in the pole position in terms of bringing enormous strategic advantages to a company that is tiny in the scheme of Big Media these days. Comcast’s ownership of the Sky satellite platform in the U.K. and Europe could be a huge boon to Circle and other assets. The U.K. in particular is a prime target for OEG’s country lifestyle target demo.
“They see potential for continued growth,” said Mark Fioravanti, president of Ryman Hospitality. “The fact is we’re focused on a segment of the consumer that is dramatically underserved. The brands we have are irreplaceable. They’re synonymous with country music and important part of music history. All those factors combined led to (Atairos and NBCU’s) viewpoint on the tremendous value we have to unlock.”
Reed emphasized that the influx of capital will be used to expand the content and distribution of Circle and it will also allow OEG to hunt for more star-driven partnerships such as the Ole Red venture with Shelton. In all, Ryman Hospitality will receive gross transaction proceeds of $593 million, including a new $300 million loan secured by the OEG assets. The proceeds will be used in part to pay off existing debt to ease pressure on the balance sheet of Ryman Hospitality.
“We’re looking at the potential growth of more theaters to put the artist in the center of brands like Ole Red,” Reed said. “We’re looking for new content that we can put on the Circle platform and to build better distribution and affiliation with advertisers.”
For Ryman Hospitality Properties, Morgan Stanley served as financial advisor; Bass, Berry & Sims PLC served as legal advisor and Skadden Arps served as tax counsel. Moelis & Co. was financial advisor to Atairos while Davis Polk & Wardwell was legal advisor.