SBD/January 3, 2014/FinancePrint All
Skeptics in Hollywood believe WME and Silver Lake "vastly overpaid" for IMG, while some "predict a massive learning curve" for WME co-CEOs Ari Emanuel and Patrick Whitesell as they "grapple with more than a dozen businesses in 30-plus countries," according to Sun & Masters of the HOLLYWOOD REPORTER. Rivals argue the combined WME-IMG "will be burdened" by as much as $1B in debt, which means $100M "a year could go to debt service." Further, a competitor predicts that Silver Lake "will pressure Emanuel and Whitesell to get the business in shape for a public offering during the next few years -- a daunting task." A rival source said, "You'd have to grow the company very aggressively to set it up for an IPO. That's a very difficult thing to do in (a few) years while you're integrating these companies." Still, Sun & Masters note the IMG deal, if it closes in the spring as expected, "leapfrogs WME over longtime rival CAA in terms of size and scope." Some "top talent has cashed in, thanks to the acquisition." IMG employees "are said to have been held to raises of no more than 2 percent for the past three years as the company has been readied for a sale." Now, some "might be eager to make more money, while others could fear for their jobs as WME seeks to eliminate redundancies." A WME source said that Emanuel and Whitesell "intend to let top IMG managers run their businesses while they handle existing clients and sign new ones" (HOLLYWOOD REPORTER, 1/10 issue).