Financial Pressures Ratcheting Up For Endeavor After Calling Off IPO
Endeavor is "likely to face a host of financial pressures" after deciding to call off its IPO last week, and company CEO Ari Emanuel will be the one to "navigate the challenges to come," according to a front-page piece by Stacy Perman of the L.A. TIMES. Emanuel's dream is to make Endeavor into a "global entertainment juggernaut," and the IPO was "intended to help fuel its ascent." The cash would have "helped chip away" at its $4.6B debt while "funding future acquisitions." Endeavor could "return to the market if conditions change." In the meantime, however, "access to capital will become more difficult." The company may have to "spin off some of its assets." It must "fend off the Writers' Guild's objections to packaging and affiliate production, two lucrative business models for the company." Endeavor's top execs and star agents, who have been "enticed with promises of the payout an IPO could bring, could become poaching targets for rival firms." And the company will have to "come up with a better way to sell investors on what it was offering" (L.A. TIMES, 9/30).
MURKY FUTURE: NBC NEWS' Dylan Byers wrote Endeavor's failure to go public "raises questions about what the debt-saddled" company plans to do with its "grab-bag of assets." Endeavor Exec Chair Patrick Whitesell and Emanuel's decision to "pull the IPO wasn't just due to weak market conditions, as they have implied." It was a sign that the "fundamental value of Endeavor isn't as clear as Emanuel, the consummate salesman, tries to make it out to be." Endeavor's $4.6B in debt also comes with $7.2B in "total liabilities." However, this "isn't to say that Emanuel and Whitesell aren't holding on to some strong assets." UFC, which Endeavor bought for $4B in '16, "may now be worth" around $7B (NBCNEWS.com, 9/30).
ANGER IN THE OFFICE: The HOLLYWOOD REPORTER's Paul Bond noted one description of the feeling among WME employees after word spread that their parent company Endeavor shelved its IPO was "shock and sadness." A source said that there was "at least one audible gasp of 'Holy shit!'" in a hallway at WME's HQ. A general feeling of "deflation and anger permeated the sleek office space." A source said that Emanuel, Whitesell and other top execs "didn't sufficiently explain the debt, or plans to reduce it, during Endeavor's roadshow, especially since boasting that a chunk of the IPO money would be used to acquire more assets." Observers also suggest that Endeavor was "too bold by seeking up to $32 a share for 19 million of them before ratcheting it down to as low as $26 for 15 million shares, especially when large IPOs like Uber and Peloton have stumbled out of the gate" (HOLLYWOODREPORTER.com, 9/28).