Kevin Mayer and Tom Stags have been in the media business long enough to resist the temptation to overreact to Netflix’s recent travels. Although their emerging investment firm, Candle Media, owns two major Netflix providers-Cockmelon Production company Munbagh Entertainment and Fauda Producer Fairway Road — They don’t seem too worried that Netflix could be overtaken by its perch. (And in press time, the previously unthinkable scene has become much, much better, more thought-provoking.)
“We’re still big believers in streaming, now and in the long run, as a whole,” Mayer said. “The addressable market is huge, and consumers expect the benefits of streaming and it continues to grow as demand grows.”
Netflix executives’ comments during the company’s recent quarterly report, which helped reduce the company’s value from $ 300 billion to $ 100 billion, “highlight the battle for customer acquisition and retention,” Stags said. Killer content is usually the answer to that challenge, he insists, is what drives their operations. “In fact, increasing competition and current economic headwinds actually underscore the importance of differentiated content,” Stags added. “And that’s exactly where we’re focusing on candles.”
Stags and Mayer worked together as senior executives at Disney for more than two decades before the company was founded last year with nearly $ 2 billion in support from private equity giant Blackstone. Maya sees this, their new venture has been “completely uninterrupted” so far.
At Disney, the early days of their tenure were marked by a memorable episode in the pre-streaming days of 2004. Under the direction of former CEO Bob Eger, they investigated the then-new theory of the proposed content “Long Tail” by magazine editor and author Chris Anderson. They have created a document called Disney 2015 which predicts that medium content will no longer be sustained by a marketplace bursting with new technology and well-defined audiences. They presented it during a board retreat in Orlando.
Both Stags and Mayer, who were seen as potential successors to Igar, helped engineer large transactions such as the acquisition of Marvel, Pixar, and Lucasfilm. Mayer’s race was highlighted by leading a strategic planning group and then launching Disney +. Stags was the CFO, COO and head of the theme park.
Mayer was passed for the top spot at Disney on behalf of Bob Chapek. The announcement of Chopek’s promotion reveals that Mayer is ending his decades-long Disney tenure as CEO of TikTok. But then, within three months, Mayer left the Chinese-origin social video platform along the way, amid increasing scrutiny by the Trump administration and constant threats of forced shutdowns in the United States, and Mayer became chairman of sports streaming outlet DAZN. Together, Mayer and Staggs preceded Candle with a special-purpose acquisition company, or SPAC. Despite being the victim of some ding by the once high-flying SPAC, the pair say they are still active, although candles are their priority. (Both names have been associated with Warner Bros. Discovery or even a possible top role at Disney, but they are unwaveringly focused on their new venture.)
They’re working around a different price than the days of Disney, but in a way that makes the rush more appealing. Most of the 21 acquired $ 71.3 billionSt. Century Fox, whom Mayer helped orchestrate, is several universes away from the sweet spot of the candle, but the reverse is so much more. The goal, as it is now, is to inject resources to identify an underestimated business and make it profitable. And the vibrant M&A market, especially as each player struggles with streaming transitions, means potential conversion deals are hidden in every corner.
Kendall bought Moonbagh last year for 3 billion, valued at $ 900 million in exchange for a significant stake in Ridge Witherspoon’s Hello Sunshine. Kendall also co-produced Westbrook, Will Smith and Jada Pinkett Smith.
Mayer and Stags see the potential for further growth in the companies they buy. Hello Sunshine is considering a kids entertainment portfolio, and features have been added to the Moonbag line. Blippy And Little Angel — the next is a YouTube network with 88 million subscribers.
Although Moonbag’s price tag surprised many casual observers, anyone with a pre-schooler entry Cockmelon Understands its magnetism. Seeing the huge impact of child rents on Disney, Mayer and Stags, the same dynamic is expected to pay dividends on a smaller scale (for now).
“Cockmelon Not only is it the largest YouTube channel, it was also the second most streamed program on Netflix last year, ”Mayer said. From Netflix’s point of view, “this level of popularity and frequent viewing makes it one of the most efficient programs in their service.”
The reason for following independent companies is simple, Mayer said. “Hollywood is now architectural because of the streaming service… everyone is vertically integrated. HBO Max can’t license from Disney and vice versa, and if you want to license content that you don’t have, or you don’t have the ability to create content because you have Apple TV +, you’ve got an individual to buy it, and this Demand for this specialty has grown significantly as a result of recent corporate scandals. “
Speaking of growth, by the end of 2021 the company’s staff consisted of just Mayer and Stags. Since then, it has brought in Salil Mehta as CFO and Brent Weinstein as chief development officer. Most recently, it hired seasoned executives Courtney Capa and Kendall Astro as SVP, Finance & Accounting, and SVP, Business Development & Community, respectively.
Where do you see the candles go from here? “We’re focused on both investing in the growth of our existing operations and making additional acquisitions that expand our business and brands,” Stags said.
The company’s latest deals include children’s property Little Angel, content business and community brand The Home Edit, and a social media storytelling company for ATTN, Gen Z and Millennials. On Tuesday, Deadline reported that Stags and Mayer had announced the acquisition of Spanish-language content powerhouse Excel Content Studio.
Stags sees two to three more deals in the near term, and although he was silent on where he would be, they praised the creator’s economy and ecommerce in addition to holding production already in a stable state. Linear TV networks, which generate substantial cash flows but are in the midst of a secular collapse, are less likely to join the portfolio.
Blackstone’s structure does not involve a traditional notion of veto power over potential investments, the top pair said, although the firm is Kendall’s largest shareholder. Keeping their investments moving forward and their overhead modest, Mayer and Stags say they are considering a public stock offer for the company, although there is no urgency or timeline for that effort.
And what if a few months after an investment the climate changes? Mayer did not hesitate to ask if Will Smith’s catastrophic Oscar-night slap on Chris Rock and what followed were the reason for any kind of reconsideration of Kendall’s Westbrook position. “We are committed to Westbrook and believe that the team will continue to build a strong broad-based content business there,” he said.
On a broader note, the M&A marketplace remains hot, but the economic context has been further discouraged, with rising interest rates, Russia’s aggression in Ukraine and new waves of supply chains and job losses on investors. “We expect that the valuation reset we have seen in the public market will be somewhat reflected in the private market valuation,” Mayer said. That trend is “definitely a positive one for us as a buyer in the near future.”
Candles are not just another passive investor. Mayer and Stags say the combined team of internal candle workers and the company they’re working for is about 400. “We see Kendall as an integrated company,” Mayer said, and the goal is to encourage collaboration. Many of the principals of the companies they invest in, including Witherspoon and Hello Sunshine CEO Sarah Harden, have joined Kendall’s board as a result of transactions.
“We want to find out, as I think we’ve already found some great companies where there’s some great leadership that we can position through scale, through capital, through coordination and some branding skills and really like them.” “But without a heavy hand in their creative vision or what they’re trying to achieve as an individual,” Stags said.
This is a well-known playbook for stags. “We’ve helped set up constructions that allow Pixar to improve inside Disney, allow Marvel to improve inside Disney, and allow Lucasfilm to do the same. So, we understand that structure and that classification. “