A Media Company Has Many Values
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Written by
Stephen Kerr, Bel Age Medias, LLC
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Written by
Stephen Kerr, Bel Age Medias, LLC
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February 2024
– 5 MINUTE READ (700 words) –
– 5 MINUTE READ (700 words) –
Our firm has been valuing film and television content libraries and companies for more than 25 years, and the job has become increasingly more challenging because the business of distributing media has evolved so much.
→ There are no "easy rules of thumb" when it comes down to setting a value on a film or TV library, nor a distributor.
Likewise, there are no simple multiples on revenues, historical sales, nor profits that are remotely accurate. The Fair Market Value* of any media enterprise is derived from a deep dive into the company’s growth prospects (or lack thereof), their profit-making ability, and the quality of their media offerings.
Four factors that add value to any distributor or content library:
Four factors that add value to any distributor or content library:
- Owning the content;
- New releases of proprietary titles;
- Growing international distribution; and
- Gross margins above 40%.
→ Adding tons of non-proprietary content at low margins will not increase the value of the business.
Our firm has been providing How to Buy, Sell or Value a Film Distributor seminars and articles since the 1990’s. Back then most companies were run in a similar fashion to their competitors. They were distinguished mostly by the quality and marketability of their catalogs. Today, the landscape for media distributors has changed – radically. Rarely do companies pay advances. Many still amalgamate their content from film festivals and producer relationships, but other distributors now license as much digital content as they can (at lower margins) to supply the insatiable appetites of AVOD and FAST channels.
Almost all the companies, that we know, are now a hybrid film distributor, producer, and FAST channel operator. Whether their content is theatrical, classic, documentary, or educational - most “home media” distributors today are highly diversified.
Almost all the companies, that we know, are now a hybrid film distributor, producer, and FAST channel operator. Whether their content is theatrical, classic, documentary, or educational - most “home media” distributors today are highly diversified.
→ Being “highly diversified” makes valuing film and television distribution businesses even more difficult.
Because we are not valuing just one business, we are assessing the value of their distribution, productions, proprietary channels, and organization separately. Only then can we determine an accurate value of the entire enterprise. As we have often stated, most companies do not have just one value. The truth is, they have many separate values that make up the whole. Our recent M&A assignments have shown us that many buyers only want part (or most) of a company they seek to acquire or merge with. There are often other parts, or side-businesses, that the buyer does not need nor want.
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