VALUING FILM & TELEVISION DISTRIBUTORS IN 2024

A Media Company Has Many Values

~~~~~~~~~~~~~
Written by
Stephen Kerr, Bel Age Medias, LLC
******************************************

February 2024

– 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:

1.  Owning the content;
2. New releases of proprietary titles; 
3. Growing international distribution; and 
4. 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.
​

→ 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. 
​

→ As a seller, one must consider the needs and motivations of the buyers. 

Just because a company has revenue, profits, and a sustainable organization – it does not mean they represent an attractive acquisition that will obtain a lofty valuation. Each suitor approaches their acquisitions with an organization, culture, financial resources, and a reputation that is unique to them.  While the content might be a good match - the culture, customer base, and systems of the seller may not. 
​

→ As appraisers and investment bankers, we must take all of this into account.

Historically, Bel Age Medias has found that companies with homogeneous content offerings, a solid distribution base, and a motivated organization are valued higher than companies with an eclectic catalog, patchy distribution network, or a fragile organization.
​

→ Looking through the lens of just the seller will not get one to a proper valuation. 

We have always maintained that the value of any company must be viewed in a holistic manner. Where the seller’s wants and needs coincide with the buyer’s needs and motivation.  If the buyer perceives that their organization can generate higher revenue and profits than the seller currently enjoys – then they will often offer a higher price for that company.
​

→ Valuing film distributors and their assets today requires research and a deep understanding of media industry trends.

​Unfortunately, many media company owners create a fantasy valuation of their business, based solely on their desire for a high valuation.  But this fanciful thinking benefits no one. It is often a waste of time for the seller, the buyer, us, and a roadblock to getting a fair and equitable transaction closed. 
​

→ The value of most media companies today is really a basket of sub-valuations that - taken together - represent the true Fair Market Value of the entire business.

___________________________________
*Fair market value is the price a business, property or other asset would sell for in an open and competitive market where the buyer and seller have adequate information of relevant facts, a reasonable time to complete a deal, are under no compulsion, are acting in their own interests and mutually agree on the price. 

---

ABOUT: Stephen J. Kerr – Bel Age Medias, LLC / Business Marketing Consultants – specialize in Corporate / Film & Television Valuations, Mergers & Acquisitions, Business Plans, Investment Profiles, and Exit Strategies, as well as a broad range of other Investment Banking services.  
Alongside his partner – Sarah Nean Bruce – Bel Age Medias Revives Underperforming IP, Rebuilds Brands, Creates Financial Projections, Syndicates New & Legacy Streaming Content, and Helps Emerging Media Companies Prosper. https://belagemedias.com

Special Thanks to Craig Sussman, Bill Sondheim, Igor Princ, and Philip Hopkins for their input and suggestions for this article. 
​

Categories: #content #distribution #valuations