Why is Endeavor Going Public?

Photo Courtesy of the Associated Press

Endeavor, otherwise known as WME (William Morris Endeavor), Endeavor Content, and the owners of Miss Universe and the Ultimate Fighting Championship (UFC), is pursuing an initial public offering (IPO) through the United States Securities and Exchange Commission (SEC).  The IPO and company value is set to create a market capitalization of $8 billion for Endeavor, a stunning figure for a company that started as a talent agency and break off of agents from William Morris and the Creative Artists Agency’s (CAA).  The IPO is also likely the first of its kind for any talent agency.

According to The Hollywood Reporter, “The company reported $551 million in earnings before interest, taxes, depreciation and amortization last year.  For the six months ended June 30, Endeavor posted revenue of $2.1 billion, up from $1.5 billion in the same period of 2018, according to Monday’s filing.  The company’s loss for the six-month period narrowed to $192.6 million from $404.5 million.”

For a little background, an IPO is where a company seeks investors to put money into the company by purchasing stock.  The investors then become stockholders and owners.  Depending on the amount and type of stock held by the stockholder, the person can become very influential and make a significant return on their investment if the company performs well.  The Endeavor stock, which is expected to be traded as “EDR” on the New York Stock Exchange, will begin the IPO purchase period at a value of $30-32 per share. 

Why is Endeavor pursuing this path towards an IPO?

1. Endeavor is no longer just an agency

In addition to the companies mentioned above, Endeavor also owns IMG, Professional Bull Riders (PBR), Zuffa, ELeague (in a joint deal with Turner Broadcasting for esports), Euroleague Basketball, Bloom, and has investments and partnerships from Tencent, Softbank, and Fidelity.  The digital video technology company NeuLion is also owned by Endeavor.  Endeavor’s move to become a publicly traded company is part diversification, part accepting the reality of what the talent agency has become, an entertainment, media, and sports conglomerate that works with talent and owns the platforms where content can be produced and distributed. 

2. Endeavor wants to be first

CAA is also a valuable company, and has sought and obtained several outside investments, but its asset portfolio is not as diverse as Endeavor’s.  Endeavor, CAA’s main competitor, has gone well beyond talent agency work and has really become a much larger and more diverse entertainment and sports company.  CAA has mostly stuck to talent agency work, with both companies adding a lot more sports clientele over the past five years.  

As the actor Jeremy Irons said in the movie Margin Call (2011) about the 2008 housing crisis based on loose mortgagees, “There are three ways to make a living in this business: be first, be smarter, or cheat.”  Irons goes on to explain that although he believes many in his boardroom are smart, and he does not cheat, so it is a lot easier to just be first.  Endeavor is following that line of thinking as part of its strategy to build more equity into the company, by being the first talent agency to go public before another similar company, like CAA, can beat them to the proverbial punch.    

3. Endeavor wants to be more than a talent agency

Until the United States Justice Department intervenes, Endeavor will continue to push and influence its way into the space beyond talent representation.  Famously, the Paramount case forbid studios from holding the contracts for talent, controlling the production studio, and the theaters for distribution.  However, again the line between talent agency and production studio with control over distribution is consistently blurring and Endeavor as a business is not the largest area for concern.  The power streamers like Netflix and Amazon, with Hulu, Disney+, Apple+, and HBOMax all seem to be blurring the lines more consistently between industry and control.  Some may say the Golden Age of Hollywood occurred when studios had more control.  Others, not so much.

Endeavor is in for an IPO payday and its sights on progression only look to be growing in and beyond Hollywood.            

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