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| The Daily Pitch |
| VC, PE and M&A |
| Your edge on global private capital markets |
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| PE sees opportunity in potential Warner Bros. Discovery breakup |
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| (Adriana Hansen/PitchBook News) |
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By Jacob Robbins, Technology Reporter
Paramount Skydance's loss could be private equity's gain.
After announcing it was putting itself up for sale in mid-October, Warner Bros. Discovery has reportedly given itself until Christmas to reach some kind of deal, CNBC reported.
The iconic Hollywood studio, whose properties also include HBO and CNN, has reportedly rebuffed Paramount Skydance three times. The David Ellison-run media conglomerate last offered to buy WBD for $23.50 per share in early October, according to The New York Times. That would have valued the company at around $58 billion—a 35% hike from the $43 billion Discovery paid AT&T in 2022.
But Warner Bros. thinks it can get a better deal—and it's entertaining all options. In an October statement, the company said it would explore a full buyout, the sale of part of its business, and a separation of Warner Bros. from Discovery.
Analysts and investors agree there are two scenarios in which PE buyers could succeed—neither of which involves buying the entire company.
While television viewing habits are changing rapidly, WBD's cable TV business has consistently generated the steady, contractually guaranteed income that PE firms love, in the form of advertising revenue and distribution fees.
For the last two years, WBD's cable ad revenue has remained steady at around $5 billion.
The company's IP portfolio is filled with iconic franchises, from Harry Potter to DC superheroes to Looney Tunes, which could be highly attractive to a buyer who can get comfortable with this somewhat intangible, hard-to-value asset.
WBD also owns several gaming studios, such as TT Games, which has long held licenses to develop Lego video game adaptations of properties like Harry Potter, The Lord of the Rings and Batman.
"There's this thesis that selling the parts off may drive more shareholder value in the end," said Alphonse Lordo, partner at Content Partners Capital, a PE firm that invests in entertainment IP. "Selling off some of those assets—some of which private equity likes a lot—makes complete sense." |
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• Just out: Our Q3 valuations data for public companies in the mobility tech sector sector. Get our analysts' report today
• Our analysts found cautious optimism at McDermott Will & Schulte's PE healthcare conference as valuation gaps narrow. Read the full recap
• The long-awaited M&A comeback might finally become a reality for the leveraged finance market, with leveraged loan activity picking up and more big-ticket deals on the horizon. Read more |
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| Pantera's recent token bets are the real portfolio winners |
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By Michael Bodley, Senior Venture Capital Reporter
Crypto-focused Pantera Capital has more recently generated the majority of its returns from betting early on digital tokens, as well as opportunistic deals, rather than from its traditional VC investments.
The skewed results underscore how stretched out venture capital's J-curve has become. And it highlights the industry's crypto-native strategy to displace traditional finance. |
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Pantera's $1.25 billion fourth fund, raised in 2021, has gained only $78 million from venture equity. Digital tokens with lock-up periods, meanwhile, contributed a $181 million gain, with "special opportunities" bringing in $431 million. Token and cryptocurrency trades, alongside digital asset treasury stakes, chipped in $239 million. The fund sits at more than $2.2 billion in AUM.
"What institutional investors want is to be in this space for a long time," said Paul Veradittakit, one of the firm's two managing partners. "[LPs] want to be in a venture fund where there's more than just traditional venture capital."
Pantera's later vehicles started blending startup investments, growth equity, token holdings and trading. The explosion of "initial coin offerings" around 2017 incited much of the industry's VCs to embrace—and even advocate for—digital tokens becoming an alternative to traditional equity.
And Pantera is taking this hybrid approach for its fifth fund, which has a $1 billion target, and held a first close Oct. 31.
"Now you have the ability to think of liquidity as a spectrum and being able to invest and allocate their bets on whatever the spectrum is—whether that's super-early or [late-stage]," said Fairmint CEO and co-founder Joris Delanoue.
The firm expects to see more IPOs in 2026, amid recent progress in US regulation.
"The risk-reward for investing in blockchain today is better than it has been in many years," said Cosmo Jiang, a Pantera GP and portfolio manager of its liquid strategy.
To take advantage of this environment, Pantera believes a multi-pronged strategy is the way to satisfy its investors.
"Ultimately, there will be a lot of value created on each side," Veradittakit said. "And thus, if you want to have optimal value in investing into crypto, you really do need to be in a fund that can provide access to both." |
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Smart reads that caught our eye.
• Novo Nordisk is confident about winning the bidding war for biotech Metsera despite lowering its own growth expectations. The Denmark-based company believes it can best Pfizer's offer for the obesity drug manufacturer. [CNBC]
• The world's richest man is getting $1 trillion richer via the largest corporate pay package ever. Tesla shareholders approved Elon Musk's latest massive pay deal after he threatened to quit his job as CEO. [The Financial Times]
• Meet Ruth Porat, the president and chief investment officer of Alphabet. From tinkering in the garage at 6 years old to a prominent rise in Silicon Valley, learn how Porat always made things work. [The Wall Street Journal] |
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