Insights

Hello Sunshine and Media's Valuation Frenzy

6 August, 2021
Big Little Lies

It’s a sellers market in the entertainment industry right now, and there’s no better example of how lucrative the possibilities are right now than Hello Sunshine’s $900 million sale. 

Hello Sunshine is Reese Witherspoon’s digital production company. It’s best known for producing series like The Morning Show for Apple TV+, Big Little Lies for HBO Max, and Little Fires Everywhere for Hulu, but there are also plenty of digital originals on platforms like YouTube and others.

Focusing on women-led series and films, and providing a platform for emerging talent, Hello Sunshine quickly found its place as a content supplier in Hollywood — with data to back up the team’s insight into what audiences want. 

Now, Hello Sunshine is valued at $900 million ($500 million has actually been paid out thus far), and is the first production company under a new Blackstone-backed company overseen by two former Disney executives, Tom Staggs and Kevin Mayer. 

Of the four TV series that Hello Sunshine has produced for major US and global streaming services, all four demonstrated outstanding demand over the course of their first seasons, respectively. Big Little Lies and Little Fires Everywhere saw the highest demand, peaking at nearly 40x the average daily demand of other global series. 

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As part of a new company, Hello Sunshine will create slates of content for companies looking to beef up their original offerings to potential and current subscribers. Having a Big Little Lies or a Morning Show may be what brings in prospective but hesitant subscribers or convinces someone to stick around. 

With 18 Emmy nominations, and top talent both in front of and behind the camera, Hello Sunshine leverages co-founder Reese Witherspoon’s relationships and experience to create the type of dramas that audiences connect with across several different networks and platforms. She’s not the only one, though. 

As content spend across networks and companies increases to keep up with new competition, high profile production companies, studios, and individuals are seeing massive rises in valuation for their suite of brands. A24 and LeBron James’ SpringHill productions are just two other examples of companies reportedly looking for a buyer, jumping on a moment of increased valuation for content producers. 

What Staggs and Mayer are buying, and what other companies are looking to buy with similar acquisitions, is the promise of potential based on proven demand for established series. The bet is that Hello Sunshine will continue to create the type of shows and movies that big streamers and other distribution partners will want to spend a decent chunk of change on. It's still a bet right now, though; like many business ventures, it might not pan out.

This week, celebrity chef Gordon Ramsey signed a  reportedly lucrative deal with Fox to create a Fox-backed production company, Studio Ramsay Global, that “will develop, produce and distribute unscripted programming focused on food and lifestyle for Fox, its free streaming service Tubi and other platforms. The new entity will acquire all of Studio Ramsay’s current TV business,” according to The Hollywood Reporter

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Not only have many of Ramsay’s original series spun off successful international versions around the world, including Hell’s Kitchen, but they remain some of the most in-demand shows amongst competition and cooking reality series. Even non-Ramsay originals, like his version of MasterChef, have remained global giants. MasterChef (US) was one of the 10 most in-demand food and competition shows globally between May 6th and August 3rd. 

Trying to create franchises that audiences flock to, that travel internationally, that can spin out into several new shows, or that boast top level talent who bring in intrigued viewers, is hard. Partnering with people who have those relationships (like Hello Sunshine) or who exist as a brand unto themselves (like Gordon Ramsay and beloved independent movie studio A24) is key for bigger players in the entertainment space, including conglomerates with their own streaming services. 

Perhaps the bigger question, if content is so highly sought out and massive corporations are willing to spend hundreds of millions of dollars (and then some) on acquisitions, what’s in it for talent? Why sell an entire company or create an entirely new arm when individual projects can be sold to different partners, but creators, studios, and production houses can remain independent? 

The most obvious answer is that it’s a good time to sell because valuations “are crazy,” as one analyst told Variety, who added “we’re at a time and place where there’s so much money chasing content right now. And that money has to find a home.” The level of spending right now on TV series and content in general is unprecedented, and the future as bright as it looks is still uncertain. Being a creator of high profile or prestigious series, or having a treasure trove of well regarded brands, at this exact moment in time, creates a perfect selling position — especially if revenue generated thus far isn't anywhere close to the valuation.

There’s a never ending, voracious appetite for new series, an undying demand for spectacular new entertainment, and a few corporations looking to outdo the competition by grabbing as many of those exclusive titles as they can. Hello Sunshine and Studio Ramsay Global are the first big, talent-led ventures to get massive financial backing from larger companies, but they’re far from the last. 

The biggest unknown from the buyer’s side of the equation is whether taking a bet on star power, and the connections they have, will actually pay off in the long run. It’s not just whether Hello Sunshine can create in-demand content that Staggs and Meyer’s can sell; it’s betting on Reese Witherspoon becoming the next Oprah or Martha Stewart, and profiting from any ventures that spring up next. 

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