Kevin Mayer shook off the “appreciation haters” and offered insight into the grand investment strategy behind his burgeoning entertainment startup Candle Media Wednesday during a performance at the APOS media summit in Singapore.
“We didn’t pay too much for Hello Sunshine,” Mayer said bluntly, defending his company, which he runs with Tom Staggs, from ongoing criticism. Hello Sunshine, founded by Reese Witherspoon and bought by Candle Media last year for about $900 million, “will be a big winner,” Mayer insisted, explaining how the acquisition fits into his company’s broader strategy. Candle Media’s vision, he noted, is the product of his experience at — or near — the pinnacle of both Disney and TikTok.
At Disney, Mayer’s last major assignment was the development and launch of Disney+, the company’s vertically integrated direct-to-consumer platform. While other major entertainment platforms followed Disney’s lead by withdrawing their content into “walled gardens,” Mayer says he realized that the value of high-quality content created by independent studios looking to sell it was only going to increase — and all that.” One supplier would be a pillar of Candle’s approach.
During his brief tenure as CEO of TikTok, Mayer gained an insight that would serve as another strategic rationale for Candle’s approach. He said he was surprised at the amount of trading taking place on TikTok’s parallel Chinese service Douyin, mainly through live streaming and asynchronous e-commerce capabilities. “Why did that happen? Because the dynamics and the trust and the energy that is created between a brand or influencer and their followers is quite remarkably strong, especially if it is a very authentic connection,” he explained. and very easy to transact e-commerce – and that’s going to happen more in the West.”
Mayer said Hello Sunshine had the three main components that he and Staggs look for when targeting acquisitions: a well-defined audience with a strong social media presence (Reese Witherspoon, plus a mission of content made for women, by women), the ability to create premium film and television to enter the market, plus underlying potential for e-commerce.
As an example, Mayer cited the Hello Sunshine home improvement show Get organized with the Home Edit, which is streamed on Netflix, but started out as a book and series of home organization products, but now features a slew of branded items available in the Container Store. “So we have a big social media presence with the founders of Editing the house and Reese Witherspoon, traditional film and television with the Netflix show, and now the underlying commerce,” Mayer said. “So that’s a really great flywheel.”
Mayer said a similar rationale was behind Candle Media’s $3 billion acquisition of children’s entertainment company Moonbug Animation, home of the CoComelon franchise, which has YouTube’s second-largest subscriber base (140 million). has spawned a hugely popular Netflix series, and “licensing and merchandising opportunities that are incredible.”
When asked how Candle Media values its acquisition targets and the remarkably high prices it has paid, Mayer said, “You have to look at the cash-generating potential under your ownership, and it should be worth more under your ownership than it is.” on an independent basis.”
“There are always value haters,” he added, noting that many analysts and investors initially mocked Disney’s $7.4 billion deal for Pixar and $4 billion acquisition of Marvel.
Just as Disney did with those acquisitions, Mayer said he strives to give the creators behind the content companies he buys the freedom and space to create freely, while centralizing their infrastructure and monetization under Candle Media. “That gives us more presence in the market with the buyers – Netflix or Amazon Prime or Apple TV. … We go to these buyers with a portfolio of things to buy, and that creates a lot of momentum in the market.”
As Candle looks at its next acquisitions, Mayer said he believes:Asia will be a very fertile place for us to buy assets.” He said he and his partners are looking for media, technology and entertainment companies with ‘that flywheel’ capability, “and Asia is a place where we think there’s great potential for that, especially when you think about the dynamics.” of commerce and social media. ”
Mayer also said he wasn’t bothered by the “great Netflix fix” of 2022 and the threat it could pose to Candle Media’s strategy pillar of producing movie and TV content to sell to top dollar streamers. . “Even with Netflix stumbling — and I think that’s a bit of an exaggeration — it’s still growing. And even if [Netflix] I don’t know how many tens of billions of dollars are spent on content purchases and investments made by the streaming services around the world. Candle Media is still quite small in comparison, so we have a huge runway for growth as an independent content provider of premium television content.”