Welcome back to What I’m Hearing, a little early tonight because I’m heading out of town. (No, not to Comic-Con—please be serious.) I’m off next week for real, so Kim Masters will be here Monday, then Eriq Gardner in his usual Tuesday spot, and Scott Mendelson on Thursday. See you in August, just in time for the WarnerMount courtroom drama.

Tonight, we finally have a buyer for the talent firm formerly known as Wasserman—and it’s not who you expect. Plus: Comcast’s parks problem, new evidence of sports swallowing entertainment, and how Sony finally got the Cinerama Dome (with a cameo from Spielberg).

Discussed in this issue: Casey Wasserman, Brad Pitt, Ted Sarandos, Adam Aron, David Ellison, Sean Diffley, Tom Rothman, Davis Noell, Brian Roberts, Chappell Roan, Ari Emanuel, Ravi Ahuja, Mike Watts, Michael Kustermann, Ben Steinberg, Sean Goodman, Blair Westlake, Mike Cavanagh, Jay Levine, François-Henri Pinault, Ghislaine Maxwell, Abby Wambach, Sydney Sweeney, Mark Shapiro, Josh D’Amaro, and… “anti-fragile entertainment assets.”

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Let’s begin…

Thursday Thoughts...

How the Cinerama Dome deal went down: I’m sure Netflix co-C.E.O. Ted Sarandos has enjoyed the optics for the past six years of an abandoned grand movie palace sitting directly around the corner of Sunset and Vine from the bustling headquarters of the digital television service that took down theaters. But now, thanks to Sony Pictures, whose film chief Tom Rothman famously screamed “Netflix, my ass!” onstage at CinemaCon (before licensing his movies to the service for billions of dollars), the Cinerama Dome will be back in 2028. No snark here—this is genuinely great news.

I’m told that Sony Pictures C.E.O. Ravi Ahuja was actually looking at leasing the Dome property before he bought the 40-location Alamo Drafthouse chain in 2024, similar to how Disney has the El Capitan theater on Hollywood Boulevard, Netflix owns the Egyptian down the street (and leases the Paris, in New York), and Amazon has the Culver Theater. It’s all part of the streamer-less Sony’s push into experiential businesses, like investing in Cosm, the home of immersive screening venues. Sony wants unique experiences in urban markets that can showcase the company’s I.P.—for a price (so no theme parks or water parks). Ahuja, strategy guru Jay Levine, and Alamo chief Michael Kustermann kept after the Forman family, which owns the Dome property but had failed to reach deals with other suitors like AMC despite the grassroots effort by L.A. actor and movie enthusiast Ben Steinberg to shame them into doing so. Finally, the Sony/Alamo team convinced the Forman reps at Robertson Properties Group to hand over a 10-to-15-year lease on the property and its 14-screen multiplex, which will be run by Alamo. And Rothman got to call Steven Spielberg to ask for his blessing to use Close Encounters one-sheets and archival photos from Columbia Pictures’s 1977 premiere at the Dome to signal its revival. Spielberg was thrilled to give permission.
Speaking of theatrical…: My guy Adam Aron at AMC has been trumpeting the best quarterly earnings in the 106-year history of the company, “making the naysayers irrelevant,” and even hosting his long-suffering debtholders at the world’s least glamorous screening of The Odyssey on Monday in New York. But while the stock price might be up, company C.F.O. Sean Goodman noted during the earnings call that attendance was still down 26 percent from 2019, and actual box office revenue was off 7.5 percent against that 2019 benchmark. So AMC’s “resurgence” is largely due to cost-cutting, closing more than 200 theaters, and raising prices. (And $100 million a year in popcorn buckets, apparently.) “It’s a story about a structurally smaller, more concentrated exhibition footprint monetizing a shrinking customer base more efficiently,” the media executive and strategist Blair Westlake wrote.

Which isn’t necessarily bad. Theaters have adjusted their business to accommodate lower demand. But the studio costs haven’t declined; if anything, movie production budgets have gone up since 2019. “Studios don’t get the benefit of exhibitor cost cuts,” Westlake added. “Their P&L is exposed directly to the top-line box office number, which is still below pre-pandemic levels in real dollars and dramatically below on a per-capita/attendance basis.”
As if Brian Roberts doesn’t have enough problems…: The Comcast co-C.E.O. finally got Peacock into the black this quarter, to the tune of $189 million, thanks to the trifecta of the NBA playoffs, World Cup (on Telemundo), and Love Island USA. But what caught my eye was the company’s 5 percent dip in theme parks profit and a warning of “softening” attendance, a trend co-C.E.O. Mike Cavanagh says has continued into the summer. Parks, as you know, have been the reliable savior lately for NBCUniversal and especially Disney, which reports numbers August 5. Disney’s more devoted fan base allows it to better manage attendance via annual passholders. (Last year, for example, the mid-tier pass was blocked out during the summer. This year, it isn’t.) But the last thing either of these companies needs amid layoffs and the upcoming NBCUniversal split is a parks problem.
Box office over/under: No wide release tomorrow, so let’s bet on the second-weekend domestic drop for Universal’s The Odyssey. Given the strong midweek business and Imax presales, let’s put the line at a 40 percent decline from last weekend’s $124 million, and I’ll take the under.

Now on to Wasserman and the sports boom…

Wasserman’s Buyout & The Allure of Athlete-Adjacent Media

Months after agreeing to sell his talent and marketing firm amid an Epstein-adjacent email scandal, Casey Wasserman is getting a massive payout as a new Morgan Stanley ranking shows just how powerful live events are becoming in the entertainment landscape.

Matthew Belloni

Get excited, we finally have a winner in the monthslong auction of the sports and talent agency formerly known as Wasserman, and it’s… maybe the least sexy of all the suitors. Per two sources familiar, Providence Equity Partners, the P.E. firm that already owns 60 percent of Wasserman (now called The Team), is finalizing a deal to buy out founder Casey Wasserman and take full control of the company.

The deal, which I’m told hasn’t been signed and won’t close for a few weeks, values The Team at about $3.4 billion. That’s a touch higher than the $3 billion estimate cited by most media outlets, but with the company on track for $215 million in adjusted EBITDA this year, the multiple would be only slightly higher than the $7 billion CAA transaction in 2023, when private equity firm TPG sold its controlling stake in that agency to billionaire François-Henri Pinault. (Disclosure: TPG is an investor in Puck.)

So despite all the speculation and conspiracy theories, Casey will indeed walk away from management of his company six months after apologizing for exchanging racy emails nearly 25 years ago with Jeffrey Epstein associate Ghislaine Maxwell. Remember, the uproar over Wasserman, also the chair of the LA28 Olympics, led clients Chappell Roan and Abby Wambach to announce their exits. Wasserman then committed to offloading all or his share of the Westwood-based company, which includes a sports and music agency, a lucrative marketing unit, and the Brillstein talent management firm that reps Brad Pitt and Sydney Sweeney.

Interesting that this deal ended up with Providence. As I’ve reported, there were about a dozen serious bidders, including UTA and the P.E. firms Permira and New Mountain Capital. But during the process, run by the Moelis investment bank, Wasserman insisted on a sky-high valuation and additional go-away money in exchange for a noncompete agreement. UTA and others fell out, and during that time, Providence’s point guy, Davis Noell, began wondering why they were bringing in another partner to co-control the company, especially at a time when there are so many opportunities in sports. So Providence reconsidered selling The Team and eventually decided to double down. I’m told Casey has indeed agreed to the noncompete.

“Who Has the Audience?”

Wasserman’s sale, though forced upon him, may have been particularly well-timed. Outside of the cooling documentary market, sports-related entertainment businesses are hot, driven by higher TV and streaming ratings for most leagues and the shift in content spend away from entertainment (as every out-of-work screenwriter and actor knows). The UFC extracted $7.7 billion over seven years from Paramount, the NFL’s Seattle Seahawks just sold for $9.6 billion, and many of the same favorable economics of the major leagues apply to their athletes. Wasserman and the other sports agency owners would never say this publicly, but betting on their companies is essentially buying an index fund tied to the sports leagues. These days, who wouldn’t want that?

I was chatting about this topic recently with Sean Diffley, an analyst at Morgan Stanley who created a new system for stock-picking called the “MS Media Matrix.” It’s a ranking of publicly traded entertainment companies based on their assets and ability to generate attention, and thus profits, in the modern media landscape. Diffley’s team looks at each firm’s audience and engagement, their “interactivity” (stuff you do rather than passively watch), the “urgency” of the content, pricing power, I.P., and A.I. positioning, and then compares these strengths and weaknesses to the companies’ relative share price. They use the Matrix to recommend stocks.

The theory goes that if generative A.I. fully democratizes content—meaning anyone can make anything at any time on the cheap—some traditional media companies will benefit (he calls them “anti-fragile entertainment assets”) while others will retreat. And the ones that benefit will likely own more live competitions and out-of-home entertainment assets than their peers. “One thing we believe strongly is that in an increasingly fragmented and distracted world, nothing captures viewer attention more than sports and live events, which carry urgency, unpredictability, and a sense of communal participation that reflect and shape the culture,” Diffley wrote to clients a few months ago.

The Media Matrix ranking is a bit similar to the “Attention 20” list of the largest attention-grabbing companies published by Owl & Co., or what Ari Emanuel and Mark Shapiro have talked about as the thesis behind TKO, which owns UFC and WWE, and their Mari holding company, which is gobbling up experiential businesses like the Miami Open and the Frieze art fairs. They’re betting that consumers will enjoy both extra time and money to spend on experiences in the A.I. economy. Diffley noted that the average American’s leisure time has been stuck at between four and five hours per day for the past 20 years, but A.I. automation could add 30 to 45 extra minutes a day to that total.

How will it be spent? Likely with some kind of entertainment, either digital or I.R.L. “Who has the audience?” Diffley asked me, describing his metrics for the ranking. “Who has the engagement? Who has the path to more interactivity with their characters? Do you own your I.P. or are you renting your I.P.? And [what is your] A.I. positioning?” (As Bill Cohan likes to say, this is not investment advice.)

Ranking Media Companies in the Battle for Attention

To that end, Formula 1 tops the Morgan Stanley ranking. It’s clearly not the biggest player, or the most influential, but it earned the highest average score based on “strong” ratings in nearly all categories, thanks to growing demand for its I.P. and product. “When we did this analysis, Formula 1 kinda checked every box,” Diffley added, noting that the company trades at a heavy discount to the aggregate value of each of its teams. Among the top five are the concert promoter Live Nation, of course, and TKO. Disney and Netflix are there, too—Disney because of its I.P., theme park cash-extraction machine, and the ESPN sports portfolio; and Netflix because of its dominant (though vulnerable) lead in engagement, and a stock price way down from its recent highs.

According to Diffley, Disney is strong not just because of parks and cruises but also the plan laid out by its new C.E.O., Josh D’Amaro, to turn Disney+ into a digital hub for A.I.-empowered interaction with the company’s characters. “We ask, who has the raw ingredients—the characters, the I.P.—but also has the distribution mechanisms to break through?” Diffley told me. The combined Paramount/Warner Discovery is also in the top 15, and Diffley liked C.E.O. David Ellison’s recent comments about his daughter’s love for Skye from Paw Patrol, and how Paramount+ should host a “customized learning solution” based on the show. “That’s actually the most interesting A.I. winner plus interactivity with your I.P. that I’ve heard articulated by a media executive,” Diffley said.

Presumably, Wasserman’s company—or, now former company—would make a strong showing in Diffley’s system if it were public, though The Team, like all the agencies, is still a service business. That direction will now be up to Mike Watts, the company’s current president, who is expected to stay on under Providence. As for Casey, I’m betting his next move, either before or after the Olympics, is sports team ownership.

See you next Monday,
Matt

Maya Tribbitt contributed research for today’s issue.

Got a question, comment, complaint, or guesses on who will replace Nicole Kidman in ‘Days of Thunder 2’? Email me at Matt@puck.news or call/text me at 310-804-3198.

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