“MEG” Investor Alignment Growth Buys Stake in Wheelhouse
RockWater Roundup
RockWater analysis to make you a better investor and operator. Today we discuss Alignment Growth’s minority investment in Wheelhouse, planned use of funds for M&A and talent recruitment, AG’s investment mandate, and why Wheelhouse should double down on unscripted productions.
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“MEG” investor Alignment Growth bought a minority stake in unscripted producer Wheelhouse.
The M&A and talent growth plan is simple, and compelling.
Let’s break it down…
👀WHEELHOUSE OVERVIEW
- Diversified prod and media co
- Sold 20 TV / streaming series in 2023
- Founded 2018 by unscripted vet Brent Montgomery
- Brent previously founded Leftfield Ent, sold to ITV in 2014 for > $360M
- Prod Co’s incl Spoke Studios, Campfire, Butternut, Wheelhouse UK, DNA
- Prod Partnerships w/ Jimmy Kimmel’s Kimmelot and Chef David Chang’s Majordomo Media
🔨WHEELHOUSE DIVISIONS
- Entertainment – Prod co comprised of 6 studios, focus on unscripted
- Wheelhouse Labs – brand mktg services incl social strategy, branded content, IM
- Wheelhouse DNA – digital arm incl podcasts, video strategy, talent mgmt co Additive Creative
- Houses – 4 event spaces in NY / LA
🏃♂️M&A + CAP MARKETS ACTIVITY
- Initially financed by Brent in 2018 via earnings from ITV sale, est in mid 8 figures
- Bought minority stake in branded content co Portal A in 2019
- Alignment investment is 1st outside funding round
🆙ALIGNMENT GROWTH
- Growth stage investor in media & entertainment, gaming, and “MEG enablers”
- Raised $360M in 2023
- Founded 2021 by Jeff Bewkes (former Time Warner CEO) and Kevin Tsujihara (former Warner Bros CEO)
- Adds ops / deal / strat experience to portfolio cos via Fortune 500 exec team experience
- Investments incl fever, build a rocket boy, crunchbase, spyglass media
💰INVESTMENT
- Minority stake
- Led by Alignment Growth
- AG partner Jeff Bewkes joins Wheelhouse board
- UOF: attract top industry talent, grow through M&A
🤔MY KEY TAKEAWAYS…
I believe this deal mandate and the growth opportunity is simple.
CEO Brent and his Wheelhouse team are some of the world’s best unscripted producers. They have a lot of momentum with buyers (20 sold shows in 2023!), and see the chance to work with bigger talent names, more often. This would allow WH to sell even more shows at higher budgets.
And to help increase their content throughput, they need more prod teams, and fast. To that end, there’s likely many production co’s who don’t have the buyer access that WH does, but have teams and capabilities that can be bought at good prices while the TV / streaming industries consolidate.
And now WH has the funds to execute against this 2-pronged strategy, and quickly. If they can stay focused in this lane, I think they’ll do quite well.
👆To the above point…
WH talks about also having talent “partner with one another across labels and divisions”. Curious what that specifically means. I get the theory of wanting to activate talent across productions, brand activations, social content, live events…but often that’s a throwaway phrase that sounds good for PR.
It seems the real money here is growing the unscripted production biz.
My guess is 90% of profit comes from the sale of unscripted series to TV / streaming. Unclear if the other biz lines are breakeven and / or what their path to profitability is. Would like to see those financials.
Makes me wonder how much longer those other divisions will be resourced by Wheelhouse. As I know from our own client strategy work, sometimes things look good on websites and in partner marketing materials. Or there are legacy divisions that have been around since company formation, but aren’t performing, aren’t aligned to current market, or just aren’t getting enough focus and support from leadership who’s focused on other biz segments.
That means it’s often best for company leadership to double down on what they’re good at, and to do so sooner vs later. That means removing distractions like non-core biz lines, and selling them off or shutting them down. Growth comes from ruthless focus.
Again, this is just speculation based on my industry experience, and I don’t have any operational details here. I’m just raising the questions and points that builders and capital allocators in our space should be thinking about.
📝NOTE: Biz lines include people, with livelihoods and families. And the creative and media industries are dealing with unprecedented disruption from AI, social media, et al. I don’t take that lightly, and always hope that non-core teams can find better-fit homes and roles to grow elsewhere.
Disclosures: I’ve hosted events at Wheelhouse space in LA, and RockWater has advised Portal A on various projects.
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I’m the founder of RockWater Industries. We do financial and strategy advisory for media, agencies, and creator economy. From M&A and fundraising to consumer research and go-to-market planning.
DM me on LinkedIn or email me chris @ wearerockwater dot com
