STX Entertainment, Studio Behind Hustlers And Bad Moms, Sold For $173 Million
Another day, another big media sale in Hollywood. This time, it's STX Entertainment, the studio behind movies like "Hustlers" and "Bad Moms," which has been sold to a private investment firm. This mean's the studio's library of titles will likely be changing hands next year, and that could put an attractive selection of movies in play for a streaming service, or multiple streaming services. Perhaps more importantly, the fate of one of the only studios still regularly producing mid-budget movies regularly now hangs in the balance.
According to The Hollywood Reporter, private investment firm The Najafi Companies for is set to acquire STX Entertainment for $173 million. This, rather importantly, includes $148 million in debt that STX has on the books. Eros International had previously, and only for a relatively brief time, owned the company. Eros is known primarily for its huge library of Bollywood titles and had been looking to bolster its Hollywood offerings by owning STX. That deal was completed in July 2020, making for a very short-term merger. The deal is expected to close by January 2022.
Jahm Najafi, founder and CEO of The Najafi Companies, had this to say following the deal's announcement:
"This is a complicated, international public company carve-out transaction, and after countless hours over the past several months, we are thrilled to announce this new chapter with STX. First and foremost, we believe in the power of storytelling and fostering an entertainment studio that is artist-friendly and supportive of storytellers."
Lots of Moving Parts, Lots In Play
As I have discussed quite a bit recently, media mergers are becoming a big thing right now in Hollywood, as streaming services in particular are in desperate need of content. As such, anyone with a library of attractive titles to sell comes with a higher-than-usual value. Some recent examples include Amazon purchasing MGM for more than $8 billion, Netflix's purchase of the Roald Dahl company, and "Alvin and the Chipmunks" looking for a buyer for a surprising $300 million. Many other similar deals are either in the works or have closed.
STX was founded in 2014 and has a library of films that have grossed $1.5 billion at the box office. Some of the studio's bigger hits include "Hustlers" ($150 million box office), Guy Ritchie's "The Gentlemen ($113 million), and "Bad Moms" ($180 million). Some other notable titles from STX include "Den of Thieves," "The Boy," "The Edge of Seventeen," "The Happytime Murders," and "21 Bridges." Unfortunately, the studio suffered some massive flops as of late, such as "UglyDolls" and "Playmobil: The Movie."
Flops aside, Najafi will be in control of a library that may well be attractive to a streaming service. They could potentially license the whole library exclusively to one streamer, or just pick and choose their battles, collecting licensing fees on a case-by-case basis. But the library has value. However, the deal includes termination possibilities from both parties. Eros can field potentially better offers from other suitors now that the deal has been made public. Or, Najafi, for whatever reason, could opt not to complete the deal. A $4.5 million termination fee would be due should either scenario come about.
All signs point to this one heading in the right direction though, and that could be a good thing. STX makes mid-budget movies that might not have a home at a big studio. If they can find a way to keep making those sorts of movies, it is good for both filmmakers and moviegoers alike.