First, we saw my friends at WeWork hold back their IPO. Next, Peloton took their shot and tumbled right out of the gate. Then, top-tier talent agency William Morris / Endeavor had to pump the breaks on their IPO plans for a second time in 10 months.I’ve been watching this closely and Friday I was called on to share my thoughts with Yahoo! Finance. You can watch the clip here.
In regards to Peloton, I believe they rushed to market. They’re currently being sued by the entire recorded music industry over the fact that they don’t have licenses for all of the songs they’re playing. To go public without having that in place — while ripping off artists and labels — doesn’t feel right to me and clearly doesn’t feel right to the investor market either. Man, I hate when companies devalue music. What would Peloton be without the songs?
In terms of Endeavor’s IPO, I think it’s genius. This has been Ari Emanuel and Patrick Whitesell’s master plan for many years and I believe they’re doing it for two reasons. First, to future-proof their business. I know from experience that a talent agency does not represent the pinnacle of business security. The big question in talent management is not if you’re going to get fired, it’s when. On top of that, you can’t really raise money and build a big brand as a talent agency, so WME smartly shifted to a platform model and started merging and acquiring properties to bulk up their offering and make it more attractive for the public marketers.
But they’ve run into some obstacles. I go deep on their IPO delays here. The main issue is that the talent is their primary revenue stream. I understand that the entertainment business is built on conflict of interest, but who does the senior leadership team have a fiduciary responsibility to? The shareholders or the artists? If you were an artist, would you want your representation focused on you or their stock price?
These are questions WME will need to answer as they wind up for a third swing. If they pull it off, which I believe they will, their place as the most powerful players in Hollywood…and maybe of all time, will be cemented. Chess not checkers, etc.