Media firm Endeavor reviewing ‘strategic alternatives,’ could go private again

US talent and media giant Endeavor has said it will begin evaluating “strategic alternatives” as it seeks to address what it calls a “dislocation” between its market value and the “intrinsic” value of its underlying assets.

Ari Emanuel

It did not expand on the specific strategic alternatives it is examining, but it ruled out selling its interest in TKO Group Holdings, the publicly traded entity formed last month from the merger of World Wrestling Entertainment (WWE) and the Ultimate Fighting Championship.

While Endeavor did not discuss potential outcomes of the review, technology investment firm Silver Lake, which owns around 71% of the voting power of the company, issued a separate statement stating it is considering taking Endeavor private.

“Silver Lake is committed to strategies that deliver value for all shareholders of Endeavor. To that end, Silver Lake is currently working toward making a proposal to take Endeavor private,” it said.

Over the past six months, Endeavor’s stock price has fallen by more than 30%, from US$25.50 to US$17.72 per share. Execs including CEO Ari Emanuel have made no secret of their belief the firm is undervalued. Meanwhile, TKO’s stock price has fallen from over US$100 per share to around US$78 since the new entity launched last month.

In contrast, Endeavor’s rival Creative Arts Agency (CAA) was recently majority-acquired by Artémis, the company led by French businessman François Pinault, in a deal valuing CAA at around US$7bn.

“Given the continued dislocation between Endeavor’s public market value and the intrinsic value of Endeavor’s underlying assets, we believe an evaluation of strategic alternatives is a prudent approach to ensure we are maximising value for our shareholders,” said Emanuel.

Endeavor, which also owns talent agencies WME and IMG, did not set a timetable for the completion of the strategic review process and said it would not necessarily result in any specific outcome. The stock rose in after-hours trading following the announcement of the strategic review.

The decision to look at alternatives comes two-and-a-half years after Endeavor went public. In the time since, it has made several major moves, including acquiring the WWE earlier this year and divesting of its majority stake in the scripted operations of Endeavor Content (later renamed Fifth Season).

Like all companies in the content space, Endeavor has felt the pinch of the writers and actors’ strike in the US, with Emanuel saying in July that the company’s revenue was taking a US$25m hit each month as a result of the strikes.

The news comes two weeks before Endeavor is scheduled to report its third-quarter earnings results. However, it is unlikely to give any more information during the quarterly conference call as Endeavor said it does not intend to comment further on the review process “until it determines disclosure is necessary or advisable.”