i
CERTAIN TERMS
When used throughout this Annual Report on Form 10-K, references to:
ii
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements in this Annual Report that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predicts,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Annual Report may include, for example, statements about:
The forward-looking statements contained in this Annual Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our Prospectus. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
iii
part I
General
We are a blank check company incorporated as a Delaware corporation whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. While we may pursue an initial business combination target in any business, industry or geographic location, we intend to search globally for target companies within the M&E industry with a primary focus on the United States, and in particular on identifying attractive targets among content studios and film production, family entertainment, animation, music, gaming, e-sports, talent management, talent-facing brands and businesses.
Overview
The COVID-19 pandemic catalyzed immense and dramatic power shifts in the vast, interconnected M&E industry, which surged to $2.2 trillion in global revenues in 2021 and is expected to reach $2.6 trillion by 2025 according to a 2021 report by PricewaterhouseCoopers.1 A clear driver of change in this space has been the new potential of AI-based technologies plus the evolution of digital consumption, especially as a result of the COVID-19 pandemic, as a sustained revenue driver existing alongside traditional media consumption channels. Consumers’ embrace of the new ecosystem helped offset revenue declines due to pandemic-related closures and has created heightened growth opportunities for media & entertainment companies.
As a result, our management team believes a number of strong and growing M&E businesses are now in a position where capital and expertise are needed to achieve their full growth potential. While some M&E business have turned to consolidation, others are seeking capital and scale through alternative means that maintain independence from larger conglomerates. This includes, for instance, celebrity-owned studios and production houses with robust content pipelines seeking enhanced scale; new media entities (e.g., podcast, music rights and IP aggregators, e-sports) looking for capital to continue their growth trajectory; undervalued talent-facing companies with solid business fundamentals, such as large agencies and PR firms; and non-traditional business divisions, such as virtual reality or animated digital production houses, trapped within traditional media companies.
Business Strategy
We believe that our team has desirable attributes to potential targets in the M&E space. Our team is a multi-cultural, multi-ethnic mixture of seasoned public-company executives, Hollywood insiders, media operators, media investors, and individuals with ample public markets and M&A experience. Our team has demonstrated an extensive track record of successful acquisitions, value creation, and value enhancement in media & entertainment industry and has access to proprietary opportunities globally that can be leveraged to drive value. Our team’s proprietary connections include touchpoints to, for example, celebrity-owned studios and brands, family entertainment media, animation, talent management, and music, including direct relationships with many celebrities.
Our team’s track record extends to successful experiences negotiating deals with numerous studios, franchises, agencies, distributors and streamers, as well as experience working directly with talent and production studios, navigating M&E companies through acquisition transactions (as both acquiror and acquiree), expanding product ranges for existing businesses, and providing strategic guidance to develop revenue and commercial opportunities.
Furthermore, we believe our team’s diversity is especially attractive to prospective M&E targets and a key competitive advantage to achieving higher value. The U.S. M&E sector is one of the least diverse of all industries, with 92% of film executives, for instance, being white, according to a 2021 McKinsey & Company report. The same report found this has translated into substantial loses for the industry, with an estimated minimum $10 billion in revenue lost due to a lack of representation.2
Given the wealth of data supporting the reality that diverse teams outperform non-diverse counterparts, our diverse management team represents a core advantage for our company; we believe our team’s diversity will make us more attractive to M&E targets, both in terms of addressing diversity gaps and in terms of helping prospective targets achieve higher returns once public.
Management Team
Our management team has a long history of value creation in the private and public markets, with a strong track record of creating value for stockholders including through acquiring and operating successful businesses within our target sectors. In particular, many of the companies our team has invested in or operated have been affiliated with celebrity partners, and several members of our team have become trusted partners with celebrities and business owners. We believe this unique network of relationships and extensive experience sourcing and executing transactions will enhance our ability to complete a successful business combination and accelerate the growth trajectory and profitability of the acquired business post-business combination.
We believe that we are well positioned to identify attractive acquisition opportunities in the M&E industry, in particular because our team will utilize their access to industry contacts and proprietary deal flow to generate business combination opportunities. We believe that our team’s networks in particular will broaden our access to potential transaction opportunities outside typical competitive deal sourcing intermediaries. Our team is well-connected in our target sectors and, as such we have the opportunity to be potential targets’ preferred partner for opportunities that they might think are appropriate for a SPAC acquisition. Illustrative networks, for instance, include the networks and accolades of Mr. Hertz, Mr. Yada, and Mr. Melendez.
Mr. Hertz, who is an independent director on our Board and chair of our Executive Committee and our Compensation Committee, works closely with the Smith Family Circle and is a director and co-founder of JUST Goods, Inc., as well as an advisor to the largest shareholder of the Smith Family’s marquee media and branded products company, Westbrook Inc. Mr. Hertz is also a Senior Partner in the Los Angeles law firm of Hertz Lichtenstein Young & Polk LLP, which represents some of the most prominent talent, entrepreneurs, agencies and brands in the entertainment, fashion, sports, media, and technology. Prior to joining the firm, Mr. Hertz oversaw music – business and legal affairs – for The Walt Disney Company. Mr. Hertz is also a principal in memBrain – an entertainment marketing and strategy consulting firm. memBrain advises numerous Fortune 500 and emerging ventures in various industries, such as Hasbro, McDonald’s, Intel, UBS, the NY Islanders, and Logitech.
Kosaku Yada and Miguel Melendez, who serve as our strategic advisors, are also deeply integrated with several media companies and celebrity circles. Mr. Yada is the CEO and a co-founder of Westbrook Inc., as well as a director for the Smith Family Circle, Founding CEO of the Smith Family Circle, a director of JUST Goods, Inc., and Managing Partner at Dreamers VC. Mr. Melendez is also a Westbrook Inc. co-founder, as well as a co-founder of Just Water and a partner in Three Six Zero Entertainment. He has been a talent and business management executive for over three decades, during which time he has established and guided the careers of numerous recording artists and international pop acts, including Academy Award and Grammy Award winner Jennifer Hudson, Grammy Award winning artist Robin Thicke and Teddy Riley’s Blackstreet. Mr. Melendez’s creative partnerships have also produced a variety of successful content in both television and film including the Emmy Award winning Facebook Watch series, Red Table Talk, the critically acclaimed TNT series Hawthorne, and the Queen Latifah Talk Show for CBS.
The networks and experiences of our other members are discussed in more detail in Part III, Item 10 (Directors, Executive Officers and Corporate Governance), and we believe each individual member of our team features a comparably strong mixture of experiences and networks which we feel constitutes a strong advantage to successfully consummating a deal. The Chair of our Board, Mr. Turner, for example, was formerly Chair of the Board of Microvision, Inc. (NASDAQ: MVIS), a public company in the LIDAR space, and is currently the company’s Audit Committee chair. He has served on numerous public and private companies boards of directors as well. Mr. Turner was the Chief Financial Officer of Coinstar Inc. from 2003 until June 2009 and was CFO when the company acquired Redbox. He also previously served as Senior Vice President of Operations, Chief Financial Officer, and Treasurer of Real Networks, Inc., a digital media and technology company.