03.06.13 | 03:59PM PT - http://variety.com/2013/tv/news
Financial News Editor
Deal with Goldman Sachs said to be worth about $400 million
Marking its largest deal to date, entertainment finance firm Content Partners has acquired Goldman Sachs' 50% stake in CBS' blockbuster franchise "CSI."
CBS owns the other half of the three skeins — "CSI," "CSI: Miami" and "CSI: NY" — and the Eye controls all domestic and international distribution rights. CBS has aggressive exploited the series in the subscription VOD market, and domestic syndication deals and international licensing have made all three shows hugely profitable since the first "CSI" debuted in 2000.
Content Partners was one of a handful of suitors for the asset back in December when bids came in around $400 million, according to sources close to the deal. The contenders for the asset are believed to have included investment firm Fortress, private equity firm Thomas Lee Partners and private equity firm Blackstone.
Goldman first began shopping its "CSI" stake last year (Daily Variety, Nov. 29). The investment bank has owned a 50% interest in the shows since 2007, when it inherited them through its acquisition of former "CSI" co-producer Alliance Atlantis.
The entire "CSI" library contains 724 one-hour episodes (and counting) that are on the air in more than 200 countries. Flagship "CSI" is currently in its 13th season, while "CSI: New York" is currently in its ninth. "CSI: Miami" wrapped its 10-season run last year.
CBS' deal for "CSI: Miami" is seen as a template for the other two series. The eye inked a lucrative pact with Netflix last year that encompasses all 232 episodes of the show. All three "CSI" series have been ratings smashes in overseas markets as well.
Disney's Touchstone TV first developed the original "CSI" through its pact with Jerry Bruckheimer, although the Mouse House famously backed out of the show in the summer of 2000, shortly before it preemed on CBS. As a profit participant and not an owner, Bruckheimer will not be affected by the "CSI" sale.
Stakes in top franchises don't come up for sale often. That, coupled with the enormous growth in the international marketplace, has made the "CSI" sale a unique opportunity for outside investors. Since CBS retains all distribution rights, Content Partners' interest will be purely passive.
That fits with the company's business model of buying assets with reliable cashflows and entrenched distributors. Content Partners buys out profit participation stakes held by individuals and companies, giving them a way to cash out backend stakes otherwise designed to pay off over time. Content Partners aggregates those disparate stakes into a single investment portfolio and currently has interests in 119 films and five television series, acquired from various actors, writers, directors and other financial participants in those properties.
The "CSI" sale also represents how sophisticated investors have become at evaluating the long-term potential of top-shelf assets. Buy buying profit participation stakes at a discount, Content Partners give itself a long-term royalty generating asset.
"CBS has one of the industry's best distribution platforms, and has made a strong commitment to aggressively distributing and leveraging the CSI franchise across all media," said Steven H. Kram, president and CEO of Content Partners. "Content distribution channels, both traditional and digital, are rapidly expanding and as developing countries come on line, distribution of CSI will continue to grow."
Backed by Todd Wagner and Mark Cuban, Content Partners was formed in 2006 by Kram, a former WMA exec veep and chief operating, and former Brillstein-Grey chief financial officer Steven Blume.
LionTree Advisors worked as advisors for Content Partners on the "CSI" deal, while Bank of America Merrill Lynch and JP Morgan provided financing. Allen Matkins Leck Gamble Mallory and Natsis repped Content Partners while Akin Gump Strauss Hauer and Feld repped Bank of America Merrill Lynch. Content Partners' co-chairman of the board Paul Wachter was also instrumental in finalizing the transaction.