WME parent company Endeavor suffered a $303.5 million (€281.6m) net loss in the first quarter of 2024, despite “brisk demand for our sports and entertainment content, live events, and premium experiences”.

The Los Angeles-based sports and entertainment giant today (9 May) announced financial results for Q1, as it awaits the completion of Silver Lake’s $13bn acquisition.

While the firm reported a consolidated revenue of $1.850bn, three of its four segments saw a decline in revenue.

Representation revenue was $345.3m for the quarter, down $4.9m or 1.4% compared to the first quarter of 2023, though the loss was “partially offset by growth in WME’s music, talent, sports, and comedy divisions”.  Adjusted EBITDA was $65.2m, down $19m or 22.6% year-over-year.

WME’s roster includes Justin Timberlake, Adele, Bruno Mars, Pearl Jam, The Killers, Bjork, Foo Fighters, Stormzy, St Vincent, Shakira and Snoop Dogg among others.

“We remain focused on maintaining our momentum through the year while working toward the close of our transaction with Silver Lake”

In addition to WME, Endeavor is also the parent company of sports booking outfit IMG, events business On Location, marketing agency 160over90 and sports data and technology properties IMG Arena and OpenBet.

The firm’s Events, Experiences & Rights segment revenue was $744.9m for the quarter – down $55.9m or 7% compared to the first quarter of 2023 – and was “primarily impacted by a decrease of $90m from the sale of IMG Academy in June 2023”.

The Sports Data & Technology segment revenue was also down, collecting $90.7 m for the quarter, a decrease of $10.1m or 10.1%, compared to the first quarter of 2023. The firm says this was primarily impacted by the loss of certain data rights at IMG ARENA.

However, Owned Sports Properties segment revenue was $685.4m for the quarter, up $332.1m or 94.0%, compared to the first quarter of 2023. The increase in revenue was mainly attributed to the acquisition of WWE in September 2023, which contributed $317m in revenue during the first quarter.

The earnings report is likely to be one of the company’s last as a public company, as the firm is expected to be acquired by majority shareholder Silver Lake by the end of the first quarter of 2025.

In today’s results, Endeavor CEO Ari Emanuel said: “We remain focused on maintaining our momentum through the year while working toward the close of our take-private transaction with Silver Lake.”

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WME parent company Endeavor will be acquired by majority shareholder Silver Lake in a deal valued at $13 billion.

Endeavor, a Los Angeles-based sports and entertainment giant, has publicly traded as “EDR” on the New York Stock Exchange since April 2021.

Last year, private equity company Silver Lake (which also owns shares in TEG and Oak View Group) announced its intention to take Endeavor private, causing the share price to surge by 25%.

The Silicon Valley-based PE firm yesterday (2 April) confirmed it will acquire all outstanding shares, with Endeavor stockholders receiving $27.50 per share.

Endeavor is also the parent company of sports booking outfit IMG, events business On Location, marketing agency 160over90 and sports data and technology properties IMG Arena and OpenBet.

TKO Group Holdings, Endeavor’s publicly listed company consisting of UFC (Ultimate Fighting Championship) and WWE (World Wrestling Entertainment), is not included in the $13 bn deal.

“Since 2012, Endeavor’s strategic partnership with Silver Lake and Egon Durban have been central to our evolution into the global sports and entertainment leader we are today,” says Ariel Emanuel, CEO of Endeavor.

“We have built and grown Endeavor from $350m in annual revenue when we first invested in 2012 to nearly $6 bn in consolidated revenue today”

“We believe this transaction will maximize value for all of Endeavor’s public stockholders and are excited to continue to unlock and invest in the growth opportunities ahead as a private company.”

Egon Durban, Co-CEO and Managing Partner of Silver Lake, and Chairman of the Board of Endeavor, said: “Our unwavering belief in Ari and Patrick, together with Mark and other talented leaders at Endeavor, has never been stronger. This is a very special partnership.

“Together, we have built and grown Endeavor from $350 million in annual revenue when we first invested in 2012 to nearly $6 billion in consolidated revenue today. Now, Endeavor can take advantage of its unique core platform to meet the dynamic forces driving growth in content, sports, and live events with bold vision. Consistent with our mission and underscored by this commitment being among the largest in Silver Lake’s history, we are all in on working with the Endeavor team and our trusted anchor investors to create value by accelerating growth at scale.”

Silver Lake made its initial investment in WME in 2012. In late 2013, it bought fashion and sports-focused talent agency IMG for $2.4 billion and rolled up both acquisitions into WME-IMG. The mega-agency was rebranded as Endeavor in 2017.

WME’s music roster includes Justin Timberlake, Adele, Bruno Mars, Pearl Jam, The Killers and Foo Fighters, among others.

Earlier this year, Silver Lake, which also has interests in City Football Group and Madison Square Garden Sports, secured a A$1.1 billion (€663.8 million) dividend recapitalisation for Australian live entertainment giant TEG after attempts to sell the company reportedly stalled.

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Shares in WME’s parent company Endeavor have soared after global investment giant Silver Lake revealed it was working towards a proposal to take the business private.

The disclosure by Silver Lake, which holds a 71% stake in the sports and entertainment firm, came after Endeavor confirmed it was looking at “strategic alternatives” that better value the company.

Endeavor went public two-and-a-half years ago but TBI Vision reports its share price had almost halved from a near $35 peak in December 2021 to $17.72 before surging 25% in the wake of yesterday’s announcements. Silicon Valley-based Silver Lake also owns shares in TEG, Oak View Group, City Football Group and Madison Square Garden Sports.

“Silver Lake is committed to strategies that deliver value for all shareholders of Endeavor,” reads a statement from the private equity firm. “To that end, Silver Lake is currently working toward making a proposal to take Endeavor private. Silver Lake firmly believes in Endeavor’s business and is not interested in selling its shares in Endeavor to a third-party nor in entertaining bids for assets that are a part of Endeavor.

“Silver Lake is the owner of approximately 71% of the voting power of Endeavor. Our co-chief executive officer, Egon Durban, and our managing director, Stephen Evans, serve as members of the Executive Committee of the Board of Directors of Endeavor. Silver Lake has been a committed investor since 2012 and has made significant investments in Endeavor since then to support its growth.”

“We believe an evaluation of strategic alternatives is a prudent approach to ensure we are maximising value for our shareholder”

In addition to WME, Endeavor is also the parent company of sports booking outfit IMG, events business On Location, marketing agency 160over90 and sports data and technology properties IMG Arena and OpenBet.

Endeavor clarifies that it is not considering “the sale or disposition of the company’s interest” in TKO Group Holdings, the new publicly listed company consisting of UFC (Ultimate Fighting Championship) and WWE (World Wrestling Entertainment).

“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 Endeavor CEO Ariel Emanuel.

WME-IMG – the mega-agency formed by the 2013 merger of music/media agency William Morris Endeavor and International Management Group – rebranded as Endeavor in 2017. WME‘s music roster includes Justin Timberlake, Adele, Bruno Mars, Pearl Jam, The Killers and Foo Fighters, among others.

Artémis, an investment firm led by billionaire French businessman Francois-Henri Pinault, acquired TPG’s majority stake in WME rival Creative Artists Agency (CAA) last month in a deal that reportedly valued CAA at $7 billion.

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Endeavor says live music is “on fire” after the WME parent company posted revenue of $1.436 billion (€1.3bn) for the second quarter of 2023.

Net income hit $666.5m and adjusted EBITDA was $304.9m, while Q2 revenue for Endeavor’s representation segment was $381.1 million, up 6.5% on the same period in 2022, with year-over-year growth across all four reporting segments.

WME, whose roster includes Justin Timberlake, Adele, Bruno Mars, Pearl Jam, The Killers, Bjork, Foo Fighters, Stormzy, St Vincent, Shakira and Snoop Dogg, is having its “best year for music touring”, according to CEO Ari Emanuel.

“Broadway is coming back strong, comedy tours are selling out and we’re having our best year for music touring,” Emanuel told investors during the firm’s Q2 earnings call. “In country music in particular, more than 100 WME clients participated in nearly 200 performance slots throughout CMA Fest Week in June.”

Meanwhile, the $1.25bn sale of its IMG Academy business has allowed the company to begin share buybacks of up to $300 million of Class A common stock in the third quarter.

Emanuel also delivered an update on TKO Group Holdings, the new publicly listed company consisting of UFC (Ultimate Fighting Championship) and WWE (World Wrestling Entertainment), saying the deal is expected to close in mid-to-late September 2023.

“We delivered solid results this quarter at Endeavor and are closing in on the launch of TKO Group Holdings”

“We delivered solid results this quarter at Endeavor and are closing in on the launch of TKO Group Holdings,” he says. “Our share repurchase plan and dividend payment initiatives will begin in the third quarter, and we remain focused on maintaining prudent capital allocation and delivering long term sustainable growth for the company.”

Elsewhere, Endeavor CFO Jason Lublin estimated the Hollywood writers’ dispute would cost the company $25m a month in revenue.

“This is the first time in 63 years both WGA and SAG-AFTRA are striking simultaneously,” he said. “We currently estimate the strikes will adversely impact our revenue by approximately $25 million per month on average, which largely flows through to adjusted EBITDA.

“However, without knowing the scope, duration and shape of the eventual recovery, especially given that the SAG-AFTRA strike is a relatively new development, having taken effect only on July 14, it would be premature to speculate the aggregate dollar impact for the balance of the calendar year.”

Cash and cash equivalents totalled $1.616bn compared to $718.7m at 31 March, 2023, while total debt was $5.110bn at 30 June 2023, compared to $5.151 billion at 31 March 2023.

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UTA CEO and co-founder Jeremy Zimmer has issued a company-wide memo asking agents to “support the boycott of Kanye West,” according to Variety.

The 23 October memo, titled Rise of Anti-Semitism and Hate, follows an antisemitic rally in Los Angeles on the weekend, sparked by the rapper.

“As a company, we stand for a wide diversity of voices and ideas; But we can’t support hate speech, bigotry or anti-semitism,” Zimmer wrote. “Please support the boycott of Kanye West. Powerful voices spewing hatred have frequently driven people to do hateful things.”

On Saturday (22 October), Antisemites took to a Los Angeles freeway overpass to express their support of the rapper, who posted anti-Jewish slurs on social media. Also on Sunday, fliers were reportedly distributed around Brentwood identifying entertainment executives as “Jewish”.

“I’m saddened to write that once again we’re seeing a surge in anti-Semitism in our communities, fueled by Kanye’s comments and a resulting in an incident in Los Angeles yesterday where hateful banners were placed over the 405 freeway,” wrote Zimmer.

“Regrettably, anti-Semitism, racism and many forms of hate and intolerance are part of the fabric of society. Generally, they live as a plague eroding the health of communities and are combatted by understanding, tolerance and the general goodness of most people.

“But throughout history some have used their public platform to spew the plague out loud and spread the contagion to dangerous effect. Kanye is the latest to do so, and we’re seeing how his words embolden others to amplify their vile beliefs. I’ve also seen copies of horribly anti-Semitic flyers left this weekend on the doorsteps of homes in LA neighborhoods, showing that the 405 banners are not the end of it.

“Those who continue to do business with West are giving his misguided hate an audience”

“Equally worrying is what is happening on college campuses, where concern and debate about Zionism becomes veiled anti-Semitism. Wellesley College recently has been at the epicenter of this dilemma. The Wellesley newspaper recently supported a mapping project showing the nearby Jewish owned businesses, and suggesting that they be boycotted. The assumption being that because they are owned by Jews, they must be anti-Palestine. This is the kind of dangerous thinking that can lead to inflaming anti-Semitism and hate, and there have been examples of it at other schools.

“Whether it’s signs on the 405 in Los Angeles, flyers on doorsteps, mapping Jewish businesses in Boston, or marching with hoods and crosses, all of these behaviors ignite the embers of bigotry, and they must not be tolerated.

“As a company we stand for a wide diversity of voices and ideas. But we can’t support hate speech, bigotry or anti-semitism. Please support the boycott of Kanye West. Powerful voices spewing hatred have frequently driven people to do hateful things. Let’s not be lulled into thinking this time it’s different,” he concludes.

Elsewhere, Ari Emanuel, CEO of WME parent company Endeavor, recently penned an op-ed for the Financial Times calling on West’s business partners – such as Apple, Spotify, Adidas and his touring partners – to stop working with him.

“West is not just any person — he is a pop culture icon with millions of fans around the world,” Emanuel wrote. “And among them are young people whose views are still being formed. This is why it is necessary for all of us to speak out. Hatred and anti-Semitism should have no place in our society, no matter how much money is at stake.”

“Those who continue to do business with West are giving his misguided hate an audience,” Emanuel added. “There should be no tolerance anywhere for West’s anti-Semitism. This is a moment in history where the stakes are high and being open about our values, and living them, is essential. Silence and inaction are not an option.”

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Powerhouse agency WME is expecting a boom period for the company as live entertainment resumes, with bookings well above where they were even in the pre-coronavirus era, CEO Ari Emanuel has said.

Speaking yesterday (16 August) during parent company Endeavor’s Q2 2021 earnings call, Emanuel, who took Endeavor public earlier this year, explained: “Our WME bookings for the second half of 2021 are double digits over where they were at the same point in 2019, the most recent non-Covid-impacted year.”

Endeavor CFO Jason Lublin said country music is “leading the way” for a rebound in live music in the US in the second half of 2021, with highlights including sold-out tours by Garth Brooks and Eric Church. “As Ari mentioned, we’re pacing ahead as relates to WME booking for the second half of the year, and we’re booking clients for dates much further into the future,” he added.

Endeavor increased revenue to US$1.1 billion in the second quarter of 2021 – up around $650 million on Q2 2020 – and expects adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) of $765–775m for the whole year. The company paid $600m worth of outstanding debt in Q2, reducing its total debt to $5.351bn (compared to $5.872bn in Q1 2021).

In its representation unit (comprising WME, IMG and Endeavor Content) specifically, Endeavor reported revenue of $328.2m (up from $192.8m year on year) and adjusted ebitda of $61.7m (compared to $52m in Q2 2020).

“We have experienced recovery in our business happening slightly faster than we had originally anticipated”

“We have experienced recovery in our business happening slightly faster than we had originally anticipated,” Lublin continued. “And although we continue to closely monitor the delta variant, bookings, ticket sales and other indicators remain positive for the balance of the year.”

According to Emanuel, Endeavor’s strength lies in its diversity, with the business also including sports properties including Ultimate Fighting Champtionship (UFC) and corporate hospitality businesses such as On Location Experiences.

“If you want to think about the whole picture, when you look at the other companies that trade in our space – whether it be WWE, Formula 1, Live Nation – they’re all one-trick ponies,” he told analysts. “We have multiple facets, whether it be sponsorship or sports properties, representation, On Location – there are multifaceted aspects of our business, and we have gone through the pandemic, and we’re raising EBITDA, we’re raising guidance…

“I think you guys are going to learn that we’re a multifaceted business that we get to pivot back and forth from. […] The company has multiple different aspects of our business that protect us against anything in the future.”

Endeavor’s latest quarterly report can be read in full here.

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Talent agency William Morris Endeavor, together with the film-focused Endeavor Content, has announced a raft of measures to improve working conditions for assistants in the agencies’ Los Angeles, Nashville and New York offices.

IQ can confirm that assitants in WME’s UK offices are also receiving a pay rise, of £3,000, with an annual base increase of £1,000. For all new hires, the starting salary will be between £23,000 and £28,000. Changes are also to be rolled out shortly at WME’s Australian offices too, according to Deadline,.

Endeavor CEO Ari Emanuel laid out the new plans in a company email last week, raising minimum pay for new hires and assistants in the US from $15 an hour to $18 an hour. Assistants will receive a further $2 an hour after completing their first year at the agencies.

The company also announced plans to further increase the minimum salary for all to $20 an hour by August 2021.

Assistants will also now be eligible for ten hours of overtime a week without pre-approval and will be considered for “discretionary bonuses”.

In addition to the pay rise, all WME and Endeavor Content assistants in the US will be eligible for two years of monthly medical premiums paid by the company. Assistants and coordinators will also have access to student loan relief of $1,000 after the first anniversary of hire, with an additional $2,000 after the second anniversary of hire.

“We congratulate WME on joining the growing ranks of entertainment companies committed to improving pay and work conditions for support staff”

The agencies are also making $50 a month available as reimbursement towards mobile phone expenses and, in a more symbolic move, inserting assistant names into email addresses, which previously were nameless.

According to the agency, the changes were planned to be announced sooner – fellow agencies CAA, ICM and UTA raised assistant pay in early 2019 and early 2020 respectively, in response to the #PayUpHollywood movement – but were pushed back due to the financial implications of the Covid-19 crisis.

WME is among major talent agencies to implement cost cutting measures in the past few months due to the pandemic, with around 20% of its global workforce subject to lay-offs, furloughing or pay and working hours reductions.

“While #PayUpHollywood is not privy to the contents of the WME email that was sent, the initial news announcing pay increases and additional benefits for support staff is heartening,” comment the movement’s founders, Liz Alper and Deirdre Mangan.

“We encourage WME to continue monitoring support staff workload and treatment to ensure the wellbeing of their most vulnerable employees.

“We look forward to the details of these initiatives and congratulate WME on joining the growing ranks of entertainment companies committed to improving pay and work conditions for support staff. It is proof that change, though slow, does happen, as long as allies and assistants continue speaking out.”

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