An Investor’s Guide to Navigating the Content Business

and i P holdings. Vine is the parent company of Village, road Show and other established industry entities, and it has slowly but surely been amassing a library through acquisitions. As More explains, Vine hopes to help fill the void for global TV buyers as Hollywood's largest studios focus on funneling content into vertically integrated streaming platforms. Or started Vine in two thousand and six after sixteen years as a banker

with JP Morgan. That experience taught him that media investing could be demystified and made more predictable and thus more palatable to investors. He had a trial by fire with a startup launched just as the country went into its last recession. Now he sees opportunities coming out of the current pandemic crisis. Jim Moore, managing partner and CEO of Vine Alternative Investments, Thank you so much for joining us. Oh,

thank you, Cynthia. It's a pleasure. Um. Well, you know, we're about we're about two and a half months into an extraordinary environment that none of us could have even imagined three months ago would be would become something like the new normal, and it looks like, at least in some places like California in particular, it looks like we're starting to very slowly turn the corner to reopening and

getting to something that looks a little bit like normal. Um. For you, as an investor, first and foremost, how have you kind of been spending this time? How have you been sizing up opportunities in the media landscape right now? Great question. We really continue to pursue our business model of investing in content related opportunities. So as an investor, we see the landscape as being one of high demand coming out of this. Uh, the theatrical environment has been

completely shut down. The streamers have been very fortunate in in growth opportunities because of this, But it means their new customers and their old customers are consuming all of the content that it's on their platform. So we see across the board the need for the entire industry to

restock its content supply. And between the content investments in our portfolio and the production investments in our portfolio, it's really more of aligning them, trying to give them the resources they need so that they're out of the gate as quickly as possible when production returns, helping them through the process of development and getting all of those ducts in a row so that on the other side of this we are able to meet what we expect to

be a very robust demand for content. Yeah. I mean we've seen that in every in every study and every ratings report. You know, people are no surprise at this time, are definitely tuned into their screens. And a number of people have said that this this could be seen as the you know, if there's a silver lining here, it is that people have had a chance to sample the incredible explosion in in content, have you. I mean, the media and entertainments was already in a period of consolidation

before the lockdown hit. Do you think that you know, coming out of this. The conventional wisdom is that the companies that were weak are going to be a lot weaker after just at this abrupt shutdown. You know, do you see shopping opportunities as the world kind of starts to get back on its feet. I think that the conventional wisdom is probably largely correct um. But we're not

just buyers. We are capital providers to the industry. So it's not just about what can we buy because it it's struggled, it's what can we support that means our capital. So we look across the spectrum at opportunities. Where are their platforms that otherwise we're very solid platforms, will run platforms with good content, but with this headwind, you know,

couldn't make it. Where can we support them with our capital is just as much a part of our business plan as where have assets become available because of this situation? And where can we add to our very large portfolio. Do you find given that you do provide you know, you do not just acquire, but you do provide that kind of liquidity. Do those opportunities come for you to

come in and support a struggling business? Do those typically come from things that you and your team scope out or do they come from incoming phone calls people know that you can provide that kind of financing and and seek you out. It's a bit of both, but I'd say it's a little bit more on the outbound. I don't I don't think people think there's the type of creative capital out there as we can provide, because almost everything we've done in the past has been pretty bespoke.

It's solved a very specific need for somebody in a very specific situation, and we have the capacity to meet those needs when people don't even know that they either have the need or that there is a solution outside of their traditional things. So our outreach is very important

to educating people. And they're not just struggling businesses. There are other businesses that now have competing priorities or are just you know, in need of another source of capital given the extreme demand that's going to be on the whole system. So it's we deal with everybody from well capitalized but needing diversification in that capital too, you know, struggling and needing additional capital too greatly, struggling and needing

the ultimate liquidity solution. M HM. Did you have any deals that were in motion that we're kind of put on ice by the pandemic. Uh No, Actually it's accelerated some of the transactions that that we were looking at. So um Our transactions take a long time. It's a it's a process of of understanding the assets at a very granular level and understanding what the issues are. So we tend to have a lot of lead time for everything we've ever done. Uh. The pandemic has accelerated a

couple of opportunities in our portfolio and we're moving that along. Mhmm. Do you um, does you know does the conditions of the pandemic, the lockdown of the last couple of months, does that change you know, price and value discussions at all? I mean the is it are the conditions that the industry is facing so significant you think that you would have to reevaluate the terms of something that you would maybe you know, come close to really nailing down like

January or early February. Is it that significant? I think if you're focused on theatrically released pictures in an independent context, you'd have to revisit the market coming out of the pandemic. The opportunity to get your theatrical film in a theater with any meaningful amount of showing is going to be extremely challenged. So if that was your business model, you have to revisit at the economics of your business model.

Our business model tends to focus more on established i P and the development of that i P into alternative platform so we haven't been as directly affected by this change, and we saw that change coming several years ago and we acquired Village road Show. Village was exactly that. They were solely reliant on the theatrical market until we took them over and steered them in a different direction to

focus on opportunities and television and streaming. And with Steve Moscow having come on board and brought a team with him and assembled a team around him to make that vision happen, that company has as positioned itself extremely well for the content demand that's going to come in the next couple of months. M I want to talk a

little more about Village road Show. But let me ask you, although I realized this is out of the scope of your I P and content focus business asn't it, just as an invest stir and somebody who you know who evaluates markets, do you think that there is an opportunity for somebody to come in at a time when the major theater change the exhibition chains are really struggling. The A m c S, the cinemarx. Do you think that

we'll see buying opportunities or consolidation in that market? Well, just because they're cheaper, I don't know that that means it's a buying opportunity. UM. I don't know who has the crystal ball that knows what the theatrical consumer experience is going to look like six months from now or twelve months from now. Um. But if your vision is that it will return to something resembling normal and something resembling a reasonable time frame, I could see making that

investment for the long term. But there's just so much unknown. H How prevalent will social distancing be, either because of regulation or because of consumer preference. You're gonna want to go to the movies and sit next to or in front of somebody you don't know as tightly as as you have. And you know that's a real estate business that relies on a certain density of consumer to make the numbers work. So you know, the the change that that gave you more of a living room experience the

eye picks of the world. They were struggling long before the pandemic because it's a challenging business market to have so much space dedicated to so few people. Yeah, so they'll be opportunities because things are valued less. I just don't know if they're valued less, if they're still over or undervalued. With your acquisition of Village road Show, you

recruited Steve Moscow, a season television executive. Is it fair to say that, at least in the short term, like year two the Village road Show, will you know, put more capital and energy towards television and digital content versus theatrical films as it has in the past. That's a very accurate. That's a high priority drive of ours is to diversify that company into providing content to a diversity

of platforms. So they have relationships with and and are talking about real content opportunities to everybody across the spectrum. And we look forward to being able to create really any type of content that the consumer wants, from the shortest form too to the new you know, single season episodic streaming television to traditional linear television. M hmm. Do you think um at this moment in time when we're seeing you know, we're seeing the launch of massive global

streaming services. You're obviously bullish and investing in Village road show. Do you think that a company of that of that size and a company that kind of fulfills that that traditional role of not quite a studio but a bit larger than a boutique, can those companies thrive in this environment where we're seeing people kind of be you know, networks and platforms and content providers are becoming you know,

more siloed than they had been in the past. Um you know, at the same time, it is a there is a very vibrant demand for content, but nonetheless, the companies and the control of the content and the rights is very is very concentrated with a you know, truly a handful of big, big players. Is that is that daunting as you try to build a build, build up a business like a village rocha. It's exactly the opposite.

If we were in the distribution business, it would be incredibly daunting because distribution is very expensive, it requires scale, and you're up against the biggest companies on the planet. We're in the content creation to news and it's those silos that our business model is exactly built to feed the fact that Warner Brothers has built HBO Max, and Disney has built Disney Plus and Peacock is coming uh that will take up content that previously had been distributed

around the industry. So the previous consumers of Warner Brothers content are going to be shut out of Warner Brothers content as it all goes increasingly to HBO Max. That opens the door for The Village road Show UM and other investments that will make in this space. On the production side, they'll be able to deal independently with all the different platforms as an honest broker and be able to deliver content that meets each one of those and

it won't be the same type of content. They'll have a demographic that they'll be trying to fill, and we have a very diverse catalog of content in development to be able to meet those needs. So it's those silos that are exactly the business opportunity that we're pursuing because they've shut off content delivery to other platforms that continue to need it, and they needed themselves as big as Warner Brothers is. They can't create enough content for HBO Max.

It's a it's a huge enterprise that they're trying to create. They're trying to compete head to head with Netflix. They need high quality original content h and obviously too in this environment, the business that the traditional TV series, the construct of how studios made money on television series has

changed very much. For for a village road show, going into a world where most of your upside is is calculated up front, maybe not paid up front, but calculated up front um that is still you feel like there's enough of a robust business there to warrant to just by your investment. We do. We do because it's a blend.

There's some element of the revenue stream that says you described it's fixed margin business UM, and the margins if you can control production costs and development costs and overhead, are sufficient to to have a good business. But that's not our only business. We still have the theatrical leg. We still have our catalog of extremely valuable tent pole titles with Matrix four coming down the pike and potentially other sequels to our iconic properties those that's an important

leg in the business. There's UM, there's other you know, we are dealing with the linear channels in a more traditional television sense, so there will be international exploitation of content we've developed for domestic platform so we look to blend all of them. We don't want anyone to be our soul business model. We think the combination of the three adds value, and the value in the fixed price contracts is stability. When you're a Village road Show sized enterprise,

extreme volatility is dangerous stability. Even though people tend to focus on oh, it takes away your upside, it takes away you're downside too, and so having a nice element of known profit is very attractive as an investor. Does Village Road Show? You know, for years, Village Road Show was very closely aligned in the feature business with Warner Brothers. You know, had had agreements together. Do there are those

still in existence? Do you still have that relationship or are you more of a what more playing the field these days in the film On the film side, we're still a very active partner of Warner Brothers. Um it's not an exclusive relationship and never actually was. The prior incarnation of Village did several movies with Sony. We have

some older paramount pictures that our in our catalog. So we've always had the ability and have always had relationships with other studios, But we do have an anchor relationship with Warner Brothers, and our development of that co owned i P is central to to that part of that relationship, and we look forward to working with them on a continuing basis. But we are free to do other things with other studios, either the television side of other studios

or the theatrical side of other studios. Will develop those relationships and continue to do what what is the intersection of the content that we have and the consumer appetite that we see And when you're producing uh in the TV series Realm, do you are there things that you anticipate Bill Road Show producing entirely on their own or are you gonna? Are you still in a business of looking for partners on a project project. We're very opportunistic.

We're capable of doing anything on our own. UM. We accept partners when they make sense within the context of the project. We don't start things meeting a partner. That's not our business model. UM. The company is very well capitalized and capable internally of creating and developing and producing anything that we start. But there are just certain times where you know, somebody has a piece of I P and you have a take and putting those two things

together makes a lot of sense. And that's where partnerships are organic and important. M Um, let's talk about Europa Corp. You are an investor in Europa Corp. And obviously that's a company that that I'm sure gives you a really you know, a good sense of the global market for content. But you know, beyond just beyond the United States, Um, that company has obviously been through They've just been through a restructuring, They've had a lot of management changes in

the last couple of years. What do you uh, you know, what what has kept you invested in or rope for Let me ask you the kind of the bigger picture question about the content business that that I'm sure you have to as an investor really evaluate. One of the things that we've been talking about, the production models, the profit models are all changing for film and television, and that makes it very hard to to evaluate and really put a number on the long term value of an

individual movie, an individual television program. How as you look at as you know you have you have been in the business of buying film libraries. You bought the Lake Shore Entertainment Library a couple of years ago. Village Road Show has a library. How do you go about, you know, in a world where syndication futures is you if you will, are not nearly as predictable as they once were because the market is so much bigger. What are the what

are the measures? What are the what are the yard sticks that you use to evaluate a library that you're considering buying or or the potential of a property that you're considering investing in at a time when when there's so much about the way people make money is changing. Um,

there is a lot of change going on. We do a very granular analysis of any library we're looking to acquire, and what that means is you're really looking at the individual pieces of content and what they're the rights are that are associated with them, and what channels are available to you and what channels will be exploited in the future. So you do have a lot of visibility, even though

there's change coming. You do have a lot of visibility because the path of content is sort of set when it's created and then it's observable over over its life. And what I mean by that is. The change that's happening is going to be happening more to new content than to the library content, and so it's easier to address.

So a new piece of content that you make for Netflix, you know, it doesn't have the the life cycle that it would have had fifteen years ago because Netflix doesn't operate the way they did then, and um and the world doesn't operate that way. So now you have an opportunity to make something for a margin and you put you don't get the international upside um. So that's sort of what you're talking about in terms of the change

that's happening. The rights that had historically been left with producers or monetized in different ways aren't being that monetized in those ways. But there's a lot of library, older assets that still are where the rights aren't controlled in the same way as they're going to be controlled in the future. There's still a very robust international demand for content.

The more and more um quality pieces of i P that get locked up in these streaming platforms, the less and less independent distributors in far entire tories have available. So you know, we can look at things very gradually. We can still understand how they're going to be exploited over the next thirty years, and we can still measure

that with a high degree of of accuracy. And as we continue to evolve our portfolio, we're always looking behind and forward, you know, how we're our projections when we made them, and how does that influence how we make future projections. And that ropebust level of data that we have gives us comfort, lets us sleep at night that we understand how much content is worth because we look at it. You can't just say in general how much content is worth. You have to look at individual pieces

and model it out separately. Is it fair to say that you are seeing a diminishing you know, revenue stream coming from traditional sources like broadcast syndication, like cable syndication in the US? I mean, is that are those businesses you know, seeing the feeling the decline that we are seeing in a macro sense of the shrinking cable universe.

The domestic TV is under a little bit of pressure, but international TV is still robust, and overall the international market is now larger than the US markets, So on the whole, those those have balanced out. Um the counter, is international TV or domestic TV. They still need content and they still have audiences to cater to. They still

have a demographic that wants to see a certain thing. So, um, while they're under pressure, they're under pressure to keep their audience as well, and that keeps a certain amount of of demand on their side that benefits owners and you and your company. Vine at times will go into like buying you know, very specific portfolios, portfolios of of interests in in content that a producer might have or a showrunner or a star. You get, you get back granular

in some deal making. Correct, absolutely, absolutely, We've we do everything from single pictures either films or television shows up to libraries of a hundred plus three hundred plus titles. So we're capable of spanning the universe of of investment. And do you do you license the library because you've picked up you know, Village Road Show, Europa, Lake Shore, do you have some some way to license the library.

Do you market the library as a as a Vine Alternative Investments library or do you do it sort of by brand when you're if you're trying to license, you know, do a big content licensing deal. Right now, we're still licensing titles under the original uh cat library names. So if you're talking about Rischer or gay Lord or some of the other titles that we've had where we have international distribution, our distributions still uses is the the original

is just that because that's the familiar name in the marketplace. UM. As we get bigger, we will entertain whether or not the Vine brand UM gives us scale. You know, we've acquired the capacity to service and sell those assets across the globe, So we're doing all of that internally with the acquisitions we've made. UM. So with increasing acquisitions, it will just organically become more familiar to the marketplace that

these are Vine assets. So but at this at this moment, do you have your own kind of like licensing and distribution team or it do we do? We have far in sales and all of the back office support you need to handle that from delivery to payment of participations, all of those, all of the capabilities within the Vine ecosystem go. And that's based in l A. It is

it is UM. Jim. Before you started, before you co founded by an Alternative Investments in two thousand six, you spent sixteen years with JP Morgan as a banker working in asset backed securities. What was it about your time

at JP Morgan that led you to launch Fine? You know, at JP Morgan, my clients were especially finance companies that UM that needed to finance themselves in a creative way and did so by issuing asset back securities backed by any number of different esoteric assets from golf cars to airplanes, helicopters, regular cars, you name it. It was a very diverse

universe of customers that I served at JP Morgan. What that taught me was, you know what investors looked for in institutional grade investments and how they liked the cash flows and the diverse the importance of diversification and and correlation. UM. There was a consumer credit cycle and a commercial credit cycle, and when I came across the entertainment sector, I realized

that there was no credit cycle associated with the entertainment sector. Yes, it went up and down, but it didn't go up and down with respect to when the stock market went up and down or when credit went up and down, when the economy went up and down. And we did a lot of digging, we did a lot of homework, and we were able to demonstrate that we could create an institutional quality investment out of investing in media and entertainment,

and it was differentiated. It was an opportunity to give something to the investor base that they had no access to before. And we tested that business model and ultimately launched our first fund in two thousand seven right before the crash, and the crash very articulately demonstrated that those assets could survive and thrive in a very adverse market and that's what led to the growth of mine for

the last thirteen years. So you and so economic downturns are are nothing new and you you have managed your way through them in the past. Are there any lessons from two thousand, two thousand eight, two tho nine period you think that will be applicable to the you know what we hope will be the great re emergence and then in the coming months. You know that from an investors standpoint, the big lesson and people tend to forget this is just because the industry is not correlated. It

doesn't mean you can't make bad deals. Uh. And it's it's discipline and deal making. It's it's discipline and risk taking that are the most important elements of success. It's from my perspective, it's about creating partnerships that benefit both sides. Those are the best deals, and when they do benefit both sides, you know you're there to come back and your partner is there to do more and and that

creates a virtuous circle of growth. So the lesson is clearly just because there's there's a lot of liquidity and this sector is not correlated, doesn't mean every deal you can do is gonna make money. You really have to stick to your to the nuts and bolts of what you do and really understand the nuances of the space. Great well, Jim, thank you for spending time with us to help us do just that. I really appreciate it's it's great to talk with you. Good luck getting through

this and we'll definitely stay tuned. Say thank you, Cynthia. This was great. I appreciate the time to talk. Thanks for listening. Be sure to tune in next week for another episode of Strictly Business.