The Operator: Joe Ianniello Carves a New Path With a Media-Focused SPAC

of colleagues who were in the same position. They set off on a mission to create a better spack deal for buying and operating media and entertainment assets. As he explains in our conversation, Argus aims to capitalize on the disruption all around the industry. The largest media companies are shifting priorities and funneling resources to build new streaming platforms.

Ianello sees quote fantastic businesses and quote being neglected. He thinks he has an irresistible offer for those in the seats that he used to occupy, sell or spin off a big piece of a solid business to the argustine and let them run it with relentless focus. Given that Ianello is surrounded by CBS alumni in this venture, it's no surprise that he still uses US an hour when

referring to anything involving CBS. Ianello sees Argus as becoming a Bolton management team or key advisors for young public companies. It's an intriguing vision of the near future for media if he can pull it off. That's all coming up on today's episode of Strictly Business. Joe Ianello, chairman and CEO of Artists Capital Corp. Thank you so much for coming to Brian Park and doing this in person. What a treat. It's great to be here with you, Joe.

You have recently you have joined the wave of spack deals that have been out there in the marketplace. That's been a really interesting development. We're going to talk about the back of it all in a little bit, but just to start, tell us about Argus Capital Corp. You recently raised about two five million and you have brought together a number of former colleagues that you worked with at CBS. You've got the band back together, You've got you've got some money in your coffers. What is what

is the goal and why did Argus Capital come together? Now, yeah, I think the timing was there's such change going on in the broader t MT sector really again driven by technological advancements. So we see lots of opportunities you know, of ahead of us, and you know, I'm fortunate enough

to put together really again a unique group. Again, these are these are kind of fortune one hundred c suite executives that happened to be all available at the same time, which is really again unique certainly in the spack world, but even in corporate America to have that breadth and depth of talent around me, and so so what exactly exactly so so so we we studied the vehicle, the spack vehicle deeply before we we entered you know, the

marketplace and what it does. It really gives us the ability to choose to deal we want to do where we can add the most amount of value. So that's why again, it's why why is back and why you know now, was the team was available again in in a in a space that we know something about and a bit and leslie all of the change that's going

on that creating a lot of these opportunities. For sure, there is, there is so much movement right now, but among media entertainment, it really is an industry in transition. I sometimes I feel like the winds around me sometimes it is literally in transition. Um And I know one of the things that you've talked about is that you feel like there's going to be a lot of moving and shaking, a lot of divesting, a lot of things

coming off of larger entities that may be reevaluating. Can you talk about that and why that's happening now in this market? Yeah? I think. I think. Look, I think when all of these conglomerates you know, getting together, right, you're putting a lot of asset groups together, you know, cable nets, with broadcasting, with streaming, with film companies. And I think what investors really want is they want focus.

You know, when they're investing in a company, they want to know how the management team is prioritizing, how they allocate capital. And now, because a lot of companies are over the top, you know, direct the consumer whatever you know, you know, call it the Netflix model, if you will, Right, it's all of that content, all of that content, you know, is being distributed directly to the consumer, and that takes

you know, capital to do that. So then I think investors are gonna push so then why are you in this business or this business or that business? Again, I just always use the example of you know, I look at Hulu and Hulu is owned by Disney and Comcast. Yet Disney and Comcast also have streaming services, right Disney Plus and Peacock. So when they're making a piece of premium content, where does it go? Does it go on Peacock, does it go on Hulu? What does it go on

Disney Plus? And I think as an investor, I think part of this process, you know, uh, when we left the after the merger, we really started you know, thinking about, you know, what we're doing more as an investor and really prioritizing how you do that, I think is what's gonna These investors are going to force companies again to

kind of choose where you want to be. And so therefore that leads to a lot of what I we're calling, you know, corporate divestitures or carve outs, where there are fantastic businesses buried inside conglomerates where their capital, you know, priority isn't top of the list, so they would be better served as a separate entity where folks are dedicated to setting up the capital structure appropriate, you know, meaning how much death does the company has, does it pay

a dividend, how does it prioritize its shoes? And letting investors invest in that company specifically. And again I think it's a win win for both. I think it's fantastic for the companies because again they get to unlock value right, these corporate carve outs and the the the asset class get investors get closer to it, right. And so I go back to our gust capital A lot of time sitting in that chair, you know, we we came to

this with our radio division or outdoor division. Yes, yes, and so um, what we didn't have the we didn't have the right public company management in place. We had fantastic divisional management that we could help, but we had to augment that with public company management. As you know, that's very different than running a business when you're dealing with public company investors quarter at a quarter. So again I come back to, is the team that we have

together can actually help in that role. And that's where you're not seeing where we saw avoid in spacts because spacts were you know, um, really, I say, one man band, really a smaller shop. But because of the breadth and depth of the team we put together, we think a corporate carve out is really an interesting solution for some of these conglomerates that they can effectually kind of have us as the as an overlay. Two again, a solid management team right to help tell that story and execute uh.

In the public markets, do you see a scenario where maybe you would buy like eight percent of something from a company and they might have a small piece of it and you run it. Yeah, I think I think it's I think it's actually different. I think we would only own a very small piece. So earlier you said to sixty five. So just so you know, we raised three or five. That includes the green shoe, so the underwriters get to exercise a green shoe and over allotment,

and so we've raised a little over three hundreds. So when we look at the size of the companies were kind of targeting, and we we're talking multibillion dollar companies, mathematically, we're going to only own a small piece of that and that's okay, But but we're aligned with that conglomerate. So for in an instance, if somebody takes a ten

billion dollar asset and wants to separate it. Right, they're going to actually own the vast majority of that asset because if this is worth again ten billion, and we have three hundred you know million, we're going to own

a small piece of that. But the company then it would it provides for the company, is right, strategic flexibility, separate capital structure, investors at, separate management, and then they could do whatever they want thereafter, they can then sell the remaining shares um they to the public, do an exchange offer, which we've done before because of some tax basis. So the spack vehicle allows a lot of that flix exactly.

I'm learning as thank you, Joe and so so Yeah, look, I think I think part of this is I don't think it's well understood. I think spats are more institutionalized today, but I still think there's a way to go to really understand the advantages of a spack. And you know what I see it is like again, when we look at it to ourselves, here's what we ask ourselves, and we always have the target in mind, is happens he said,

Should this target be a public company? That's the first question you should ask, and there's got to be a hard question and question. And we've seen a lot of things that had no business being a company to oh they're not ready yet, or they didn't have the right you know, counsel and you know in coaching available to it. And so so you've got to ask yourselves. And again back to the depth of the team. I think we'll get to the right answer when we ask ourselves that,

but again putting the targets hat on. And so if the answer to that is yes, then we have a couple of more questions we want to ask. It's like, well, does timing matter? You know, if you're if you're in a business that has growth, and you you have good organic growth, but there's also m and a growth, you might want to have a currency out there to start rolling these things up. So timing could be important. Uh B.

You know is does does projections matter to you? Meaning is it you tell your story better by future numbers or historical numbers? Again, a lot of times, you know when I p O is you don't use projections right in a spac you can use those projections if that tells a better story to reflect the current value of the enterprise. Right. A lot of times when you see, you know, how did its facts kind of come come to be? When I POS doubled, you know, in the

first day of trading, that's very good for investors. That's not so good for the target company because the company didn't double in value from yesterday to today. The bar just got raised the whole incredible lot. So what happened there, well because it wasn't priced appropriately, And again a lot of times it wasn't price appropriate because what numbers were

you looking at? And so again as fact what we call it price discovery, you get to kind of find where market the market is with us fact because again you tell your story, you still have to go to the investors and they still have to buy into the deal at that value. Right, and we'll talk about you know, this thing as a blank check, which is is really a misnomer. But the investors and you have a negotiation.

The target gets to negotiate that right, you know, different than the I P O. So if that matters, you know, um to you, you use the forward projections, you hit the market uh quicker and then what I think most important for argus, right, then you get the benefit of hundreds of years of experience of the Argus team right, again very different than others, but again not available in an I P O. Do you have to make in those conversations? Do you I would imagine it? Who view

to make the case? Here's how we're going to run in and here's how we're going to do it better or more efficiently or with more yeah, strategy. We listened to the targets company, you know, the management team of the current ownership and what their vision is. And if we could take a good idea and make it a great idea, then we're adding some value and then we

have to help them execute it along the way. So a lot of times, again there's a lot of great companies that you know, probably have a great CEO and great manager, which is totally fine, and we're going to help them with the public investor story. But if there's gaps, we could help and drop some executives into operating roles as necessary. Um. But a lot of times, a lot of times, these companies they have a good framework, they just need a little bit of more direction of you know,

how to get there. And I think our collective experience can really help them again achieve you know, their objectives really at the end of the day. But look, like I said, is they have to see the value we bring to that. And again I go back to the experience that you have when you have decades of experience with public investors. You know what I always say with public investors, you have to you have to tell them what you're gonna do, and then you have to do

what you say, right, and then then the value. You don't decide what the value is. They decide what the value is. But if you execute that plan again, you know you should be increasing value if you're hitting all of your metrics. I know you can't talk super specifics, but the types of assets you're looking at and guessing networks content. Yeah, and I would say, look, it's obviously in the broader t MT space, but you know, think think O, t T think direct to consumer any any.

The way we like to describe it is called tech driven media, where technology is enriching the consumer experience. Right, so we know something about you know, how to do that. It obviously can be new sports entertainment, right, so anything that has a you know, any live events, you know sports, you know, Um, I think again, we have some credibility in in our experience of running those types of companies. So so when we're what we're looking for is good,

solid businesses. Again, they could be kind of late stage VC. They could be owned by private equity portfolio companies or these kind of corporate carve outs that we call them, but good you know, solid businesses, category leaders, strong fundamentals. They may be at a strategic inflection point, you know, they may be going from lineator, digital, all of those things. Again, where we can say is we have experience doing that.

So I love the streaming, you know aspect of it because you know, we were one of the first companies, you know, traditional media companies to launch a streaming service called CBS All Access back in Access. I signed up I think the first week and I still use it. I used it this morning. Right, It's not Paramount plus e grot Bound Amount plus. But but if you just think about that for a second, ten that's five years before Disney plus Peacock on the our other piers launched

their services ago. So so so that's what so when you have started, when you start at zero and then you build it, you get a lot smarter on you know, you know, why do subs come in why did they churn out? You know, where are they spending time? You know, I always used the example of he used to say, Showtime has been in the subscription business for its entire existence, but up until they launched we launched Showtime O T T, they never had a subscriber. And people look at me,

they go, what do you mean by that? It was like, because the distributors had all of this subscription data on the on the the m v P dcast of the world, the classic middlemen middle right, and Showtime we just get cash. They get you know, a fee for that, but they didn't know their their subscriber. And so once we launched

Showtime over the Top, we got so much smarter. We're able to program more efficiently, and in terms of CBS All Access, the advertising can be much more targeted, right, and so so the efficiency you get by doing that. And so look, we saw the trends early. Um, we saw that's the way consumers were consuming content, and we said we had to position the company, you know for that.

So imagine us telling that story to a target company who has a subscription service, to say, look at the breadth and depth of this team that can help you you know, navigate those tricky waters. You know, there are streaming wars as you know going on. You know, we believe there's not just going to be you know, three or four you know, streaming services. We think there's lanes for for many they may have two hundred million subscribers, right, but you could still make a fantastic business model at

you know, ten millions subscribers, right. So, so we think there will be those pockets of that that that dedicated kind of focus us streaming service. So we see there's going to be lots of those you know, companies kind of coming out of this. And so look that what we're really kind of focusing on. We're using our our collective networks to talk to the right people to make sure again it goes through that criteria is like should this entity be public and have access to the public

market's timing? Do we add value? Is? So is this kind of actionable and so um so, look, we we've we've been we've been excited. It's it's it's so much fun really to work with people you you trust, respect, enjoy you know, being around. So it's a different kind of version for us. It's all a bit new, but again, the principle of building a world class you know, organization and company and helping another company grow is really kind of why we get up every morning. Don't go anywhere.

We'll be back with more from Argus Capitals Joe ian l O right after this message, and we're back with more from Argus Capitals Joe I n L. Are you to the point where you're calling people, you know, people the business associates you know, and it's like, hey, what about this? But we do something like is the is the market that kind of like just active right now?

We're in the targeting phase, and so what we do is we target companies where again we're putting we're putting the conglomerate or the targets company had on and we're thinking to ourselves, should this company be public or should this asset, you know, a group of assets be public, shouldn't be separated in some sort of way? What are the pros and cons? And again, because we sat in the chair, I would say that would be I would never do that because X, Y and Z or that

makes perfect sense. So you're looking for stuff that unlocks value right for the for the target right and gives them capital. Third, party capital. We're going to bring money into this about yeah, about equity, and you'll be equity, it could be debt, right, we will bring fery party capital north of the we have. So the way the projects will be responsible for bringing capital even beyond. That's called the pipe exactly exactly, So that's called that's called

a pipe. Basically, it's a private investment in the public entity. And so we will once we know what it is. It's hard to go raise money when I don't know what the deal is. But once we know what the deal is, we would then go and raise more capital.

That's why I think we can do a very large deal, bring infuse significant capital, let that business grow while the parent, the target whatever still controls right the entity, and it gets again the added value benefit of our collective operating experience. So it would be like they would A scenario would be that the larger company would keep and then be able to consolidate, but it would not have that's try and so so so again it gives them strategy flexibility.

That's why again, if I was sitting in the chair, if I was running one of these large media conglomerates today, right, I would be thinking about that because that's very interesting again because again I know you cannot just say, hey, you know, I know the NFL just re re up their rights, right, So you saw everybody's rights fees, you know, increased significantly. So where is that happen? Where is that

capital come from? Well, that capital has got to come from you know, that balance sheet of that media company. Well then where else? I mean, what what's giving you know, are you you can you increase revenue at that rate? That isn't I don't think so, right, And so so that's why you have to make those choices. And that's why you see you see companies selling assets, you see

them you know, divest them. And this is such an elegant, a tax free way to do something to bring in you know, third party capital, smart money with an experience operator led group. Again me, it's it's win win win for everybody. Now, the key is that you have to price it right, right, you know, if you push the valuation, that doesn't work so well. And what I just keep saying is, look, let us build it. You know, the the the initial merger is just the starting point of

where the value is. We build it from there. And so so we as a as a manager, agree to lock up our shares, we won't sell shares for multi years, and you commit to be operators or the idea that over time that just it depends. I think again, it's whatever the target needs is really the gap we're gonna fill if they need one or all as operators, if they need maybe it's sitting on the board, or maybe it's just as an investor. And so to me it's

like again we're here. We're here to help again the company along again, manage the public markets and in certain instances manage the company if necessary. But you wouldn't have as much of a timeline for returns as a more traditional quit. No no, no, no, no. Again, we're a long time. We're used to get you know, we're used to receiving you know, an employee stock options right there were very low in their four year base and stuff like that, with restrictions and stuff like that, and so

again we're doing this for the long haul. I mean, our our objective here is to build a platform to allow the company to succeed with our with our knowledge base, and we're going to kind of put our money where our mouth is and not to say, hey, we build a thing, we sell it, and we go off to the next one. We want to make sure again, UM this this is successful. Um, so we're gonna have to

put in time. M Um. I know again, I won't, I know, I won't pressure on specifics, But do you have any are you in the hunt on anything now? Do you have any sense of like a time when you might have a deal? Yeah, and I I don't. I think we're having lots of good, interesting conversations. I obviously won't comment on anything specific at the moment, but I think there are there are some real I would say, big, you know opportunities that some of some of these companies have.

They have to decide, they're making the decision. Um, we're just kind of pointing out what we think the upside is to kind of for them to see it through our eyes. And if if that, if we're kind of like minded and we see we see the world similarly, then I would say there's something there. So, UM, I'm quite encouraged by the conversations we're having. Um, we want to make sure we're disciplined not to kind of just

jump at the first you know idea. We again, we want to put it through a thorough you know, due diligence process to make sure we fully vet you know, all the risk because again, we're investors right at the end of the day in the game, we have we have skin in the game, right and so um, we're aligned, you know, with the investors, and so we want to see we want to see it be successful and that

takes time. But again I go back to the team is you know, the key is going to be due diligence because it's as when when we would buy you know, a company at CBS, we would make sure we understood the business very well before we decided, you know, what price we would pay. And it's a very similar type of analysis that we're good, we're that we're doing so so you know, we're we're we're going through employee costs

and stuff like that. You know, we know, we know that, and so I think that part of it is going to be very helpful. Uh, and we're gonna look for you know, where there's value upside right where if somebody may not if you're not in the business, if you don't understand it's like, hey, you're looking at the contract, He's like, hey, we can do this with this content. Uh that it's not it's not being monetized unless you've been there and it's kind of done that you won't

see it that way. And if we see it again pointed out and we kind of, you know, get it properly valued, I think that would demonstrate to the target and two investors that'd say, Wow, those guys are really adding value because I didn't. I didn't realize that that that depth of experience. Let me ask you my last question for you, Argus, where did the name come from?

Very interesting? So, so we were very democratic about the argust name because we had to name it and every every obvious name that you would think of as taken and you know, and so we would do legal searches. So we the entire team I wanted to you know, blind, So everybody submitted um a list of names, and then everybody kind of voted, you know on it, and Argus got the most votes. And Argus in Greek mythology, Uh,

it means it's the eyes of Argus. And what we thought the cost we're quote unquote on the hunt for a deal, having the eyes of Argus out there scouring, you know, looking for a deal. You know, it made it made the most sense. Uh and so so yeah, So I didn't know who named it. So one of one of our one of our team members was the

was the one who came up with it. But I didn't know when we when we did it at the time, who did it to make it, you know, as democratic as you could possibly make it, to just say, it's like if I came up with the name, everyone's yeah, I like that name. I like that name. So um, I did not come up with the name. That's a good collective approach there, well, and you could forgive a bunch of CBS veterans wanting a name that indicated yeah

that that was not lost upon us as well. When it said the eyes and I said maybe the logos should know I said no, no, no, no, no, no, too far you know something about I P yeah people yes, yeah, and uh and uh. And then we had a little design company designed the logo, which was fantastic. And so so look, we're really jazzed about this this next chapter. I think, as I said before, it's um, it's fun.

We're we're really enjoying this positive. It's different, excitingly building something you've been incorporations And because yeah, because look, I think we're learning about businesses that I would say a media adjacent where you know, some are coming to us and say, hey, this is not exactly down your fairway, but it's close and so would you consider doing something like this on that and so so it's just to

have those conversations to understand those business models. Um, it's really kind of interesting and just just saying, wow, is that there's a lot of interesting businesses out there outside of the media, you know world, And so I think again, it's really just been Um, it's been invigorating to really kind of you know, see this kind from nothing all of a sudden start kind of forming literally going through

an I P O process doing a road show. I like, wait a minute, Um, but you really right now, we're we're just capital. We have we have capital, and the operations are pretty limited. And so we're saying, wait a wait, we're not used to doing that. We're used to kind of you know, dealing with issues and tens of thousands of employees and you know, it's just a you know, a dozen of us on a zoom call, you know,

at the moment. But um, but we're using investment banks, we're using all of our collective networks really again to to find the right opportunity uh that again, uh and make a deal that works. It works for everybody. It's interesting because you know, I've been through, like we've been through periods where everybody's talking to everybody murger. But in this moment, it feels like things are being almost like legos, you know, things are being snapped off and snapped together

in different ways. And so I can imagine with your expertise and that and and money and and drive, which which is definitely we could we can yeah, and look,

look I can think. Look, that's that's why we well, that's why we did this because you know, uh, several of us could have went with the private equity route, did did a traditional route where another skills, another media company and things in any but this, you know, kind of felt because of all of this change going on the opportunities that we were going to be able to kind of pick the one we saw, you know, as as the upside, but again also having a little bit

of fun and understanding where we can add some value. And so look, it just it lined up. I always say, you know, timing and life is everything, and I would not be able to put this group together, you know, twelve months from now, uh and do that. And so that's why it can. We said, we saw the opportunity and I think you know. The way we position it is kind We call it the lack of a better unique term spack two point oh, where this is what a SPAC should be. It should be an operator led

team that can add value to the target post the deal. Yeah, thanks for listening. Be sure to leave us a review at Apple Podcasts. We love to hear from listeners, and be sure to tune in next week for another episode of Strictly Business.