Bill Ackman's SPAC Buys Into Universal Music Group

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

Bill Ackman's SPAC Buys Into Universal Music Group

Hedge-fund billionaire investor Bill Ackman is getting a 10% share of one of the world's largest music companies, valued at $40 billion, and performing some Wall Street-styled gymnastics to do it.

Ackman launched the largest SPAC ever last summer with the goal of acquiring a "mature unicorn" to take public with his new blank-check company. Those plans have changed. Ackman's SPAC – Pershing Square Tontine Holdings Ltd. – will instead be acquiring a piece of Universal Music Group: a carveout from an already publicly-traded company, Vivendi, which itself was planning on going public.

By doing so, Ackman fulfills his SPAC's obligation to acquire a company within two years. But Tontine will live on, only as a new type of financial entity: a so-called SPARC.

UMG is expected to go public on the Amsterdam-based Euronext exchange later this year.

Tontine will pay about $4 billion for its 10% stake in UMG – the world's largest record label by market share, whose expansive roster includes Kanye West, Lady Gaga and Taylor Swift. UMG's sweeping catalog provides Ackman and his shareholders access to an asset that has steadily been attracting investors, who've paid big sums for music publishing rights as digital music soars.

The deal must still be approved by shareholders of UMG's parent company Vivendi. A vote is scheduled for Tuesday.

Meanwhile, the deal meets Ackman's acquisition obligation, and leaves him flush with about $2.9 billion in cash still available to the blank-check company. Tontine will continue searching for another acquisition target, according to a company statement.

Shareholders will get a slice of UMG along with rights to purchase shares of a future acquisition, under the arrangement that inspired the term SPARC, or special purpose acquisition rights corporation. Those rights, or warrants, are expected to be tradeable on the NYSE or Nasdaq, Tontine said.

The financial engineering puts a spin on the SPAC, one of the hottest Wall Street trends of late.

Tontine said it was attracted to UMG's 5% revenue growth in 2020, when streaming proved resilient during the pandemic. Music streaming comprises the majority of UMG's revenues.

Competitor Warner Music Group went public in 2020 at a market value of $15.6 billion. That provided a tidy sum to Len Blavatnik, who bought WMG for $3.3 billion in 2011.

Tontine's 10% stake in UMG is expected to settle within a few weeks.

Shares in Tontine closed flat Monday at $22.70. They fell sharply, however – about 13% – when news first surfaced earlier this month that it was exploring a 10% UMG acquisition.

"During the course of our negotiations with Vivendi, it became clear that various tax, legal and other strategic considerations precluded Vivendi from entering into a 'traditional' de-SPAC merger transaction, and from selling more than 10% of UMG," the Tontine announcement said. "Even with the additional complexity, time, legal, and other costs that these constraints created, we were convinced that the opportunity to acquire such an extraordinary business was the best option for our shareholders."

Tontine will hold a livestream presentation and Q&A about the deal on Wednesday.

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Genies Wants To Help Creators Build ‘Avatar Ecosystems’

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Genies Wants To Help Creators Build ‘Avatar Ecosystems’

When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”

The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.

Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.

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Here's What To Expect At LA Tech Week

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Here's What To Expect At LA Tech Week

LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.

The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.

From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.

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PCH Driven: Director Jason Wise Talks Wine, Documentaries, and His New Indie Streaming Service SOMMTV

Jamie Williams
­Jamie Williams is the host of the “PCH Driven” podcast, a show about Southern California entrepreneurs, innovators and its driven leaders on their road to success. The series celebrates and reveals the wonders of the human spirit and explores the motivations behind what drives us.
Jason Wise holding wine glass
Image courtesy of Jason Wise

Jason Wise may still consider himself a little kid, but the 33-year-old filmmaker is building an IMDB page that rivals colleagues twice his age.

As the director behind SOMM, SOMM2, SOMM3, and the upcoming SOMM4, Wise has made a career producing award-winning documentary films that peer deep into the wine industry in Southern California and around the world.

On this episode of the PCH Driven podcast, he talks about life growing up in Cleveland as a horrible student, filmmaking, Los Angeles and his latest entrepreneurial endeavor: A streaming service called SOMMTV that features–what else?–documentaries about wine.

The conversation covers some serious ground, but the themes of wine and film work to anchor the discussion, and Wise dispenses bits of sage filmmaking advice.

“With a documentary you can just start filming right now,” he says. “That’s how SOMM came about. I got tossed into that world during the frustration of trying to make a different film, and I just started filming it, because no one could stop me because I was paying for it myself. That’s the thing with docs,” or “The good thing about SOMM is that you can explain it in one sentence: ‘The hardest test in the world is about wine, and you’ve never heard about it.’”

…Or at least maybe you hadn’t before he made his first film. Now with three SOMM documentaries under his belt, Wise is nearing completion of “SOMM4: Cup of Salvation,” which examines the history of wine’s relationship with religion. Wise says it’s “a wild film,” that spans multiple countries, the Vatican and even an active warzone. As he puts it, the idea is to show that “wine is about every subject,” rather than “every subject is about wine.”

For Wise, the transition to launching his own streaming service came out of his frustration with existing platforms holding too much power over the value of the content he produces.

“Do we want Netflix to tell us what our projects are worth or do we want the audience to do that?” he asks.

But unlike giants in the space, SOMMTV has adopted a gradual approach of just adding small bits of content as they develop. Without the need to license 500 or 1,000 hours of programming, Wise has been able to basically bootstrap SOMMTV and provide short form content and other more experimental offerings that typically get passed over by the Hulus and Disneys of the world.

So far, he says, the experiment is working, and now Wise is looking to raise some serious capital to keep up with the voracious appetites of his subscribers.

“Send those VCs my way,” Wise jokes.

Subscribe to PCH Driven on Apple, Stitcher, Spotify, iHeart, Google or wherever you get your podcasts.

dot.LA reporter David Shultz contributed to this report.