FORBES: Investors Double Down On Skydance Media With $700 Million In Fresh Capital

April 1, 2016

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Skydance Media, the Santa Monica-based production company behind Terminator Genisys, Mission Impossible – Rogue Nation, and the Netflix series Grace and Frankie, has secured $700 million in new debt and equity financing to expand its slate of projects and diversify into new areas of business.

The recently closed round of funding consists of a $500 million line of credit arranged by the company’s long-time lender JPMorgan Chase, and $200 million in new equity commitments from existing Skydance shareholders. It is a measure of the company’s success that it didn’t need to reach out to new investors, as its offering was fully capitalized by financial partners with whom it has been in business since its launch.

Founded in 2010 by CEO David Ellison in an airplane hangar at the Santa Monica airport with an initial cache of $350 million, the company has pursued a focused strategy of placing measured bets on event-level entertainment with well-known franchises, A-list stars and directors, and a major Hollywood studio—Paramount Pictures—as its co-financing and distribution partner.

Skydance is named for the tricky brand of aerobatic flying that was Mr. Ellison’s main passion before he entered the wild and wooly world of funding and producing major motion pictures. After negotiating the right to pick several films each year from Paramount’s slate in which to invest, he and his staff chose the Coen Brothers western True Grit as their first venture. The film was a runaway success, grossing $250 million in worldwide box office against its modest $38 million budget, and it launched Skydance on a lofty trajectory from which it has rarely descended.

The company’s second film, Mission Impossible—Ghost Protocol, put it in the Tom Cruise business in a big way, grossing nearly $700 million in global theatrical revenues. It has made three films with Cruise that have grossed $1.6 billion in worldwide box office, and has made a fourth with him, Jack Reacher: Never Go Back, that will release this coming October. There has also been talk of a newTop Gun film that may soon find its way into production with Cruise in a starring role in the near future.

Skydance has also worked closely with Chris Pine (theStar Trek and Jack Ryan movies), with Brad Pitt (World War Z), with Arnold Schwarzenegger (Terminator Genisys), and it recently teamed up with writer-director-producer Dean Devlin (Independence Day, TV’s Leverageand The Librarians) and a cast top-lined by Gerard Butler to make the upcoming sci-fi thriller Geostorm, which is scheduled for release by Warner Bros in January, 2017.

The creative talents who have worked with Skydance have done well by the company; its backing has resulted in the highest grossing Star Trek, Terminator, GI Joe andMission Impossible films in those respective franchises, as well as the highest grossing Tom Cruise and Coen Brothers films.

Together with Chief Creative Officer Dana Goldberg, Ellison has steadily moved the company from being a pure co-financier of Paramount’s movies to a full-fledged development and production house that is originating and overseeing its own projects. In-house film productions include last year’s Terminator and Mission Impossiblefilms, the aforementioned Geostorm, and Life, a sci-fi picture written by Deadpool scribes Paul Wernick and Rhett Reese and starring Rebecca Ferguson (Mission Impossible—Rogue Nation.

In 2013 Skydance entered the television business and found early success, placing its show Manhattan on WGN in a straight-to-series deal in 2014. In May, 2015 it debuted the Jane Fonda-Lily Tomlin series Grace and Frankie on Netflix, and has seen that Emmy-nominated show blossom into a bona fide success, with a second season set to premiere on May 6, 2016, and a third season commitment from Netflix.

Ellison is a big interactive game enthusiast, and with the new capital infusion he will expand the company’s activities in both games and the burgeoning field of virtual reality. The company already has global licenses for mobile games based on its Mission Impossible andTerminator films, and will further exploit the interactive rights it holds in Geostorm and its future films and TV productions.

Skydance has wisely stayed out of the film and TV distribution businesses, preferring to leave those complex and high fixed-cost activities to larger partners like Paramount and to Lionsgate, which manages international distribution of Skydance’s TV shows.

Mr. Ellison and his colleagues at Skydance have demonstrated a rare capacity for picking winners and making sound, measured strategic decisions in a challenging industry that has recently seen several well-funded competitors fall by the wayside. Their investors have given them a big vote of confidence by doubling their capital base. So long as they keep doing what they’re doing, the Skydance team should be able to keep flying for as long as they like.

News reported via Forbes

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