EXCLUSIVE: There’s been a lot of biting rumors around STX Entertainment during the past four months, from a potential sale to Lionsgate to possibly filing Chapter 11. These aren’t coming to fruition as the Hustlers and Bad Moms studio now can breathe a sigh of relief, having fully closed its sale to The Najafi Companies, with Birch Grove LP and 777 Partners now also providing financing.
The Forest Road Company was originally part of the Najafi consortium in taking over STX’s debt, but it is no longer part of the revived studio going forward.
All of this puts STX Entertainment in a position to remain independent, now completely separated from Eros International, which we’ve heard has had its own financial baggage, further complicating matters for the Burbank studio. All of this is good for the greater independent film ecosphere as STX won’t be a theatrical distributor to bite the dust in an industry still obsessed with streaming as the pandemic eases.
Robert Simonds will serve as STX chairman, and currently president Noah Fogelson will become the new CEO. Adam Fogelson will continue to serve as chairman of the Motion Picture Group, Andrew Warren will continue as chief financial officer, and John Friedberg will continue to oversee the international and acquisitions divisions for the Motion Picture Group out of the company’s London office.
Friday’s transaction puts STX in a position to further develop, market and distribute content globally through multiple distribution channels including theatrical releases, international and direct-to-streaming services, as well as video-on-demand. STX is pivoting away from what was originally conceived as 12 theatrical releases annually. The studio is now planning 15 films a year, with five destined for the big screen and the balance split between straight-to-streaming or international theatrically distributed PVOD or direct-to-streaming titles.
Like other studios, STX pivoted during the pandemic, with either hybrid theatrical releases or licensing lucratively straight to streaming. STX sent Greenland to PVOD stateside, skipped theatrical (when New York and Los Angeles cinemas were closed) and sold streaming to HBO Max on that Gerard Butler movie in summer 2020. It licensed what was to be a theatrical release, My Spy, to Amazon. It did handle The Mauritanian, which won a Golden Globe.
Recently, STX sold The Contractor to Showtime and Queenpins to Paramount +. STX has expanded into television with the debut of the reality show FBoy Island on HBO Max.
“At a time when the demand for global content has never been greater, we are very excited about this rare opportunity to acquire STX Entertainment, one of the only remaining independent studios,” said Jahm Najafi, founder and CEO of The Najafi Companies. “As investors, we are long-term minded, and we believe in the power of storytelling and fostering a studio that is friendly to storytellers. We have the utmost respect for this plus-100-year-old ecosystem, and we look forward to supporting this partnership and the ways modern entertainment studios are evolving in the future. ”
Said Simonds: “The closing of this deal means STX’s position of leadership and its hopeful future within the film and television industry. We are excited to work alongside this highly respected investment company and are thankful for their continued support as we expand our library of star-driven content. We have solidified our international reputation and remarkable ambitions thus far, and we look forward to continually proving ourselves with each project we push forward. ”
Noah Fogelson added: “In a relatively short amount of time, STX has helped create and distribute over 70 movies, many with stars and filmmakers who have made multiple projects with us. From The Gift, Bad Moms and Hustlers to The Upside, Molly’s Game, Greenland and upcoming Operation Fortune, the studio has, despite many headwinds, cemented a place in the industry. We’re thrilled that an investor as savvy as Jahm [Najafi] and The Najafi Companies see the value of the platform today, and also what’s possible tomorrow. ”
It was announced in December that STX was being acquired by Najafi’s Phoenix-based company for $ 173 million, followed by a 45-day “go-shop” period whereby STX could field offers from other suitors; that’s when the Lionsgate bid was contemplated. That deal, we hear, involved not only the absorption of the library but also STX personnel as well. Lionsgate offered a price STX felt was too low to take to its board.
In re-arranging its financials of late, STX put two movies into bankruptcy under shell companies to protect the titles: Greenland 2 and the Chris Pine-Ben Foster movie The Contractor. While The Contractor was sold to Showtime for an estimated $ 15M +, the pic’s financier 30West filed a complaint in a US Bankruptcy Court in New Orleans asking for dismissal of the Chapter 11 case and claiming STX failed to make $ 8.4M in contract payments. The bankruptcy filing automatically prohibited 30West from ending its defaulted deal with STX. 30West was seeking to end its contract and reclaim the movie.
Last week, Deadline reported that STX made some stuff cuts at the lower-level executive tiers as well as in marketing and distribution as it changes up its model. Given today’s announcement, STX should be in a better position to reconcile all of the above dilemmas; we’ve heard its even hiring.
The Najafi Companies is an entrepreneurially driven private investment firm with significant holdings in consumer brands, media, ecommerce, sports and technology.