Break down the agreements on “Succession”
HBO’s critically acclaimed “Succession” series – a show that chronicles dysfunctional family dynamics and financial power games – has just wrapped up its final season.
Waystar Royco, an aging conglomerate owned by the Roy family, is trying to navigate the new media landscape and thwart rivals through a series of attempted acquisitions, which reflect real deals.
The writers of the series say that the characters in the series have been inspired by the Redstone family, owners of Viacom, and the Murdochs, whose empire includes Fox News and the Wall Street Journal.
“I think they did a really good job of taking inspiration from contemporary events to give their own show some relevance,” said Gavin Slader, co-head of investment banking and head of mergers at JMP Securities, a Citizens company.
Slader and Don Holbrook, Managing Director of Citizens M&A Advisory, joined Marketplace to share their take on making deals on the show.
Season 3: Rate the GoJo deal
The final season chronicles Waystar Royco’s attempt to acquire GoJo, a video streaming service, but ends in a twist when the head of the company tries to acquire Waystar.
Holbrook said he has seen real-life instances where companies like Waystar have failed to adapt to the next generation of media.
“And that’s clearly kind of what’s going on here. They are falling behind. And sometimes you can catch up, sometimes you can’t, ”he said. “In the case of what GoJo is going to do for them, they don’t really have a choice.”
Holbrook said that when a deal seems too good to be true and you break it, you will likely never see that deal again.
“So somebody says, ‘Hey, we’ll give you $ 100 million,’ and you say, ‘I don’t want that, I’m going to be worth more,’ this business typically sells for under $ 100 million,” Holbrook mentioned.
Slader pointed out that Waystar is a company that “fights hard for relevance”.
“It sounds like a necessity, maybe even as it begins to enter a state of desperation,” he said.
Jesse Armstrong, the showrunner, says offers like The purchase of Time Warner by AT&T and the purchase of Time Warner by AOL had been on the minds of the writers during the development of the script.
At the end of the season, the Roy children plan to use the Waystar shares their mother Caroline received in her divorce agreement with Patriarch Logan to create a qualified majority and veto their father’s plan to sell. the company. However, Caroline and Logan revise the terms of their divorce agreement so that Logan takes control of his actions and voting.
“That’s why Logan quickly took the lead when he saw what was going on and made sure he had his vote,” said Holbrook.
Holbrook said the reversal is plausible and he has seen divorce deals affect the outcome of a trade deal. He noted that divorce settlements come with all kinds of specific agreements about what you can and cannot do. He said if there was a business worth $ 100 million and one party to the divorce bought the other for $ 50 million, you might see the other party asking to be corrected (or have their payment adjusted) if that business ends up being sold for, say, $ 150 million.
Holbrook said he believes the Roy Children were in fact the winners of the Waystar sale deal (at least from a business perspective). If they were left on their own to run the business… who knows what would happen?
“If I’m a Waystar shareholder, I don’t really trust what’s going on there,” Holbrook said. “There was a definite need for an injection of leadership.”
Season 2: PGM chord scoring
In season 2, the Roys try to buy back PGM, a rival media legacy business owned by the Pierce family. PGM wins Pulitzer Prizes and maintains the kind of credibility and prestige that Waystar lacks, although it doesn’t appear to have Waystar’s diverse portfolio, which includes entertainment, news, and a cruise line division.
One Piece Slate compared the Pierces to the Bancroft family, who sold Dow Jones to Rupert Murdoch for $ 5 billion in 2007. (By comparison, the Roys had planned to buy PGM, which has its own TV station, for $ 25 billion.)
The goal of purchasing PGM is to make Waystar large enough to avoid a hostile takeover bid of some of its shareholders.
“Back then, I just remember thinking that two turkeys don’t make an eagle,” Slader said.
Slader said that in real life these two companies may have found the ability to cut costs to “generate a lot more cash flow for shareholders and investors in the short term.”
But, he explained, that wouldn’t help companies like Waystar who are striving to become more relevant.
At the end of the season, the Pierces end up withdrawing from the deal after Waystar’s victory the cruise ship scandal is surfacing.
Slader said that in the end, the Pierces come out the winners simply because their decision to rescind the deal takes them away from the “Estate” family.
Slader said if you had a legacy business “that you put your blood, sweat and tears into” and then align with the Roy family, it “would probably be a pretty disappointing outcome.”
Season 1: Rate the Vaulter Agreement
During the show’s first season, Waystar ends up buying online media company Vaulter, a startup Kendall sees as the future of her family’s media empire.
Slader said it was the “born out of necessity” type of acquisition.
He pointed out that the deal was Waystar’s attempt to maintain its relevance since Vaulter was an emerging media company.
Kendall later ends up firing her editors and dismantles the business, leaving it with only its “food and weed” verticals. Spin wrote how this plot reflected the current media landscape, with the fall of Vaulter which recalls the media company Mic. Although it was previously valued at over $ 100 million, Mic ended up selling $ 500,000. The Huffington Post reported that Mic was at the mercy of Facebook’s changing algorithms, and the staff they spoke to remained “exhausted, suspicious of leadership and desperate for financial security.”
On the show, it is also revealed that Vaulter’s leadership skewed his traffic figures, bringing to mind the Ozy Media story. Although Ozy claimed have 50 million unique users per month in 2019, the New York Times reported that analytics firm Comscore was not showing anything similar. Based on data from Comscore, The Times said Ozy “touched nearly 2.5 million people over the course of a few months in 2018, but only … 479,000 in July.”
“There’s this fine line of presenting data in the best possible light, and then starting to tiptoe across that line to use data that ultimately can’t be supported,” Slader said.