What A24’s Whopping $2.5 Billion Valuation Says About the Indie Darling – and the Movie Business

Even in Hollywood, $225 million — the amount of indie production and distribution company A24’s first-ever equity investment — is a big chunk of change. In fact, you could make yourself a big movie like 2020’s “Tenet” for a mere $200 million.

However, industry watchers seem to have their eye on a a much bigger dollar figure that was sneaked into last week’s announcement of the new investment in the 10-year-old indie studio A24, whose art-house hits include Oscar winners like “Moonlight” and “Minari” as well as “Hereditary” and “Uncut Gems.” ln the statement, the New York-based company was noted that its new group of investors “will hold less than 10% of the company” with a $225 million investment, which if you do the math (and many of us did) values A24 at $2.5 billion.

Industry experts are quick to say the $2.5 billion valuation of A24, not just the investment itself, speaks loudly in favor of A24’s brand of edgy, independent filmmaking, as well as triggering hopes for a strong post-pandemic comeback for movies in general.

“It’s $225 million at a $2.5 billion valuation. That’s remarkable — even in a time when content companies seem to have very high valuation,” O’Melveny law firm partner Lindsay Conner told TheWrap. Conner added of the deal, “I think it signals that the film business is back in the eyes of investors.”

A24’s notoriously reticent leaders, CEO David Fenkel and chairman Daniel Katz, declined TheWrap’s request for comment on the deal — although A24’s recent hire of London-based BBC executives Rose Garnett and Pier Wenger to oversee international expansion confirms A24’s aggressive commitment to growth, including global production and distribution aspirations. However, the leadership’s ongoing shunning of the press seems to add to A24’s appealing mystique (the kind of mystique that apparently calls for leaving “$2.5 billion” out of a press statement).

The silence gets people talking — not just about A24 but also about the significance of the investment to the general film business landscape.

Although A24 has moved into producing small-screen series content for the streamers (HBO/HBO Max’s hit “Euphoria” and Hulu’s Emmy-winning”Ramy,” for example), the company has built its reputation on critically-acclaimed indie films that have drawn awards attention (including an Oscar for Best Picture for “Moonlight” in 2017).

That’s why, even when acknowledging A24’s burgeoning TV and streaming presence, Conner said, “this is a huge vote of confidence in the film business generally, and the independent film business in particular.”

John Mass, executive VP at Content Partners, an L.A.-based investment adviser focused on acquiring royalties in media and entertainment, holds a similar opinion. While the world is unlikely to return to prepandemic levels of theater-going, he said that A24’s reputation for edgy, quality content has an appeal to both theatrical distributors and streamers.

And unlike many movie companies, Mass said, “A24 is a brand.” While movie viewers might be attracted to talent names like Steven Spielberg, or Marvel franchise directors like the Russo Brothers, Mass said very few production and distribution companies since the collapse of Miramax and The Weinstein Company have built up a recognizable name to draw audiences. “This is good news and I hope it inspires more financiers to invest in specialty distributors,” he added.

Of course, A24’s success could also make it an acquisition target — particularly in an era of frantic mergers and acquisitions that in 2021 saw Amazon gobble up MGM for $8.45 billion and Discovery plan to merge with AT&T’s WarnerMedia in a $43 billion deal.

That M&A action has extended to smaller Hollywood outfits too. Reese Witherspoon’s Hello Sunshine, valued at $900 million, was snapped up by Candle Media, the next-generation media company run by Kevin Mayer and Tom Staggs and backed by Blackstone . Unlike A24, however, Witherspoon’s company is touting itself as a women’s lifestyle company rather than focusing almost exclusively on entertainment product. Hello Sunshine recently acquired The Home Edit, a home organizing brand.

Experts point out that A24’s big move is an investment — with the potential for an IPO, a sale or continued growth down the line. In the meantime, both creators and exhibitors seem bullish on seeing such a high-profile investment in high-quality art house movie fare.

Greg Laemmle, who runs L.A.-based Laemmle Theatres art-house movie chain, said A24 “has been a great supplier of quality theatrical films since their formation.” And he noted that 2021 A24 titles like “Minari,” “Zola,” “The Green Knight” and Denzel Washington’s “The Tragedy of Macbeth” have “helped bring audiences back to the theaters” as pandemic restrictions have lifted.

“I can’t really speak to the specifics of this investment,” Laemmley noted. “But in general, I believe it is a good sign for the future to see something like this.”

Mynette Louie, a producer of indies like “I Carry You With Me” who has not worked with A24, also saw signs of hope in the investment. “I hope it inspires more financiers to invest in specialty distributors,” she said. “There are so many wonderful films that deserve bespoke releases and innovative marketing strategies. A24 is among the few distributors left that are willing to support non-algorithmic films that need a little extra TLC to thrive.”