STX Sold to Investor Group Led by Najafi Companies
STX Entertainment, the Robert Simonds-founded film and TV studio that once hoped to compete with Hollywood majors by focusing on mid-budget, talent-driven projects, has found another buyer in an investor consortium led by Najafi Companies. Investment firms AS Birch Grove LP and 777 Partners joined in financing the deal, which was unveiled Friday.
STX’s leadership team is staying in place as Simonds will serve chairman, Noah Fogelson is taking on the CEO role and Adam Fogelson will keep leading the motion picture group. “The closing of this deal signifies STX’s position of leadership and its hopeful future within the film and television industry,” stated Simonds. “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.”
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The Phoenix-based Najafi-led group picked up STX assets after bidding $173 million for the company in December, although after the agreement was announced Lionsgate was also said to be exploring an offer for STX in a deal that didn’t materialize. The Najafi deal price tag was around $157 million, with Eros keeping a 15 percent stake, a knowledgable source tells The Hollywood Reporter. A regulatory filing later put the “total value of the transaction” at approximately $158 million, including debt.
The plan for STX’s next chapter is to release four to five theatrical releases a year in the $20 million to $60 million range, this source says, along with plotting out premium video on-demand releases and selling projects directly to streaming companies. (Michael Mann’s upcoming Ferrari biopic, budgeted at $80 million, is said to be an exception for the studio.) A sequel to Greenland, which had been sent into bankruptcy protection amid sale uncertainty, is also expected to be a part of the studio’s slate.
“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. As investors, we are long-term minded, and we believe in the power of storytelling and fostering a studio that is friendly to storytellers,” said Jahm Najafi, founder and CEO of The Najafi Companies.
Additional leadership unveiled Friday includes Andrew Warren continuing as CFO and London-based John Friedberg as leader of the film international and acquisitions divisions. STX, which currently staffs about 85 people in Burbank and London, recently underwent a round of layoffs in theatrical and distribution.
The sale marks the latest chapter in a tumultuous few years for the banner. STX, founded in Burbank in 2014, launched its theatrical slate with The Free State of Jones (which grossed $25 million globally), The Secret in Their Eyes ($34 million), The Gift ($58 million) and nabbed a Showtime output agreement that ran through 2019.
In kicking off its slate in January 2015, Adam Fogelson, formerly of Universal, described the company as “the first major studio to launch in two decades.” In the months after, the firm — which had initial backers that included private equity firm TPG Growth and China-based Hony Capital — closed a multiyear financing deal with China production company Huayi Brothers, built out its executive team and revealed plans to release 12 to 15 films a year and spend $350 million to $400 million annually in media buying to promote its slate. In 2017, STX reeled in investment from media mogul John Malone’s Liberty Global.
STX launched a family division, a London-based international division led by David Kosse and an unscripted television unit from Jason Goldberg (which went on to produce Nat Geo’s Valley of the Boom) and also branched out into virtual reality projects (like Robert Rodriguez’s The Limit). The firm scored a hit with ensemble comedy Bad Moms ($183 million) in summer 2016 and then quickly greenlit a sequel, 2017’s A Bad Moms Christmas ($130 million). The studio teamed with Jennifer Lopez on 2018’s Second Act ($72 million) and then on Hustlers ($157 million) a year later. It also backed Chadwick Boseman actioner 21 Bridges ($49 million) and Guy Ritchie’s The Gentlemen ($115 million) in 2019.
STX also acquired rights to the UglyDolls brand in 2015, with the company envisioning that a feature film would help build a franchise that could extend to television and gaming, enlisting Hasbro and Hulu as partners. The resulting animated feature, with an ensemble voice star cast, went on to gross only $32 million in 2019.
By April 2020, STX had released 34 films during its run as an indie studio. The company, which had hoped to raise funds by listing on the Hong Kong Stock Exchange, pulled those plans in 2018 amid unfavorable trading conditions. Instead, STX agreed to a stock-for-stock merger with India-based movie major Eros International, with the hope that the companies could combine to become a streaming powerhouse with Eros Now’s 26.2 million paid subscribers as a foundation. That bet didn’t pay off.
STX appeared to nab premium video-on-demand success with actioner Greenland in 2020, which also grossed $52 million overseas despite movie theater closures during the pandemic. In August 2021, STX began publicly shopping its film library in order to pay off $150 million-plus in debt.
“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,” stated Noah Fogelson on Friday, adding of the deal close: “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.”
