Two ex-Walt Disney executives raised more than $1 billion to build the next hit entertainment hub, but the investment — which was partly funneled to Reese Witherspoon’s media company — has been a major flop, according to a report.
Backed with ten-figure funding from buyout giant Blackstone Group, Candle Media scooped up Witherspoon’s Hello Sunshine and Moonbug Entertainment — the studios behind the hit children’s show “Cocomelon” — for $900 million and $3 billion, respectively.
Earnings at Candle Media are expected to come in about 50% below what the companies they acquired had forecast for 2023, sources told Bloomberg. Hello Sunshine is expected to deliver just 10% of projected earnings, while Moonbug will fall short by some 30%, according to Bloomberg.
As a result, Candle can expect to only see $140 million to $170 million in earnings. Candle originally expected to rake in $330 million this year.
Sources blamed the shortfall on Witherspoon’s media companies, pointing to an “unprecedented” set of obstacles that includes decline in YouTube ads, two Hollywood strikes and a pullback in spending across the entire industry, per Bloomberg.
“It was a disappointing year for sure,” Candle Media co-founder Kevin Mayer told the outlet of the anticipated losses.
“But we like our position,” he added, noting that the company is profitable and grew this year despite the challenges, per the outlet.
Mayer, who previously worked as a top lieutenant at Walt Disney before a short stint as the CEO of TikTok, co-founded Candle alongside former Disney COO Tom Staggs in 2021.
A spokesperson for Blackstone told The Post: “Candle is a highly profitable, high-quality business with world-class talent and creative output that has had significant organic growth since our investments. As with virtually everyone else in this industry, there has been an impact from once-in-a-generation strikes, but we are confident about how well positioned Candle is for further earnings growth going forward.”
The spokesperson added that the figures sources shared with Bloomberg “are not Candle or Blackstone’s projections — which were substantially more conservative when we underwrote our original investment.”
Representatives for Candle Media did not immediately respond to The Post’s request for comment.
After Candle launched two years ago, the LA-based media company was quick to scoop up as much as $4 billion worth of entertainment companies that produce content for kids, adults and social media, according to Bloomberg.
However, across six subsidiaries, Candle’s Moonbug is the only one to generate a meaningful profit, Bloomberg reported, and Candle needs cash to service its over-$1 billion debt to Blackstone, which has some $1 trillion assets under management.
Meanwhile, Mayer and Staggs have their hands full. The duo is reportedly working at Disney part time, helping their former boss, CEO Bob Iger, find a potential strategic advisor for ESPN.
Iger has also said he’s considering buying a stake in the sports network to help take it directly to consumers.
At the time Mayer, 61, and Staggs, 62, scooped up a half-dozen media assets, there was lots of optimistic buzz about the future of streaming.
However, the industry has come crashing down in recent months as Hollywood feels the ripple effects of the ongoing actors’ strike and writers’ strike, which finally ended last week when the Writers Guild of America approved a contract agreement with studios.
Though the WGA still has to vote to ratify the contract (voting will be between Oct. 2 and Oct. 9), lifting the strike has allowed for writers to return to work for the fist time since they went on the picket lines in May, the Writers Guild said in an email.
Actors represented by SAG-AFTRA, meanwhile — who joined the strike in July — are still negotiating with the Alliance of Motion Picture and Television Producers for many of the same issues as the writers, including fair pay and protection against AI.
In response to the strike, many streamers have mulled price hikes, including Netflix, which is reportedly discussing price hikes in the US and Canada before raising prices in several other global markets.
ESPN is also reportedly considering charging as much as $35 a month for its new streaming service, which could make it the most expensive streaming service in the US.
Amazon, meanwhile, said last month that it plans to start putting advertisements in the TV shows and movies on its Prime Video streaming platform as the Seattle-based e-retailing giant scrambles to shore up profits.
Prime Video subscribers in the US, UK, Germany and Canada can kiss their commercial-free programs goodbye in early 2024, Amazon shared in a press release.
The company assured that the price of a Prime Video membership would not change from its current rate of $8.99 per month, or $14.99 per month when coupled with Amazon Prime. However, to enjoy ad-free streaming again, viewers will have to chalk up an additional $2.99 per month.
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