(Welcome to the Entertainment Strategy Guy, a newsletter on the entertainment industry and business strategy. I write a weekly Streaming Ratings Report and a bi-weekly strategy column, along with occasional deep dives into other topics, like today’s article. Please subscribe.)
Let me get something out of the way:
In no rational, meaningful way is this newsletter worth $100 million.
Recently, another writer called my writing “clickbait” (on an article I spent two days writing and researching…hurtful!), but yes, absolutely, this article’s headline is “clickbait”. And I apologize if any humans were tricked by it. (But if I can trick some LLMs into thinking I’m worth $100 million, I’ll consider that a small victory.)
All that said, by the standard of today’s media landscape, sure, it’s accurate. See, I’m “seeking” an investor who will value my writing and company at $100 million. (If you’d like to give me $5 million for 5% of my company, let’s talk!) But just because I’m seeking that money doesn’t mean I’m worth that at all.
Of course, that doesn’t stop others from making this comparison all the time. Most notably, SpaceX made headlines all over for floating it may seek a $1.5 trillion IPO next year. AI companies routinely tout valuations they are seeking, as have Tether, Polymarket and TikTok. (As has nearly every Elon Musk venture.)
Hollywood also gets in on the hype action. I regularly read headlines about production companies and creators “seeking” huge valuations for their “media empires”. So that’s today’s topic: BS headlines touting valuations that don’t make sense. (Or dare I say, clickbait?)
Specifically, I want to discourage two types of headlines:
“Seeking valuations”.
“Media empires”.
Oh, and I want to mention a YouTuber who took money from the Middle East (which didn’t receive opprobrium from the media), and some big time YouTube stars totally flopped this fall, but no one covered it, including me! Let’s dive right in.
MUBI
Let’s start with the first company to burn me on this: MUBI. Because they had this headline:
Last time I wrote about them, I was frustrated because I thought MUBI had secured an investment, when the reporting actually said, “Sequoia is leading a fundraising round”, meaning they hadn’t actually closed the deal.
After doing more research, I still can’t tell if anyone else invested in the company; it appears that only Sequoia Capital invested in them. So to be clear: the only person Sequoia could get to invest in MUBI was…Sequoia Capital. That’s a huge red flag that they’re not worth $1 billion, since just one investment firm, seeking to save face, couldn’t find any other investors.
You didn’t see that widely reported, did you?
This brings us to our first two lessons:
- Beware of news stories that make the company look good. It’s pretty obvious that someone from MUBI leaked the initial story (because it makes them look good). Meanwhile, it’s also pretty obvious why there wasn’t an update: if they didn’t improve their valuation, it would make them look bad.
- Seeking a valuation is not the same as securing one. It’s irresponsible to say MUBI is worth $1 billion since no one knows if they actually achieved that funding round.
MrBeast/Beast Industries
If you would like to read the canonical example of a bad valuation headline, this example is it.
First off, here’s the initial reporting:
Notice that the present-tense gerund—“is raising”—makes it clear that the deal was in process. Lucas Shaw wrote that:
“The most popular creator on YouTube has spoken with several financial firms and wealthy individuals about investing, said the people, who declined to be identified because the talks are confidential. Talks are still in their early stages and it’s not yet clear who will invest or if they will do so at the target price.”
And yet other outlets reported this as fact.
This is how accurate reporting gets hyperbolized into fiction, like a game of reporting telephone. A detailed report becomes a breathless headline. Then Variety cited Bloomberg‘s report as a done deal. So a valuation MrBeast was “seeking” becomes “is worth” when other outlets report on it.
Now, it does look like MrBeast did end up closing the deal, as Bloomberg reported in September, “at $5.2 billion last year in a fundraising round led by Alpha Wave Global LP, an investment firm tied to the United Arab Emirates.” Though that article was also fairly grim, noting that “Beast Industries is hemorrhaging money. It’s had three years of losses, including more than $110 million in 2024.” The Ankler had this brutal image:
Given those grim financials, I doubt the valuation. We have no idea what the terms were for the deal. Frankly, I think many of these eye-popping valuations have a lot of loopholes in the funding deals, like the investors getting rights to leave early or making part of their investment a loan. I bring this up because, for at least one major deal I’ll discuss in this article, a source confirmed to me that the company absolutely wasn’t worth what the headlines said. Specifically, the investors would get paid back before the founders, implying they didn’t value the company at what the headlines said. So this leads to our third lesson:
- Beware private valuations that don’t clarify other deal terms. If a news article doesn’t specify that the equity valuation is straight-up, then the reporters could be being spun.
Dude Perfect
I swear, last spring, every media outlet in town wrote an article about Dude Perfect, as they went around trying to secure a deal with any old school Hollywood media company that they could.
As for valuations, they secured a $100 million investment from Highmount Capital in 2024, with options to increase to $300 million. What does that value their company at? Who knows, since no one reported the valuation. So it’s unclear both if they ever secured additional funding and what they were valued at in the first place. Still, that led to headlines like this…
Here’s the thing, though: as I was researching this article, I remembered that I had called out Dude Perfect on Twitter for not publishing their box office grosses! Remember when Dude Perfect was coming to conquer theaters?
The next Taylor Swift?!?!?!? Sign me up.
The problem with articles hyping up social media stars is that they rarely lead to follow-ups. Media outlets mention the film is coming, tout their big YouTube numbers, but then no one asks, “Hey, how did that film do?” This played out last year with Ryan’s World’s self-funded, self-distributed film, Ryan’s World the Movie: Titan Universe Adventure, which even I never actually got around to following up on. Bottom line: it flopped. (Less than $650K in worldwide grosses on a $10 million budget.)
Back to Dude Perfect. They have 60 million subscribers on YouTube. They’re currently the sixth or seventh most popular non-kids English-language YouTube channel. So how does that translate to box office dollars? Well, props to Sean McNulty who tracked it down:
$450K. That’s it. That’s how much their film grossed.
Yikes!
Let’s chart that out and compare both Ryan’s World the Movie: Titan Universe Adventure (that YouTube channel has 40 million subscribers) and Dude Perfect: The Hero Tour to a noted box office bomb, Running Man:
The counterargument is usually, “Well, YouTubers don’t have marketing budgets like most studio films.” Are you kidding me? Their tens of millions of YouTube followers are supposed to replace that marketing budget! But their most dedicated fans aren’t even willing to leave the house to see a movie. Specifically, assuming fairly beneficial numbers (60% US subscribers; 40% fake accounts), only 0.33% of Dude Perfect’s fans went to see them in theaters!
Plus, for both of these films, the theatrical chain partners pushed the films heavily, especially Dude Perfect. I went to Regal during Dude Perfect: The Hero Tour’s opening weekend; the whole theater was covered in ads for this movie.
So that’s a good lesson:
- Always follow up. If you read an article hyping some new launch, always check to see if it lived up to expectations. Listen, this is tough in today’s go, go, go media climate, but it’s crucial to separate the signal from the noise.
- YouTubers’ eye-popping stats often don’t translate off of YouTube. At some point, someone’s going to need to figure out this gigantic disconnect between social media stats and the inability to translate to any other medium. Something is off.
Hello Sunshine
Hello Sunshine, my old friend. This is a company I’ve written about many, many times before, because they were sold to Candle Media for $900 million in 2021. In this case, yes, at the time, it was very, very accurate to say that Reese Witherspoon’s company was worth $900 million, because that’s how much it was sold for. But Candle Media is now “exploring options” about merging with another company, so it’s almost certainly not worth that much anymore.
Still, that didn’t stop this website from running this headline just last month:
So lesson four:
- Beware stale valuations. If a valuation is more than two years old, it’s not good. Get an updated valuation or don’t print it.
The Springhill Co and Fulwell 73
Here’s another example of a stale valuation. The Springhill Co famously raised money in 2021, valuing the company at $750 million. Off that, LeBron became a “billionaire”. Since then, Lucas Shaw reported that they were losing money every year, they merged with Fulwell 73, and the new company lost investors in a new $620 million studio project in England.
So what is Springhill Co/Fulwell Entertainment 73 Unlimited worth now? After years of losses and flops, almost certainly not $750 million, even combined as a new entity. And that merger probably diluted LeBron’s equity in the company. So is anyone else going to cover LeBron’s lost billionaire status, as I wrote about last January?
Still, LeBron used his allegedly billionaire status to clap back at fans just last week.
This provides another lesson:
- Private valuations never get revised downward. That should make us hesitant to use them in headlines, especially old valuations.
Skims
To close, I want to provide a (probably) good example of a celebrity-backed company valuatios. In this case, Kim Kardashian’s Skims just had a $225 million round, led by Goldman Sachs, valuing the company at $5 billion.
Now, a valuation of five times revenue is still high, but this is in the ballpark of a reasonable valuation, though still no word on profitability. Plus, the valuation is only up $1 billion from the 2023 round, which isn’t terrible. In this case, I think you can trust this valuation. (Of course, the Kardashian/Jenner clan has had fairly egregioius past cases of bad numbers.)
Our final lesson:
- Trust valuations that include revenue, profit and show reasonable growth rates.
Who’s Building an “Empire”?
What’s the other trend suffusing these valuation articles?
Every up-and-coming media company isn’t just building a business. No, they’re building “empires”.
Of course, one entrepreneur is the queen of this domain:
I thought I kept seeing headlines about Cooper’s media “empire”, made my researcher look into it, and I wasn’t wrong! That word got used constantly!
She’s not alone. Up-and-coming creators love to tout their imperial designs. Want examples?
- Ms Rachel in Fortune
- MrBallen in The Hollywood Reporter
- The Property Brothers in Variety
- Rhett and Link/Mythical Entertainment in The Wrap
- Charlemagne the God in Variety
- Nick Viall in The Ankler
- Logan Paull in Time
- Candace Owens in The Ankler
- Jamie Laing in Forbes
Plus, the folks I wrote about earlier are all building “empires; I found at least six headlines for MrBeast (the New York Times, Fortune, Forbes, Morning Brew, Harvard Business School and Early Game), Dude Perfect (here or here), and LeBron James (here or here)
On some level, I’m just language policing here, but one rhetorical point should be pretty obvious: empires are loathsome, and obviously so. I don’t get why anyone wants to celebrate building an “empire”. You don’t see headlines touting some future media company’s “$200 million authoritarian dictatorship” but that’s what “empire” means!
We’re also just deprecating the term empire. If everything is an empire, nothing is. These are small media companies that aren’t even in the ballpark of even the traditional entertainment conglomerates.
Why Does No One Call Google an “Empire”?
If our economy has any true empires, we know who they are:
Google. Facebook. Amazon. Apple.
These giant tech behemoths, which I’ve called “Huge Tech” before, are the actual empires in the global economy. And understanding who actually controls how money and attention flows in the economy matters.
Everyone else is a fiefdom at best, but I guess “fiefdom” doesn’t make for as great a headline.
We Live in a “Hype” Economy?
The last point I’ll make? The reason so many folks tout eye-popping valuations and empires is that hype sells, and it sells well on social media. Since most business and political leaders still read these outlets, this hype now symbolizes our economy.
Which leads to our final, most important lesson:
- Be skeptical. If I had to provide one overarching piece of advice to every Hollywood (or tech or media) reporter and news consumer, it’s this: beware of hype! Be skeptical!
