Former WWE executives George Barrios and Michelle Wilson, about a year after their surprise departure from the scripted sports giant, have formed a Special Purpose Acquisition Corp. -- Isos Acquisition Corp. -- to raise $200 million to purchase a company in the digital media space.
Isos filed a prospectus with the Securities and Exchange Commission on Jan. 20 to issue 20 million shares at $10 each. The money would be used to purchase a company in the digital media space. Isos has about two years to find a target, at which time they would either make a deal or return the proceeds of the IPO back to shareholders.
Isos believes there is ample opportunity in the digital media space, with the global entertainment and media market expected to grow at an annual rate of 4.9% to reach $42.3 trillion by 2023, according to The Business Research Company Media Investment Global Outlook 2020, which was cited in the prospectus. North America accounted for about one-third of the total addressable market in 2019, or $519 billion, the report stated.
SPACs, also known as blank check companies, have become a popular method of taking smaller private companies public. Use of the financing vehicle exploded in 2020, when about 248 SPACs were created, more than four times the 59 formed in 2019, according to SPAC Insider. SPACs raised a total of $83 billion in 2020, compared to $13.6 billion in 2019. So far in 2021, about 59 SPACs have been formed, raising $16.8 billion, according to SPAC Insider.
Several media companies have used SPACs to go public, including streaming company CuriosityStream and online betting company DraftKings. Severbal former and current media chiefs have formed their own SPACs over the past several months, including former Walt Disney Co., streaming chief Kevin Mayer; current Dish Network chairman Charlie Ergen and former AT&T Broadband CEO Leo J. Hindery Jr.
Barrios and Wilson were named co-presidents of WWE in February 2018, but abruptly resigned in January 2020 after what WWE chairman and CEO Vince McMahon said was a failure to see eye-to-eye regarding the company’s future direction. Both had been instrumental in the wrestling giant’s success. WWE stock plummeted on the news of their departure (it was down 23% at one point on Jan. 31, 2020, but has since recovered that lost ground.
According to the Isos prospectus, the company has attracted some top TV, finance and entertainment executives to its board of directors, including former NBA China CEO and DirecTV EVP Derek Chang; former Sirius XM SVP and head of corporate strategy Barbara Daniels; former Telemundo chief operating officer Jacqueline Hernández; Fandom CEO Perkins Miller; Facebook VP of Global Sports and Media Partnerships Dan Reed; and Boston Consulting Group managing director and senior partner John Rose.
JP Morgan and LionTree Partners are serving as bookrunners for the IPO. LionTree and Apollo Global Management also have agreed to participate financially in the company, with Apollo agreeing to purchase 7.5 million warrants for shares of Isos at $10 each in a private placement once it finds a business target and completes the combination. LionTree has agreed to purchase 1.3 million warrants at $1.50 each (for a total of $7 million) under the same terms.
Barrios and Wilson formed Isos Capital Management in December, to seek out investments in the sports space. Aside from working together at WWE for about 11 years -- Barrios was hired in 2008, Wilson rejoined the company in 2009 -- the two have extensive experience in the business and sports space. Barrios was CFO of The New York Times Co. and served stints at HBO and Time Warner before joining WWE. Wilson had worked for McMahon’s first attempt at a professional football league -- XFL -- in 2001, and later worked as a marketing executive at the NBA, US Tennis Association and Nabisco before joining WWE in 2009 as EVP and chief marketing officer.
The two hope to leverage that experience to find an attractive digital media target.
According to the prospectus, Barrios and Wilson were part of a management group that drove WWE’s stock price up 426% in four year (from Jan. 1, 2015 to Dec. 31, 2019), creating $4.8 billion of enterprise value over the same period.
Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.
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