Kevin Hart has heard apocalyptic rumors about the streaming industry that have been shaking up Hollywood since Netflix reported it losing subscribers last week.
But prolific actor and stand-up comedian Mr. Hart isn’t buying it.
“There are too many different assets, too many different platforms, too many different places for the content world to disappear,” said Mr Hart in an interview from Belfast, Northern Ireland, where he is shooting a movie for Netflix. “If anything, it has now been strengthened.”
Mr. Hart has a large backing of supporters for his thesis. On Tuesday, Mr. Hart’s media firm, HartBeat, said it had raised $100 million from Abry Partners, a private equity firm in Boston. People familiar with the deal said Abry bought a 15 percent stake in HartBeat, valuing the company at more than $650 million.
The deal makes Mr. Hart the latest entertainment entrepreneur to tap into private equity money spilling over into Hollywood. Last year, Reese Witherspoon, LeBron James, and Will Smith sold their stakes in their media businesses to firms looking to cash in on rising content demand.
Valuations rose, in part, due to firms’ interest. Hello Sunshine, the company founded by Ms Witherspoon, was worth about $1 billion In a deal with Candle Media, a startup backed by private equity firm Apollo Global Management. Moonbug Entertainment, owner of the popular children’s show “CoComelon,” was valued at close to $3 billion in a deal with Candle Media.
Michael Nathanson, an industry analyst, said production deals with leading artists will become increasingly common as publishers focus on profitability. Media companies want the shows and movies that have the best chance of gaining new subscribers, and name recognition is a reliable way to do that, he said.
“The only way to avoid confusion is with quality or established brands,” said Mr. Nathanson.
HartBeat was founded in 2016 by the Lionsgate film studio and Mr. Hart and HartBeat Productions is Mr. Hart’s production company.
Mr. Hart, who controls HartBeat, is stepping down as CEO but will remain as chairman of the board. He will be replaced by Thai Randolph, chief operating officer of both Laugh Out Loud and HartBeat Productions. Mr. Hart’s longtime business partner, Jeff Clanagan, will become the company’s chief distribution officer, and Bryan Smiley, HartBeat Productions’ head of film and TV, will become HartBeat’s chief content officer.
Peacock streaming service, which has a deal that gives NBCUniversal a chance to buy HartBeat-produced TV shows, will remain a minority investor in the combined company. HartBeat executives will also own shares.
Abry Partners did not respond to a request for comment.
Ms. Randolph said both HartBeat Productions and Laugh Out Loud were profitable before the merger, but declined to give details. More than 50 percent of HartBeat’s revenue will come from its studio arm, which has deals to produce shows for publishers like Peacock and Netflix. (Past productions have included “Olympic Highlights,” a real-time post from the Summer Games, and “Fatherhood,” a Netflix movie featuring Mr. Hart as a grieving father.) The rest will come from a combination business, such as content. Licensing and brand consultancy work for companies such as Procter & Gamble, Lyft and Sam’s Club.
The merger discussions began in July in Los Cabos, Mexico, during a retreat in Mexico that nearly 60 employees from both companies re-acquainted after working remotely for months during the Covid-19 pandemic, Randolph said. In a hotel room near the beach, executives worked on a structure that included a reorganization of senior leadership for the combined company.
Mr. Hart predicted that competition between streaming services would result in a market with several big players competing for subscribers, each offering different content. He made a comparison with the athletic apparel industry, where established companies like Nike continue to grow. “As long as HartBeat offers good shows, it will continue,” he said.
“There will never be a time when people don’t want to laugh, they don’t need to drop their shoulders and just have a good time,” said Mr Hart.