Blue Ant Media to acquire Thunderbird Entertainment for $89 million

Key Concepts

• Acquisition: Blue Ant Media acquiring Thunderbird Entertainment.
• Financial Scale: Blue Ant's goal to expand its financial and operational size.
• Reverse Takeover: Blue Ant's previous public offering via a reverse takeover of Boat Rockers.
• Accretive Transaction: A deal that is expected to increase the earnings per share for shareholders.
• Production Capacity: Thunderbird's ability to create content.
• Earnings Capacity: Thunderbird's ability to generate profits.
• Cash Flow Generation: Thunderbird's ability to produce cash.
• Program Creator and International Distributor: Blue Ant's core business functions.
• Streaming Channels: Blue Ant's ownership of channels in Canada, the US, and internationally.
• Subscription Video on Demand (SVOD): A model where users pay a subscription fee for access to content.
• Free Ad-Supported Streaming TV (FAST): Channels that are free to watch but supported by advertising.
• Cost Savings: Expected reduction in duplicated expenses after the acquisition.
• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of profitability.
• International Customers: Thunderbird's existing client base, including major studios.
• Content Libraries/Catalogs: Collections of existing programming.

Blue Ant Media Acquires Thunderbird Entertainment

Blue Ant Media is set to acquire global production and distribution company Thunderbird Entertainment in a deal valued at $89 million. This strategic move is driven by Blue Ant's objective to significantly expand its financial and operational scale.

Rationale for the Acquisition

Michael McMillan, CEO of Blue Ant Media, explained that Thunderbird Entertainment was identified as a strong fit due to its robust production capabilities, particularly in animation, children's shows, and live-action adventure programming. The acquisition is being financed through a combination of cash and stock, and is considered a "highly accretive transaction" for Blue Ant's shareholders. McMillan emphasized that the interest in Thunderbird was not driven by a single specific content piece, but rather by the company's overall production and earnings capacity, as well as its cash flow generation.

Blue Ant's Long-Term Strategy and Synergies

Blue Ant Media operates as a program creator, international distributor, and also owns streaming channels in Canada, the US, and internationally. The core business model revolves around producing and acquiring compelling programming for both external distribution and internal use on its own channels. The acquisition of Thunderbird is expected to:

• Fuel Production and Acquisition Capacity: Increase Blue Ant's ability to create and acquire more interesting programming.
• Expand International Channel Reach: Enhance Blue Ant's capacity to build out its channel presence globally.
• Financial Accretion: Improve the financial performance for Blue Ant's shareholders.

Return on Investment and Cost Synergies

Thunderbird Entertainment is described as a profitable business. A key driver for improving the return on investment is the anticipated realization of significant cost savings. McMillan projects that $7 million in annual cash cost savings can be achieved on a run-rate basis shortly after the transaction closes. These savings are expected to stem from the elimination of duplicated public company costs, as both Blue Ant and Thunderbird are publicly traded entities. Beyond these savings, Blue Ant will also benefit from inheriting Thunderbird's existing earnings and cash flow, with the potential to improve the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by an additional $7 million annually.

Expanding Partnerships and Client Base

The acquisition of Thunderbird will introduce Blue Ant to new partners and reinforce existing relationships. Thunderbird has established a strong reputation for producing animated shows for prominent international clients, including Disney, Lego, and Marvel. This integration will expand and strengthen Blue Ant's roster of international clients.

Future Growth and Strategic Outlook

Looking ahead, Blue Ant Media's strategy involves a balanced approach between producing and distributing television programming and expanding its international channel base. The recent acquisition of Mellan TV in October of the same year serves as an example of this strategy. Mellan TV is an international streaming platform that includes both Subscription Video on Demand (SVOD) services and Free Ad-Supported Streaming TV (FAST) channels.

Blue Ant intends to continue building its international streaming presence through a combination of organic growth ("build") and acquisitions ("buy") of additional international streaming platforms similar to Mellan. Furthermore, the company is actively seeking to acquire existing libraries or catalogs of programming that align with this expansion strategy.

While no further announcements are planned before the end of the year, Blue Ant remains open to future opportunities.

Conclusion

The acquisition of Thunderbird Entertainment by Blue Ant Media represents a significant step in Blue Ant's growth strategy. By integrating Thunderbird's production capabilities and client base, and by leveraging anticipated cost synergies, Blue Ant aims to enhance its financial performance, expand its global reach in content distribution and channel operations, and solidify its position in the international media landscape. The focus remains on a dual approach of content creation/distribution and the strategic expansion of its international streaming platforms.