Ari Emanuel, a highly wealthy American business man, is in talks to acquire an international theatre group called ATG Entertainment for £4.5 billion through his media venture called Mari Group. At the moment, ATG is owned by a private equity firm called Providence that had itself acquired ATG for £350 million in 2013.

ATG Entertainment owns 70 venues across the UK, US, and Europe, having strongly recovered profits from pandemic-era closures. This includes popular West End theatres like the Lyceum and the Savoy, as well as major Broadway theatres in the US. The Mari Group was founded last year with $2 billion of equity, backed by institutional investors like asset management company Apollo.

Analysis

This deal reflects a novel recognition of live experiences as an asset class. As opposed to other entertainment options like streaming that is subject to audiences preferring film or television, live performances are resistant to digital substitution because of the unique experience they provide. More specifically, ATG Entertainment has built up established audiences and long-running productions that ensure a reliable source of profits.

The fact that Providence, the current PE owner of ATG, has held onto the group for over a decade even though PE investments tend to be exited within 5 - 7 years, attests to the consistent profits and returns that ATG has netted.

What does this mean for the sector?

• This deal signals a growing institutional appetite for live entertainment assets, an asset class that has been historically undervalued compared to media and sport

• Providence’s significant private equity exit, with substantial returns on its initial £350 million investment, encourages further buyouts of theatre groups

• UK policy may have to tackle the foreign ownership of iconic West End venues, delving into whether these venues may be considered heritage assets due to their long histories