Breaking down the deals on “Succession”
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Breaking down the deals on “Succession”
HBO’s critically acclaimed series “Succession” — a show that chronicles dysfunctional family dynamics and financial power plays — just finished airing its latest season.
Waystar Royco, an aging conglomerate owned by the Roy family, tries to navigate the new media landscape and thwart its rivals through a series of attempted acquisitions, which reflect real-life deals.
The show’s writers say the show’s characters have been inspired by the Redstone family, which owns Viacom, and the Murdochs, whose empire includes Fox News and the Wall Street Journal.
“I think they’ve done a very good job of drawing from contemporary events to drive some relevancy for their own show,” said Gavin Slader, co-head of investment banking and head of mergers at JMP Securities, a Citizens company.
Slader and Don Holbrook, managing director with Citizens M&A Advisory, joined Marketplace to share their insight into the deal-making on the show.
Season 3: Rating the GoJo deal
The latest season chronicles Waystar Royco’s attempt to acquire GoJo, a video-streaming service, but ends in a twist when the head of the company attempts to acquire Waystar.
Holbrook said he’s seen cases in real life where companies like Waystar have failed to adapt to the next generation of media.
“And that’s clearly kind of what’s going on here. They’re falling behind. And sometimes you can catch up, sometimes you can’t,” he said. “In the case with what GoJo is gonna bring to them, they don’t really have a choice.”
Holbrook said when a deal seems too good to be true, and you don’t follow through on it, you will likely never see that deal again.
“So someone says, ‘Hey, we’ll give you 100 million,’ and you say ‘I don’t want that, I’m going to be worth more,’ that company usually sells for less than 100 million,” Holbrook said.
Slader pointed out that Waystar is a company that is “massively struggling for relevancy.”
“This feels like a deal of necessity, maybe even beginning to tiptoe into a deal of desperation,” he said.
Jesse Armstrong, the showrunner, said deals like AT&T’s purchase of Time Warner and AOL’s purchase of Time Warner had been on the writers’ minds when crafting the storyline.
At the end of the season, the Roy children plan to use the Waystar shares their mom, Caroline, received in her divorce agreement with patriarch Logan to create a supermajority and veto their father’s plan to sell the company. However, Caroline and Logan revise the terms of their divorce agreement so that Logan gets control of her shares and her vote.
“That’s why Logan was quick to get ahead of that when he saw what was going on and to make sure that he had her vote,” Holbrook said.
Holbrook said this reversal is plausible, and he’s seen divorce agreements affect the outcome of a business deal. He noted that divorce settlements come with all sorts of specific agreements about what you can and cannot do. He said if there’s a business worth $100 million, and one of the parties in the divorce buys out the other for $50 million, you might see the other party ask to be trued-up (or have their payment adjusted) if that business ends up getting sold for, say, $150 million.
Holbrook said he thinks the Roy children are actually the winners in the deal to sell Waystar (from a business standpoint, at least). If left to run the company on their own … who knows what would happen?
“If I’m a shareholder of Waystar, I’m not really trusting what’s going on there,” Holbrook said. “There was a definite need for an injection of leadership.”
Season 2: Rating the PGM deal
In season 2, the Roys attempt to buy out PGM, a rival legacy media company owned by the Pierce family. PGM wins Pulitzer Prizes and maintains the type of credibility and prestige that Waystar lacks, although it does not appear to have Waystar’s diversified portfolio, which includes entertainment, news and a cruise line division.
A Slate piece compared the Pierces to the Bancroft family, which sold Dow Jones to Rupert Murdoch for $5 billion in 2007. (In comparison, the Roys had planned to buy PGM, which owns its own TV station, for $25 billion.)
The goal in buying PGM is to make Waystar big enough to avoid a hostile takeover from some of its shareholders.
“At the time, I just remember thinking two turkeys don’t make an eagle,” Slader said.
Slader said in real life, these two companies may have found the ability to reduce their costs to “drive a bunch more cash flow to shareholders and to investors in the near term.”
But, he explained, that wouldn’t help with companies like Waystar who are pushing to become more relevant.
At the end of the season, the Pierces end up backing out of the deal after Waystar’s cruise ship scandal surfaces.
Slader said that in the end, the Pierces emerge as winners simply because their decision to call off the deal keeps them away from the “Succession” family.
Slader said if you had a legacy business “that you put your blood, sweat and tears into,” and then you aligned with the Roy family, it would “probably be a pretty disappointing outcome.”
Season 1: Rating the Vaulter deal
In the first season of the show, Waystar ends up buying the online media company Vaulter, a startup that Kendall sees as the future of his family’s media empire.
Slader said this was the type of acquisition “born out of necessity.”
He pointed out that the deal was an attempt by Waystar to maintain relevance since Vaulter was an emerging media company.
Later, Kendall ends up firing its staff writers and dismantles the company, leaving it with just its “food and weed” verticals. Spin wrote how this plot line reflected the current media landscape, with Vaulter’s downfall reminiscent of the media company Mic. Although it was once valued at more than $100 million, Mic ended up selling for $500,000. The Huffington Post reported that Mic was at the mercy of Facebook’s changing algorithms and that the staffers they spoke to were left “exhausted, distrustful of leadership and desperate for financial security.”
In the show, Vaulter’s leadership is also revealed to have misrepresented its traffic numbers, bringing to mind the story of Ozy Media. Although Ozy claimed to have 50 million monthly unique users in 2019, The New York Times reported that the analytics company Comscore doesn’t show anything near that. Based on Comscore data, the Times said Ozy “reached nearly 2.5 million people during some months in 2018, but only … 479,000 in July.”
“There’s that fine line of presenting data in the best possible light, and then beginning to tiptoe across that line into using data that can’t ultimately be supported,” Slader said.
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