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Thursday, Mar 28, 2024

Saban to Take Panavision Public

The Valley could have a new high-profile public company with Saban Capital Acquisition Corp.’s purchase of camera company Panavision Inc. in Woodland Hills and Sim Video International Inc. in Toronto. Under the acquisition agreement, Los Angeles-based Saban Capital will pay $622 million for both companies. The private equity firm, founded by Israeli-American billionaire Haim Saban, specializes in media and entertainment ventures including investments in Hong Kong-based Celestial Tiger Entertainment and Univision Communications. Saban Capital plans to change its name to Panavision Holdings Inc. once the transaction closes early next year. The firm currently trades under the ticker SCAC on the Nasdaq. The combined company will continue to be listed on the exchange. Panavision Chief Executive Kim Snyder and Chief Financial Officer Bill Roberts will retain their positions after the deal goes through, and the headquarters will remain in Woodland Hills. In a conference call on Sept. 14 to announce the deal, Adam Chesnoff, chief executive of Saban Capital, said it’s an opportunity to capitalize on increased spending by film and television production companies. Panavision designs and manufactures cameras and rents them to filmmakers, while Sim is a post-production house. “The combination provides a great end-to-end service offering with the benefit of being able to cross-sell across different business lines while backing a management team that has a track record of executing successfully,” Chesnoff said. Marty Shindler of media consultancy Shindler Perspective Inc. said the deal will let Panavision and Sim capture a lot of business all at once. “Combining those two companies gives them a one-stop shop for cameras, post-production and other tools that they can sell,” said Shindler, who has done work for Panavision in the past. Saban Capital is financing the transaction with $250 million in cash, $55 million in private investment as well as a planned $350 million in credit facilities, according to a November filling with the Securities and Exchange Commission. The firm expects “to continue to incur significant expenses” stemming from the merger and may request additional loans from its current creditors or “certain of our executive officers and directors,” according to the filing. On the day prior to the announcement of the acquisition on Sept. 13, shares of Saban closed at $10.14. On Dec. 4, they closed at $10.15 on the Nasdaq. Complementary companies Founded in the early 1950s, Panavision has been a pioneer in 35mm cameras and lenses. It later branched out into digital cameras, starting with the Genesis model in 2004. The Millennium DXL digital camera was introduced in 2016, followed by the large format Millennium DXL2 8K this year. In late 2014, the company acquired Light Iron, a post-production house with locations in Los Angeles, New York, Atlanta, Chicago and other cities where Panavision has a presence. Sim has a similar footprint as Panavision, with locations in New York, Atlanta, Los Angeles, Vancouver and Toronto. Sim rents cameras, lenses and lighting equipment and provides post-production services as well as studio space in Vancouver. “The resulting scale of the new combined enterprise will better serve our clients and help shape the content-creation landscape,” said Sim Chief Executive James Haggarty in a statement. According to information provided by Saban Capital, revenue for Sim was forecast at $117 million this year while Panavision revenue was expected to reach about $282 million. Combined, the companies employ more than 1,700 workers in 80 facilities in 15 countries, although staffing cuts and consolidation of locations could follow the merger. According to Saban Capital, up to $12 million in annual cost savings will be achieved by eliminating positions with overlapping duties, moving Panavision’s Vancouver camera operations into Sim’s facility, and streamlining the camera rental component of the business. An additional $1.3 million to $4.5 million in costs can be reduced by eliminating overlapping facilities and more staffing cuts. Snyder said that the deal brings together two complementary businesses that subscribe to a strategic vision of a beginning-to-end portfolio of services. “This vision is deeply engrained in both companies, which will benefit us as we go through the integration process and look ahead to the future,” she said during the conference call. Content creation growth Increased spending on television, film and digital video creation figured large in Saban Capital’s strategy for pursuing Panavision and Sim. Between 2013 and this year, the compound annual growth rate in content spending was 7 percent for traditional broadcasters and cable networks. More striking was the 55 percent increase in that five-year period for digital streaming companies such as Netflix Inc., Amazon.com Inc., Apple Inc., Facebook Inc., and joint venture Hulu LLC, according to the Saban Capital. Just this year alone, Netflix is expected to spend about $8 billion, primarily on original shows, Snyder said during the conference call. “We believe that Amazon and Hulu are also looking to spend several billion dollars this year,” she added. The combined operations of Panavision and Sim may prove to be an incentive to studios and production companies to work with the company, Shindler said. “Adding more people and more equipment makes it conducive for the streamers in particular to do business with them,” he explained. Saban brings to the table its extensive relationships with media companies, both the well-known broadcasters and studios as well as the new digital entrants to the market. “One of the reasons we are excited about our partnership with the Saban Capital Acquisition management team is their network of connections at the highest executive levels from these companies,” Snyder said. While the new company anticipates consolidation of facilities in cities where both Panavision and Sim are located, the headquarters will remain in Woodland Hills. “Panavision Woodland Hills will be the corporate headquarters,” Snyder wrote in an email to the Business Journal. For Shindler, it makes sense that Panavision would stay in the San Fernando Valley. After all, it has a great network of locations that works for the business, he said. “If you are going to shoot a movie in Australia, you don’t need to pick up a camera in Woodland Hills and bring it to Australia,” Shindler added. “They have a facility there to make sure that the camera is available for you.”

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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