Content Partners LLC, a Westwood-based investment company specializing in intellectual property acquisitions in the entertainment industry, launched a new business division, Content Partners Capital, at the end of last month.

While Content Partners operates through transactional, equity investments, CPC will act as a lender with a credit-focused approach.

Leading CPC is Alphonse Lordo, who has been in the banking industry for the last two decades, 15 years of which were spent focusing on the entertainment sector. Lordo explained CPC’s vision of providing “debt-oriented investments throughout the capital structure to operating businesses or people with assets who want to do an asset trade deal.”

In his tenure, Lordo started a specialized lending group in entertainment media at One West Bank and most recently was the head of entertainment for Truist Securities, a bank in Atlanta.

While CPC and Content Partners will feed off each other, Lordo said, CPC employs a “completely new strategy.”

With Content Partners’ transactional investment approach, its deals are typically swift – moving in and out after it acquires something. Conversely, CPC is looking to grow strategic partnerships with an investment duration of three to six years. 

“Here, we’re in bed with the operator. We’re putting money to work. This is long term money … and we’re here to help really support the growth of a business,” Lordo said.

CPC mints first deal

The newly launched division already made a splash with its first deal underway where CPC provided debt financing to Media Capital Technologies for its film slate transaction with Lionsgate. 

Lordo provided some context to the deal.

“It’s an investment thesis where (MCT) invests in a long number of pictures with (Lionsgate) and so, we invested into the capital stack to give them more capital to invest,” Lordo said.

CPC did not disclose the amount of financing provided, though Lordo said the firm’s typical investment checks will range between $10 million and $100 million with various credit structures.

Wanting to replicate the scale of Content Partners’ investments, which is “well north” of $1 billion, Lordo said CPC will likely deploy hundreds of millions of dollars annually.

Its investments will target middle and lower-middle market companies with IP-heavy business models in the entertainment industry.

Estimating the value of this target market to be over $2 billion, Lordo said there is plenty of opportunity in this sector.

Following the opportunity

After seeing a decrease in liquidity following the collapse of Silicon Valley Bank, Lordo saw an opening in the lending market.

“There was this massive opportunity to deploy alternative capital, private capital – just like normally banks should be doing – but under different risk parameters with better funding structure,” Lordo said.

Dubbing the entertainment industry “perennially underfunded,” Lordo positioned CPC’s thesis as a “big value proposition,” asserting that no one else in the industry is using the same strategy on the same scale CPC intends to.

Jonathan Handel, an entertainment and technology attorney for Feig Finkel LLP in Beverly Hills, noted that he is not aware of any other significant players in the entertainment industry announcing a debt-oriented strategy. He also spoke to how this business model falls in line with current economic trends.

“The market conditions have changed. The prospects for robust returns on equity investments have declined somewhat in this sector, and conversely, with interest rates still elevated, there’s the opportunity to be a lender if you have money to lend and to see a healthy return on a credit facility,” Handel said.

Lordo also distinguished CPC from competitors by emphasizing the advantage Content Partners’ reputation and established portfolio bring to the table.

“There’s not a lot of intelligent capital. There’s capital, but they don’t have the industry relationships or expertise that we have across Content Partners. They don’t have our access to our balance sheet (which is) very well capitalized,” Lordo said.

Handel noted that in the current economic environment, having access to sizable funds can make the difference between a company continuing to operate, downsize or close entirely. He framed what taking on a debt-oriented investment will look like for companies who choose to go into business with CPC.

“The client is betting more on itself when it takes on credit because it’s betting that there will be a robust return on investment so that it will be able to service the debt. … So if you take on debt, you may be better positioned to enjoy the returns if your bet on your property pays off, rather than sharing the returns with an investor,” Handel said.

Founded in 2006 by Steven Blume and Steven Kram, Content Partners owns the rights to, or interests in, more than 500 films including “13 Going on 30,” “Hugo” and “Black Swan.” It also co-owns the “CSI” television franchise.

“While we continue to experience significant growth with our transactional IP investment strategy, we’re excited to now step into the next chapter of film, TV, and music sector investment: providing the capital and strategic partnership to help businesses grow,” Kram said in a statement.