Endeavor should have priced its IPO, possibly within hours, at around $ 27 per share, after saying last week it would be as high as $ 32.
In a sign that Wall Street's appetite for investing in talent agencies and even diversified media holdings may be lower than expected, Endeavor Group has postponed the first public offering.
"Endeavor will continue to evaluate the timing of the proposed offer as market conditions develop," the company said on Thursday.
Endeavor was expected to announce a stock price for its IPO, possibly within hours, at around $ 27, after saying last week it would be as high as $ 32. But in the end, the IPO was scrapped ̵
The reduced share per share, combined with a lower than expected number of shares that will be made available, would mean that the parents of the talent agency WME and the Ultimate Fighting Championship could raise around $ 360 million from the IPO it had previously predicted to raise to $ 600 million.
Endeavor's stock was supposed to start trading on Friday on the New York Stock Exchange under the "EDR" symbol, with a starting market value less than the previous estimate, which was north of $ 8 billion.
The filing of the IPO is likely to be a huge disappointment to top executives and many of the other 7,000 employees who were expected to benefit from the tune for a total $ 1 billion bonus. The IPO would also be a big win considering the time, as WME – along with the other major Hollywood talent agencies – is still involved in a high-profile legal battle with writers, many of whom have severed ties with their agents.
The agencies' struggle with the WGA involves packaging fees, which agencies charge for linking talent to a TV project, a practice writer claims increase agency profits at their expense. Some Wall Street observers privately reported that Endeavor had forged ahead with its stock exchange listing despite less-than-bullish sentiment in part to prove that WME's business is not dependent on packaging fees and has not been harmed much by the lack of most writing clients .
Many observers predicted that the feud had to be settled prior to any IPO, and in fact, WGA had taken direct action against Endeavor's IPO, on one occasion, telling the SEC that WME inflated the number of clients and another reason that it was "impossible to reconcile the basic purpose of an agency – to serve the best of the customer – to maximize the return on Wall Street. " Whether this effort paid off is difficult to say.
Endeavor has also struggled with five unresolved lawsuits brought by a group of UFC warriors for years who make antitrust claims and accuse the company of replacing them. Some giants are also trying to unite Ize, an effort that the UFC resists vigorously.
In an SEC filing, Endeavor acknowledged that between lawsuits filed by WGA and UFC fighters, plaintiffs may seek recovery of "very large or indefinite amounts" and the outcome "may remain unknown for substantial periods."
IPO would have was significant in another way, as it would have required WME to disclose financial details that historically dense lip agencies have previously kept secret, and in addition, Endeavor's listing could have encouraged other executives, such as the CAA and United Talent Agency, to one day follow suit, although those companies are not yet as diversified as Endeavor, whose assets also include Professional Bull Riders, Frieze Art Fair, power supply company NeuLion and marketing agency 160over90.
In Endeavor's filing prior to listing, it reported $ 2.05 billion in revenue for the first six months of 2019 with operating revenues of $ 10.3 million and a net loss of $ 223 million. and Patrick Whitesell, co-CEOs, along with CFO Jason Lublin, Endeavor President Mark Shapiro, Bozoma Saint John's marketing director and staff topper Kerry Chandler are likely to make millions of dollars each, so far, as well as Silver Lake Partners, which became the first the private equity company that bought into Endeavor in 2012 and has accumulated a significant but still minority stake since then.
In a roadshow video from before the IPO, Lublin says: "We are going to be more public and responsive to our customers and … to give us capital and currency for M&A, which has and will continue to be central to the strategy
In the same video, Emanuel adds "I don't think it's another platform like ours. I have competition in advertising, talent agency and sports, but they're all individual businesses. … I'm on my way out front you miles and miles. "
Apparently Wall Street didn't buy what the executives sold, at least not to the extent they had hoped. Yanking the IPO is a sign bankers, executives and all others involved were not sure the stock would be well received and likely would have traded below even the recently lowered expectations.
The Writers Guild of America West made the following statement:  "Reports that Endeavor's IPO has been withdrawn show that investors did not purchase the company's conflicting business practices."
September 26, 7 p.m. 1613: Updated with statement from WGA.