• Hello Sunshine encounters hurdles amidst sector upheavals and labor disputes.
• Candle Media is looking into merging Hello Sunshine with another studio.
• Blackstone is currently not seeking offers proactively.

Blackstone

BX.N

is looking into various possibilities for Hello Sunshine, one of the most recognizable properties within its Hollywood media firm Candle Media’s asset collection, potentially even merging it with another entity, according to information shared by four individuals close to the situation to Reuters.

Candle Media’s takeover of Reese Witherspoon’s Hello Sunshine, the production house known for shows like Apple TV+’s “The Morning Show” and Amazon’s “Daisy Jones & the Six,” propelled the emerging media firm into the spotlight in 2021.

Like other standalone production firms, Hello Sunshine has faced challenges due to the rise of video streaming platforms.

cut

Expenditure and the Hollywood strikes halted production activities, according to three individuals. They mentioned that their varied operations, featuring an internal social agency named Solar, which links brands with women via narratives, along with events such as the yearly Shine Away gathering and Reese’s Book Club initiative, kept them financially stable even amidst the current upheavals within the entertainment sector, stated another source.

The Blackstone and Candle Media executives are contemplating moves that could provide Hello Sunshine with more breadth and size. These steps might involve merging it with another studio, said the four individuals acquainted with the situation, requesting confidentiality since these discussions are private.

discussions are

Private. These sources warn that Blackstone is currently not actively seeking bids, although one source noted that during an era of media consolidation, “every single independent studio is searching for a potential collaborator.”

“Although we do not discuss speculations about deals, we frequently examine various strategic possibilities to foster development, enhance value, and stay flexible within an industry that is quickly changing,” stated a representative from Candle Media.

RTL Group

AUDK.LU

, Europe’s biggest broadcaster, is considering various possibilities for its Fremantle production division, such as a potential merger, following an overall reduction in television commissions throughout the sector, according to previous reports from Reuters. Similarly, British network ITV has engaged in initial discussions with Abu Dhabi-supported entity RedBird IMI regarding a prospective consolidation of their individual studio operations.

The private equity company that supported Candle Media’s notable purchases, such as the $900 million acquisition of Hello Sunshine, recently performed a comprehensive evaluation of all Candle Media’s business units, according to these individuals.

Blackstone opted to offload Candle Media’s ATTN, a firm renowned for producing timely short-form content aimed at Generation Z.

millennials

, according to two of the sources who mentioned this was due to inquiries from potential buyers.

Portfolio company

The framework of Candle Media as a portfolio firm—rather than a venture focused on funding film batches from Hollywood—enables such adaptability if a potential purchaser comes forward, noted one source.

four

resources familiar with the plan.

Hello Sunshine and ATTENTION were part of a sequence of

acquisitions

Candle Media moved swiftly to tap into the ever-expanding demand for content from rapidly growing streaming platforms. They acquired Moonbug, which owns popular children’s entertainment franchises such as CoComelon and Little Baby Bum, for approximately $3 billion. Additionally, they purchased Faraway Road, the creator of Netflix’s series “Fauda,” and invested in a minor share of Will and Jada Pinkett Smith’s production firm, Westbrook.

In April 2022, Wall Street’s excitement over the streaming industry waned after Netflix announced its first subscriber decline in ten years. This unexpected shift caused investors to start doubting the massive investments media firms were making in content creation as they struggled to gain subscribers at a profit.

This emphasis on profitability had adverse effects on independent studios such as Candle Media. This situation worsened further in mid-2023 due to Hollywood’s concurrent writers’ and actors’ strikes, causing production halts lasting half a year.

In response to the recently thrifty nature of streaming services, Candle Media declared in July that they were reducing expenses and restructuring the firm into two main segments: the live-action division called Candle Studios, led by Sarah Harden who heads up Hello Sunshine; and Moonbug Entertainment, which focuses on children’s entertainment.

Based in London, Moonbug is turning profits through various income streams including ads supported by its 270.5 million YouTube followers, partnerships with major video platforms like Netflix, Amazon Prime Video, and Disney+, as well as earnings from Spotify’s music offerings, according to two insiders. The company’s yearly revenues are nearing multiple hundreds of millions of dollars, these sources indicated.

Hello Sunshine has been highly active in producing films, TV shows, both scripted and reality series. However, according to sources, the company has faced budget constraints, extended sales periods, and changing timetables—issues that have become typical in Hollywood following the 2023 strikes.

Nine projects are anticipated for release this year, such as Amazon’s romantic comedy “You’re Cordially Invited,” featuring Reese Witherspoon and Will Ferrell. Additionally, nine more will commence production shortly.

the fourth person said.

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Reported by Dawn Chmielewski in Los Angeles, Amy-Jo Crowley in London, Edited by Anousha Sakoui and Nick Zieminski