KKR shoots $400bn into Top Gun producer​

By Jake Rickman​

What do you need to know this week?

KKR, one of the world’s largest and most recognised private equity firms, has zeroed in on the studio production company behind one of this year’s hottest films, Top Gun: Maverick, with a $400m cash injection supported by other sponsors.

As reported by the Financial Times, Skydance Media, the production company behind the blockbuster that reprises Tom Cruise’s role as Lt Pete “Maverick” Mitchell, has had a successful year. In addition to releasing its first animated film exclusive to Apple TV, Top Gun: Maverick generated more than $1.4bn in box office sales around the world, which is among the highest performing releases in history. Other recent titles include the seventh and eighth films in the Mission: Impossible franchise and the 2022 film The Greatest Beer Run Ever.

This is not KKR’s first foray into the media world, having previously invested in US video game publisher Epic Games and Axel Springer SE, which is a German multimedia publishing house.

Why is this important for your interviews?

As the FT notes, private equity has taken an increasingly dim view of TV and cinema production companies in recent months, largely due to the dually declining rates of box office cinema sales and streaming service subscription rates. Netflix, Warner, and Disney have all experienced “sharp” declines in their market capitalisation as a consequence.

KKR’s backing of Skydance is therefore significant because it reflects a contrarian market perspective on big-budget media companies. This is especially remarkable in the current economic conditions suggestive of a recession, which implies many consumers will cut back on non-essential expenditure including their media consumption as disposable incomes are squeezed.

Likewise, this deal demonstrates that there is still some vitality in the private equity market more generally, even though both the volume and ticket size of transactions has fallen throughout much of 2022.

How is this topic relevant to law firms?

American corporate and PE boutique Paul, Weiss (whose presence in London is awfully understated) advised KKR on its $400m cash injection.