The distributor of films like “Melancholia” and “John Lewis: Good Trouble” is reportedly seeking a buyer. Magnolia Pictures has hired investment bank Stephens to run a sale of the company, Deadline reported after the New York Times first broke word of a potential sale on Wednesday.
The move comes as consolidation is rapidly reshaping the industry for the streaming era. While it has amassed a diverse library of 500 films during its 20 years in business, Magnolia is a vastly different company than other recent Hollywood acquisitions targets, like MGM with its exploitable IP or Reese Witherspoon’s “Big Little Lies” production outfit Hello Sunshine.
The Hollywood Reporter once called Magnolia “one of the last indie distribution houses dedicated to art house fare.” Magnolia wants to find out what that might be worth in a time where box office revenues are down, but streaming has fueled a demand for content that has never been greater.
“We went through this process 8-10 years ago and did not sell it then, and we may not sell this time. But the climate this time is strong and we have done extraordinarily well,” president and co-founder Eamonn Bowles told Deadline. “The climate right now has been large amounts being thrown around. It would be silly not to explore what the market would bear right now.”
The Times report contextualizes the potential sale against the backdrop of an industry in which “streamers seek content deals.” It also notes that “mass-appeal movies have started to rebound at the box office, but art-house films haven’t followed suit, in part because their audience tends to be older and therefore more concerned about the coronavirus.”
Should a deal materialize — particularly with a streaming outfit — it would say a lot about the current value of film libraries for streamers.
While Bowles did not share word on any potential buyers with Deadline, he did note that Magnolia’s library has been performing extremely well even during the pandemic, when many people turned to streaming for their entertainment needs. He noted that even the company’s older films have been performing well in recent months. Magnolia has its own SVOD service, Magnolia Selects, which launched in 2019, and inked an output deal with Hulu in 2017 after its previous deal with Netflix expired.
Much of Magnolia’s business comes from acquisitions of festival titles, which include documentaries profiling mainstream figures like the Oscar-nominated “RBG.” But its library skews toward the niche, like the psychedelic animated feature “Cryptozoo” or foreign language offerings, like the 2019 Japanese Oscar nominee “Shoplifters.” Its other recent acquisitions include Rodney Ascher’s heady documentary “A Glitch in the Matrix” and genre standout “Censor” which, along with “Cryptozoo,” premiered at Sundance in January. Magnolia recently teamed with National Geographic Documentary Films for “Fauci,” which was released in theaters last month ahead of its Disney+ debut in October.
Magnolia was an early pioneer of day-and-date releases, a model that has expanded from a unique feature of specialized distributors to a mainstream practice embraced by Universal, Disney, and others during the pandemic.
Magnolia was founded in New York in 2001 by Bowles and Bill Banowsky, initially funded by a small group of investors led by Mark Cuban and Todd Wagner. The billionaires soon purchased Landmark Theatres and bought out Magnolia’s other investors as part of a vision to integrate two sides of the arthouse business.
“Mark and Todd were very bullish on messing around with theatrical windows. Having a theater chain meant we could do day-and-date releases on VOD and in theaters,” Bowles told THR in 2016.
Cuban put both Landmark and Magnolia up for sale in 2011. No buyers emerged. He put the theater chain on the market again in 2018, when Cohen Media Group bought it. Cuban last year described the timing of that sale as “fortuitous” to IndieWire. He admitted that streaming hasn’t advanced as quickly as he predicted years ago. “I think where we are is where we expected it to be 10 years ago,” he said. “When we first started the streaming industry, I was making projections that by 2005 television would be replaced. We’d be experiencing these big screens at home. I was obviously wrong.”
Amazon, Netflix, Apple, and other deep-pocketed streamers have over the last few years encroached on Magnolia’s territory to compete for some of the most desirable festival acquisitions. While Magnolia’s library, niche titles and all, is its most obviously desirable asset for streamers, its theatrical distribution prowess could also be alluring to a company like Apple.
Apple broke records when it acquired “Boys State” at Sundance in 2020, but it teamed with A24 to help make a theatrical release happen. A24 also released Sofia Coppola’s Apple-produced “On the Rocks.” Apple broke another record at the following Sundance when its acquired “CODA,” but tapped Bleecker Street to distribute the film in theaters. That pandemic-era release didn’t light up the box office, despite enormous buzz out of Sundance.
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