Joe Boskovich, partner at Old West Investment Management, dives deep into his investment thesis on WildBrian including the potential of the Peanuts brand with Apple and WildBrain Spark's growth story. They explore the challenges faced by WildBrain Spark due to COVID-19 and changes in advertising regulations. They also discuss the success of their distribution strategy and the possibility of launching their own A-Bod network.
WildBrain's intellectual flexibility allows them to value different businesses with different valuation processes.
Spinoffs can create significant value despite concerns about alignment with shareholders.
WildBrain Spark's AVOD network is a major player in the kids' content market, reaching one in three kids globally with billions of minutes of watch time per month.
Deep dives
Wild Brain: A Major Player in Kids' Content
Wild Brain is a company that has made a mark in the children's content and brands industry. They hold the distinction of being the largest owner of kids TV shows outside of major Hollywood studios. The company creates and distributes children's cartoons through various platforms like linear broadcast, streaming services, and their own advertising video-on-demand network called Wild Brain Spark. They also license consumer products based on their programs. What sets Wild Brain apart is their intellectual flexibility, allowing them to dive into different sectors and value varied businesses with different valuation processes. They focus on investing in owner managers and capital allocators aligned with shareholders, which underlies all their holdings.
The Value of Howard Jonas' Spinoffs
Howard Jonas, a renowned figure among value investors, is known for his spinoff ventures. One notable spinoff, Straight Path, gained significant attention. However, some question Jonas' approach, suggesting that he pays himself well and benefits at the expense of shareholders. Joe Boscovich, a partner at Old West investment, acknowledges both sides of the argument. While he agrees that Jonas is not always aligned with shareholders, he believes that the potential value created by spinoffs outweighs any concerns. Boscovich emphasizes the importance of smart capital allocation and the ability to evaluate spinoffs individually based on their merits.
Wild Brain's Exciting Investment in Wild Brain Spark
Wild Brain Spark, the advertising video-on-demand (AVOD) network created by Wild Brain, has become a significant aspect of their business. With around 800 channels on YouTube and over 200 million subscribers, Wild Brain Spark is a major player in the kids' content market. It reaches one in three kids globally, with four billion minutes of watch time per month. Boscovich points out the potential value in the AVOD space, considering the rapid growth of non-linear viewing and the shift of advertising dollars from linear to non-linear platforms. He acknowledges concerns about relying on YouTube's algorithm but highlights the company's investment in building their own sales team and the strong proposition they offer to advertisers.
Wild Brain's Massive IP Library
Wild Brain's extensive library of intellectual property (IP) sets them apart. They not only focus on their own brands but also represent numerous third-party brands, including Sonic, Super Mario, Pink Panther, and more. Their vertical integration allows them to negotiate distribution rights and capture the same economics as copyright holders. Boscovich states that while there may be concerns about being dependent on platforms like YouTube, Wild Brain's strong market position and the growth of non-linear viewing create numerous opportunities for success. He believes that Wild Brain's library and strategic partnerships position them favorably in the industry.
Growth potential beyond traditional advertising
Wild Brain believes it has a large and long runway for growth, not just in traditional advertising. With their direct sales advertising team, they are able to charge higher CPMs than YouTube's algorithm typically assigns. They have seen big growth in content production, particularly with toy unboxing videos.
Discovering and revitalizing brands
Wild Brain has shown success in discovering and revitalizing brands. For example, they helped the Russian kids' property, Sunny Bunnies, grow their YouTube channel from 1200 subscribers to 400,000 subscribers and 2 billion views. This success led to securing a master toy partner and ultimately being bought by Disney. Wild Brain's expertise in creating franchises is evident, and they are focused on building other brands, such as Strawberry Shortcake and Teletubbies, to drive consumer product sales and increase their market value.
Joe Boskovich, a partner at Old West Investment Management, dives deep into his investment thesis on WildBrian (WLDBF), including why he thinks Apple could drive the Peanuts brand to the next level and how WildBrain Spark could be a huge growth story.
Joe's Twitter: https://twitter.com/boskovic64 Old West Investment website: https://www.oldwestim.com/press
Chapters 0:00 Intro 2:10 Quick discussion of IDT and their spins 5:55 WildBrain investment thesis overview 21:30 Devil's Advocate: Haven't these franchises been passed around a lot? 35:00 Could the Apple partnership get the Peanuts brand growing again? 46:35 WildBrain Spark: just another YouTube channel, or real growth asset? 1:00:45 How does this compare to LGF's valuation? 1:10:55 Quantifying WildBrain's upside ~3 years out 1:19:30 Bonus point: could WildBrain go D2C?
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