Reese Witherspoon's $900-million deal

When news broke last week that Reese Witherspoon — star of Legally Blond and Wild — had sold her production company Hello Sunshine to a group backed by private equity giant Blackstone Group, no one in Hollywood was really surprised.

The size of the deal was jaw-dropping: Blackstone has reportedly paid $500 million in cash for a majority stake in Hello Sunshine, valuing the company, which produces HBO's Big Little Lies, Apple TV's The Morning Show and Hulu's Little Fires Everywhere, at around $900 million, the Wall Street Journal reported.

But there is a lot of money sloshing around show business right now. Amazon recently agreed to buy MGM studios for $8.45 billion and television group Discovery, whose TV networks include Animal Planet, TLC and the Discovery Channel, in May announced a $43 billion merger with WarnerMedia, the group that owns film studio Warner Bros. and television channels HBO and CNN.

Every major media company with a strong track record and an A-list celebrity owner —LeBron James' SpringHill Co., Ron Howard and Brian Grazer's Imagine Entertainment, or Westbrook Inc., the film and TV company co-founded by Will Smith and Jada Pinkett-Smith — are reportedly fielding nine-digit buyout offers.

What's driving this spending spree is streaming, according to industry experts. The market for films and television series is booming thanks to the deep pockets, and global ambitions, of video-on-demand platforms from Netflix and Amazon Prime to newer streamers — Disney+, AppleTV+, WarnerMedia's HBO Max — launched by traditional media giants.

But while demand for "content" is skyrocketing, the supply of high-quality films and series — and the writers, directors, producers and actors that can deliver it — remains in short supply. This is leading to a scramble for talent.

Netflix signed major, nine-figure deals with television producers including Ryan Murphy (Glee, Pose) and Shonda Rhimes (Grey's Anatomy, Scandal) to provide a steady supply of movies and series to feed their subscribers' insatiable hunger for more stories.

The streaming boom has mostly been great news for creators, especially for those from once-marginalized groups. Netflix money helped Rhimes create multicultural period drama Bridgerton and gave Murphy the LGBTQ-focused alternative history series Hollywood. But as major studios and media companies push their movies and shows onto their own streaming platforms, they can come into conflict with the creators, who want to ensure the value of their work is being maximized.

See what happened on July 29, when Scarlett Johansson filed suit against Walt Disney Co., claiming Disney violated her contract for the Marvel movie Black Widow, potentially costing her tens of millions of dollars, by releasing the film on Disney+ at the same time it went to theaters.  

This is where private investors come in. Wall Street companies like Blackstone are offering film and TV talent an alternative to the studios and streamers. When Reese Witherspoon makes a new series or film for Hello Sunshine, she — together with Blackstone — can sell it to whatever streamer offers them the most money.

Witherspoon also said the investment was a win for equality, since it meant she could "double down" on her mission to "hire more female creators" to tell their stories. "This is a meaningful move in the world because it really means that women's stories matter," she said in a statement announcing the deal with Blackstone.

Hello Sunshine is just the start. Blackstone is reportedly looking to invest a minimum of $2 billion in new media and entertainment holdings and has hired former Disney executives Kevin Mayer and Tom Staggs to help pick which companies and talent to invest in, according to media reports.

And Blackstone isn't alone in trying to create an independent entertainment company for Hollywood's streaming era. New York investment firm KKR has Leonine, a German media company founded in 2019 that has gobbled up some of the biggest local film firms, including TMG, Universum, as well as TV producers Wiedemann & Berg (makers of Netflix hit, Dark).

French investment firm MACSF has Mediawan, which owns several French film and TV producers, including the makers of Call My Agent!, another hit Netflix show. Earlier this month, Leonine and Mediawan joined forces to buy Drama Republic, the UK television company behind TV series Doctor Foster and The Honorable Woman, Variety reported.

In an era increasingly dominated by big streaming companies, says Drama Republic co-founder Greg Brenman, private equity gives independent producers more options. "If a global streamer buys your show, they usually want to own it everywhere for all time," he says. Making TV and films with outside money "can be commercially beneficial" for independent creators. "Because you still have control of your show once you make it."