Kevin Hart has heard the doom on the streaming industry that has rocked Hollywood since Netflix announced last week that it had been losing subscribers in recent months.
But Mr. Hart, the prolific actor and stand-up comedian, isn’t buying it.
“There are too many different entities, there are too many different platforms, there are too many different places for the world of content to shut down,” Mr Hart said in an interview from Belfast, in Northern Ireland, where he is shooting a film for Netflix. “If anything, it’s now amplified.”
Mr. Hart has strong backing supporting his thesis. On Tuesday, Mr. Hart’s media company, HartBeat, said it had raised $100 million from Abry Partners, a Boston-based private equity firm. Abry is buying a 15% stake in HartBeat, people familiar with the deal said, valuing the company at more than $650 million.
The deal makes Mr Hart the latest entertainment entrepreneur to tap into the private equity money spilling over into Hollywood. Over the past year, Reese Witherspoon, LeBron James and Will Smith have all sold stakes in their media companies to companies looking to cash in on increased demand for content.
Valuations have soared thanks in part to corporate interest. Hello Sunshine, the company founded by Ms Witherspoon, was valued at nearly $1 billion in its deal with Candle Media, a new company backed by private equity firm Blackstone. Moonbug Entertainment, owner of the hit children’s show “CoComelon,” has been valued at nearly $3 billion in a deal with Candle Media.
Michael Nathanson, an industry analyst, said production deals with high-profile artists will become more common as streamers focus on profitability. Media companies want shows and movies that have the best chance of winning new subscribers, and name recognition is a reliable way to do that, he said.
“The only way to break up the clutter is to use quality or established brands,” Nathanson said.
HartBeat is a new comedy and cultural content-focused company created from the merger of two companies associated with Mr. Hart: Laugh Out Loud, a digital comedy company that was conceived in 2016 as a subscription streaming service by Lionsgate Film Studio and Mr. Hart, and HartBeat Productions, Mr. Hart’s production company.
Mr. Hart, who controls HartBeat, is stepping down as chief executive but will remain chairman of its board of directors. He will be replaced by Thai Randolph, who was the COO of Laugh Out Loud and HartBeat Productions. Jeff Clanagan, Mr. Hart’s longtime business partner, will serve as the company’s chief distribution officer, and Bryan Smiley, president of film and television at HartBeat Productions, will serve as HartBeat’s chief content officer.
NBCUniversal’s Peacock streaming service, which has reached a deal giving it the first chance to buy HartBeat-produced TV shows, will continue to be a minority investor in the combined company. HartBeat executives also own stock.
Abry Partners did not respond to a request for comment.
Ms Randolph said HartBeat Productions and Laugh Out Loud had been profitable before the merger, but declined to provide details. More than 50% of HartBeat’s revenue will come from its studio arm, which has deals to produce shows for streamers such as Peacock and Netflix. (Past productions have included “Olympic Highlights,” a real-time send-up of the Summer Games, and “Fatherhood,” a Netflix movie starring Mr. Hart as a grieving father.) The rest will come from a combination of businesses, such as content licensing and trademark consulting work for companies such as Procter & Gamble, Lyft and Sam’s Club.
Merger talks began in earnest at a July retreat in Los Cabos, Mexico, where some 60 employees from the two companies reunited after months of working remotely during the Covid-19 pandemic, said Miss Randolph. In a hotel suite near the beach, executives worked out a structure for the merged company, which included a senior management shakeup.
Mr. Hart predicted that competition between streaming services would result in a market with several larger players vying for subscribers, each offering distinct content. He drew a comparison to the sportswear industry, where established companies like Nike continue to grow. As long as HartBeat puts on good shows, it will last, he said.
“There will never be a time when people won’t want to laugh, won’t need to put their shoulders down and just have a good time,” Mr. Hart said.