Trends Watch: Media and Entertainment

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Vania Schlogel, Managing Partner, Atwater Capital.

What is your outlook for private equity?

My view on private equity remains very positive. Firstly, the market fundamentals that support private equity as an asset class remain largely unassailed by COVID-19: large pockets of capital globally that need to be invested, low interest rates for the foreseeable future, and an opportunity to invest in an asset class where operational strategy and change represent a real value creation lever. The latter is particularly what we focus on as investors, as it diversifies returns generation away from a binary (or over-) reliance on exogenous factors like financial engineering or the health of the capital markets at time of exit.

Where do you see the greatest opportunities and why?

As investors focused on the media and entertainment sectors, change is endemic to our investment style. We form theses based on where we believe these sectors are headed, and this informs our investment decision-making. COVID-19 has hastened many trends that we already saw in motion (such as digitization of content consumption), as well as introduced disruption that has engendered new modalities for how we work and how we fundamentally think about work.

This monumental shift in work, as one example, will reshape everything from our public physical spaces to the nature of human interactions in the years to come. While we invest in a sector that is particularly prone to evolution and/or outright upheaval, the pace of change in the coming years is a fantastic opportunity to leverage our industry expertise, form clear investment themes, and place capital to benefit from these views. In particular, our fund is seeking opportunities that back the online creator community, benefit from growth and globalization in over-the-top streaming, and have access to unique insights derived from large and proprietary data.

Where do you see the greatest challenges and why?

At its core, investing is an activity centered around people. At Atwater, we especially value investments helmed by top-notch management teams and rely on our ability to form deep partnerships to develop and optimize operational strategy. While there are undoubtedly great efficiency gains from less travel and more Zoom, I worry about the effects of not spending quality time in-person with key industry partners.

Another challenge we face, as a fund focused on media and entertainment, is the perception that our sector is overly “hit-driven” or that an asset base of intellectual property is less valuable than real assets. On the contrary, we feel lucky to be investing in a sector that is full of companies that are buoyed by meta-trends like digitization, while also uncorrelated to the overall macro-economy or public equities markets. Additionally, IP has proven itself to be an asset class that can significantly appreciate, not depreciate, with time. Hence, there is oftentimes a gap between perception and reality when it comes to media and entertainment.

What keeps you up at night?

As of late, I worry about society and the way that unrest has manifested itself at a global scale, over the past four years especially. I hope that we will build systems that instill economic purpose and security to those who have lost it, and that we also begin to assess the total economic and environmental cost of an activity or good when we make consumption decisions. 

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.