Why I Backed and Joined the Board of Thunderbird Entertainment (TSX.V: TBRD)
$265 million was wired to my company’s bank account on March 8, 2018, my 30th birthday. It seemed like a dream, but I had just worked myself out of my first founder/CEO job and celebrated the occasion over a big barbeque with family and friends.
A fire was lit under me as a teenager to become financially independent. As a young adult, I learned how to spot opportunities and act on them. I launched Lithium-X in 2015. A resource company with projects in Argentina and Nevada, it was designed to profit from the rise of electric cars sweeping the world. The experience building Lithium-X together with our team, as well as the support we received from shareholders, was tremendous. When a Chinese firm acquired Lithium-X earlier this year, I took a few months off to reflect before going back to the drawing board.
I’ve been searching for other major trends to get behind ever since, and I think I have found a gem— in Hollywood of all places.
Netflix has, in the words of Jim Cramer, “totally transformed the way we watch TV”. Services like it — e.g, Amazon Prime, HBO Go, Hulu, and others — have been complete game changers for the entertainment industry. They’ve harnessed the power of technology to make viewing high-quality film and television possible almost anywhere in the world.
This Netflix and Amazon Revolution has already been a massive win for investors. NFLX and AMZN are two of the best-performing stocks in history. At the heart of this success is quality content that people want to watch — binge watch.
During a recent CNBC interview, Guggenheim’s senior analyst Michael Morris framed the issue. “It’s not only about making a volume of shows, but making sure they have high-quality shows,” he said. “What we have heard from media industry leaders is that the biggest scarcity isn’t getting access to shows per se, but it’s having the best writers, the best producers, make those shows happen.”
Like any business, having the top talent will always help drive success. But, so does the broader business environment.
“If you’re in the content production business in Hollywood, this is the absolute golden era,” said Bloomberg Intelligence’s senior media analyst Paul Sweeney during an interview in April. “Everybody is upping their game…to compete against the Netflix and the Amazon Primes. So you see networks, traditional cable networks, like TBS and Turner and all those networks, and USA, that would just be content running re-runs, now they can’t do that. Now they have to create original scripted programming.”
What all of this means is the Netflix and Amazon Revolution is creating a massive opportunity for those creating quality scripted programming and their investors.
Thunderbird Entertainment is a rapidly growing multi-platform entertainment company with offices in Vancouver, Los Angeles, Toronto, and London, and a new office in Ottawa coming soon. After more than a decade of establishing itself as a private company, it is about to commence trading on the TSX-Venture Exchange under the symbol “TBRD” later this week.
Thunderbird owns a library of content in excess of 600 hours, and currently has 16 shows in production with total budgets exceeding $100 million. The company develops and produces factual, animated, scripted, and unscripted content under various divisions, including Atomic Cartoons and Great Pacific Television, in addition to running a theatrical and television distribution unit.
Canadian business legend Frank Giustra invested in the company eight years ago when he and Thunderbird founder Tim Gamble purchased an interest in the iconic cult classic Blade Runner. Ever since, the company has experienced incredible growth.
Currently, Thunderbird produces content for a voracious list of partners, including Netflix, Amazon, Discovery Channel, National Geographic, TLC, CBC, Global, CPAC, The Weather Channel, YouTube, Facebook, ABC Australia, Seven Network, Animal Planet, HGTV, W Network, and APTN. These are some of the outlets driving Thunderbird’s growth.
And you’ll recognize a lot of their shows. Recent hits include the animated Netflix original series Beat Bugs, featuring reimagined songs from the Beatles’ catalogue sung by the biggest recording artists of today; the thrilling sequel to the cult classic Blade Runner, Blade Runner 2049; Discovery Channel’s popular Highway Thru Hell series depicting the toughest men in the towing business facing off against Mother Nature; and Canada’s top TV comedy, Kim’s Convenience.
In addition to its substantial library, Thunderbird is already an impressive business. For the 9 months ended March 31, 2018, Thunderbird generated (unaudited) revenues of $131 million and net income of $3.7 million, and adjusted EBITDA of $8.3 million. The company has a modest market cap of roughly $93 million (46.43 million shares at $2 per share) and working capital of $16.7 million.
Key to Thunderbird’s long-term growth strategy is the development of a growing library of owned content and the commercialization of that intellectual property. It’s a strategy similar to that of Spin Master (TSX:TOY), which has capitalized on the success of animated kids series like PAW Patrol to build a global entertainment business with a market cap north of $4.5 billion and more than US $1.5 billion in annual revenue, principally from sales of licensed/branded products (e.g., toys, video games, clothing, etc.), in addition to television distribution income.
I believe Beat Bugs and other upcoming Thunderbird series — such as Princesses Wear Pants — have a real potential to become global entertainment properties like PAW Patrol, with thriving post-production merchandise businesses.
Jennifer McCarron, Thunderbird’s CEO, is boldly aiming to lead the company to the top of the media landscape. “Thunderbird is the next global studio,” she told me during a recent interview. “With the exploding need for content, with our track record of success, we are uniquely positioned to be the next Pixar. It’s going to happen!”
A reminder: Disney bought Pixar from Steve Jobs in 2007 for over US $7 billion.
“There is such an exploding need for content now because there are so many more platforms,” added Jennifer. “There are very few high-level quality content producers trusted by companies like Netflix, Amazon, and Discovery Channel. We are lucky to be one of them.” And it’s not just the quality of content that Jennifer focuses on, but also a commitment to creating socially responsible content that aims to make the world a better place.
Jennifer and Thunderbird’s President, veteran producer Mark Miller, have been instrumental in maintaining relationships with iconic brands like Disney, Marvel, Lego, and Minecraft.
I’m excited to serve alongside and learn from an impressive board of directors. In addition to Frank Giustra, Tim Gamble, Jennifer, Mark, and myself, the board is headlined by Ivan Fecan, the former CEO and President of Canada’s largest private media company, CTVglobemedia; Francesco Aquilini, the owner of the NHL’s Vancouver Canucks; and Frank Holmes, the CEO/CIO of US Global Investors.
This is Frank Giustra’s first major entertainment endeavour since creating Hollywood’s largest independent studio, Lionsgate Entertainment, in 1997. “I think that having a pure content play, now, at this moment in history, is a very enviable position to be in,” Frank told me recently. “Thankfully we took the last eight years to be ready for this situation right now, and I’m really excited about it!”
Watch my new film, as I explore the opportunity Thunderbird presents: “The Backdoor Way to Profit from Netflix & Amazon.”
Follow Thunderbird Films “TBRD” on the TSXV and do your own due diligence on the company’s website and SEDAR profile.
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