EXCLUSIVE: The billion-dollar question on Broadway and the West End: Who will buy ATG Entertainment, an increasingly dominant force in live theater.
Blackstone Inc., the private equity and real estate giant led by billionaire Stephen Schwarzman, is rumored to be exploring a takeover of the multinational producer and theater owner, after acquiring a minority stake last year. Buying all of ATG Entertainment from another private equity company, Providence Equity Partners, would be one of commercial theater’s priciest transactions ever.
“For so many reasons, it makes all the sense in the world,” said David Wasserman, an independent investment banker who isn’t working with ATG or Blackstone.
Providence Equity Partners is a motivated seller. Amid a global dealmaking slump, its funds have owned the company formerly known as Ambassador Theatre Group for 12 years, double the median holding period for private equity. Based on my calculations from filings in the U.K., where ATG is incorporated, Providence’s purchase of ATG has cost about $1.5 billion. That includes the price of additional venues and subsidiaries ATG acquired to make the company more attractive to other institutional investors.
Schwarzman recently said that Blackstone expects to invest $500 billion in Europe over the next decade. By virtue of the investment company’s minority stake, ATG is a top holding of a 20-month-old Blackstone private equity fund for wealthy individuals, according to a fund filing with the Securities and Exchange Commission. Along with artificial intelligence and other investment sectors, “experiences” is one of Blackstone’s “high-conviction themes.”
Tech and travel executive Ted Stimpson hasn’t made a public comment since he was abruptly named ATG chief executive in October 2023. An ATG spokesman declined to comment for this story. Emails to Blackstone’s communications office weren’t returned. Broadway Journal hasn’t been able to confirm the veracity of the Blackstone-ATG rumor, which has circulated widely in theater and finance circles.
Any deal would come at a challenging time for Broadway, which is grappling with runaway production budgets and a paucity of musicals recouping their costs. ATG and its producing partners raised a head-spinning $24.25 million for its own revival of Cabaret, which has been a resounding flop. Cabaret is scheduled to end its run at the August Wilson Theater Oct. 19 — unless it closes earlier to stanch additional losses of hundreds of thousands of dollars a week.
ATG is a lead producer of the fall’s starry revival of Waiting for Godot with Keanu Reeves and Alex Winter, in ATG’s Hudson Theatre; and Art with James Corden, Neil Patrick Harris and Bobby Cannavale, in the Shubert Organization’s Music Box Theater. ATG earlier produced revivals of Andrew Lloyd Webber’s Sunset Boulevard in ATG’s St. James Theater, and Neil Simon’s Plaza Suite in the Hudson. ATG subsidiary Sonia Friedman Productions produced the special effects-heavy new plays Harry Potter and the Cursed Child in ATG’s Lyric Theater, and Stranger Things in the Nederlander Organization’s Marquis.
“Content production” helps keep ATG theaters busy, which drives profits. The five Broadway houses that ATG bought from Jujamcyn Theaters earned a profit of $34 million on revenue of $116 million in the year ending March 30, 2024, according to an ATG disclosure. ATG paid about $600 million for Jujamcyn in 2023. (ATG’s parent, International Entertainment Holdings, reports results in British pounds, which I converted into dollars.)
ATG controls seven Broadway houses, 10 on the West End and dozens more in the U.S., U.K., Germany and Spain. In addition to renting its venues to producers, it sells food and beverages to theatergoers, charges for the convenience of skipping lines to enter its venues and accessing its VIP lounges, and earns fees from ticketing and handling advertising and marketing.
ATG is now Broadway’s third-largest theater owner, competing with the Nederlander’s nine venues and Shubert’s 17. It’s unlikely any new theaters will be added to the 41 Broadway-branded houses anytime soon, especially given the high cost of theater construction.
“It’s hard to build new ones,” Jeff Hooke, a private equity expert and senior finance lecturer at Johns Hopkins Carey Business School, told Broadway Journal. “That’s protection from competition.”
Len Blavatnik is also part of the tiny pool of potential ATG suitors. Ukraine-born and British-American, he has 31 Broadway credits, mostly as a co-producer, and he bought the Theatre Royal Haymarket on the West End in 2018. Blavatnik made his initial fortune during Russia’s privatization following the fall of the Soviet Union; Bloomberg LP estimates his net worth at $40 billion. Emails sent to his company, Access Industries, weren’t returned.
Providence Equity Partners’ billionaire founder Jonathan Nelson is familiar with Blavatnik. In 2011, Providence was among the investors that sold Warner Music Group to Blavatnik for about $3.3 billion. Blavatnik later took the company public.
Schwarzman need not look far to find a champion of live theater. Since 2018, his wife, Christine Schwarzman, a former intellectual property lawyer, has used what she calls her “considerable resources” to produce and co-produce 30 Broadway shows. (Co-producers raise money and/or invest themselves.) Current projects of her company, No Guarantees, include the musical comedy Schmigadoon!, which had a well-received tryout at the Kennedy Center and is eyeing Broadway this spring, following two seasons on Apple TV+.
No Guarantees has a long-term lease on the downtown Astor Place Theater and sponsors jargony research about how to grow the theater audience. Its most recent study, Unveiling the Value of Broadway: How Pulling Back the Curtain on the Broadway Experience Triples Its Value Among Next-Gen Theater Goers, describes youngish adults who prioritize “Emotional Return on Investment, or ERoI, where the return on time and money spent is not about practicality but about striking a deep emotional chord.”
Christine Schwarzman has a close working relationship with Sonia Friedman and hosted a party for Tony voters for the hit revival of Merrily We Roll Along at the Schwarzmans’ Park Avenue triplex in 2024.
ATG’s operating profit rose 18 percent to $180 million in the year ending March 2024. But credit analysts deem the company a mixed bag. While praising its “diverse venue network, including strategic Broadway and West End locations,” S&P Global cautioned in a report that “ATG’s dependence on discretionary spending preferences and overall limited size and scale in the fragmented live entertainment industry constrain long-term prospects for its earnings growth and resilience.”
Moody’s Ratings also found ATG constrained, by “elevated leverage” — $1.5 billion of net debt as of March 2024 — “and the acquisitive nature of the business,” which may lead to ATG taking on more debt to finance new deals.
President Trump, whom Stephen Schwarzman endorsed last year, may help stoke interest in ATG. Earlier this month, Trump signed an executive order encouraging overseers of 401(k) retirement funds to add “alternative assets” such as private equity. Barron’s reported that “access to even a sliver of the $12 trillion in assets sitting in 401(k)s and similar retirement plans could drive industry growth for years.” That growth could increase investment demand for ATG and other large private companies.
Everyday investors may eventually be able to own part of Broadway and the West End in their 401(k)s. First, a handful of billionaires will play an outsized role in determining what happens to ATG.
