Candle Media Cuts Costs, Reorganizes Divisions Amid Streaming Pullback

Candle Media, the entertainment company backed by private equity giant Blackstone and headed up by former Disney executives Kevin Mayer and Tom Staggs, is reorganizing around two divisions, The Hollywood Reporter has confirmed.

The internal changes at Candle Media, first reported on by Semafor on Tuesday, will see animated series folded into the company’s children’s media company Moonbug Entertainment, which launched in 2018. Moonbug, which was acquired by Candle Media in 2021, creates and distributes Cocomelon and the series Blippi. 

A second division, Candle Studios, to encompass live action content, will be led by Hello Sunshine CEO Sarah Harden. The company acquired Reese Witherspoon’s Hello Sunshine, which produces series like Big Little Lies and The Morning Show, in a deal valued at $900 million in 2021.

Candle Media, backed by investment capital from funds managed by Blackstone’s private equity business, has grown in recent years through pricey acquisitions, including for Hello Sunshine, Moonbug, Fauda maker Faraway Road Productions and a stake in Will and Jada Pinkett Smith’s Westbrook Inc.

But those buys left Candle Media saddled with debt — Bloomberg pegged the debt figure at $1 billion as of the end of 2023 — just as the era of Peak TV went bust and demand by global streaming players for original content has plateaued. The result is a company looking to cut operating costs as part of other internal initiatives to better monetize big-ticket acquisitions.

Mayer, the architect of Disney’s streaming strategy, had bet that the value of high-end content created and sold by independent studios like Candle Media would significantly rise amid streaming wars competition.

That was before the impact of the dual Hollywood strikes last year, which signaled the end of easy money to build out streaming platforms and generous and plentiful overall deals for talent to star in original content movies and series.

Now as higher interest rates raises Candle Media’s debt costs, the indie studio business has just got that much harder to turn a profit in as major investors look for quality and returns on investments.