On My CV: John Cowie

What was the deal?

The sale of Blippi, one of the world’s most popular digital children’s content channels, to Moonbug Entertainment, a special-purpose vehicle backed by US media fund Raine Capital. Blippi’s business is made up of its YouTube channel, associated brands and merchandising contracts. The value of the acquisition was not disclosed, but it was one of three businesses we sold to Moonbug, and we’d had other offers – we know that revenue multiples were often into double digits. The deal completed in June 2020, 14 months after we got involved.

How were you introduced to the deal?

Alfie Chubb is the M&A guru behind Moonbug. We’d previously sold two digital children’s channels to Moonbug – Little Baby Bum and a majority stake in Toddler Fun Learning. Alfie asked us to speak to Stevin John, the creator of Blippi. He hadn’t had much joy with him and hoped we could broker a sale. So, it was quite an unusual introduction, as I was effectively introduced by the potential buyer.

Who were the advisers?

We were the financial adviser to Blippi and Stevin John. Blippi’s legal advisers were Fieldfisher in the UK and Blank Rome in the US. Moonbug carried out its own financial and commercial due diligence, and used Reed Smith for the legal work in both the US and the UK.

How was the deal structured?

The deal was the sale of the business and assets, which included the Blippi YouTube channel and the associated IP, its associated brands, merchandising and live show licences. The consideration was payable over two years.

What were the challenges?

Stevin was essentially a one-man band, which presented logistical challenges – finding availability to discuss and explain key aspects of the transaction while he continued to film and produce content was difficult. And, since he was the sole decision-maker, gaining the level of trust to ensure all of his concerns were dealt with and satisfied was another challenge.

It was really just a matter of whether he wanted to continue doing what he was for the next five years and potentially earn some of the money that he might get today, or take the huge capital sum on offer and continue producing content for his YouTube channel. It seemed a very straightforward question to us, but we patiently guided him through it without cajoling him. It was a psychological exercise more than anything.

Were there issues completing the deal during lockdown?

Around Christmas 2019, Google AdSense, YouTube’s owner, was fined $250m for failing to prove that it had received consent from younger viewers to watch its adverts and had to change its business model, knocking nearly 70% off YouTube revenues overnight. We knew that would be resolved, though, and had to stand firm on price. There weren’t many people who would buy Blippi at the price Moonbug had offered, so the only negotiating leverage we had was the nuclear option. Right up to completion, Stevin would say: “I don’t have to do this.”

What happened to the business after the deal?

Blippi is now on Amazon and has developed new content. Moonbug, meanwhile, was acquired by a Blackstone-backed acquisition vehicle for around $3bn in November 2021. Moonbug’s revenue last year was £40m, so on paper it’s a revenue multiple of more than 50x, which is incredible. The question I guess now is how will Blackstone make money out of that deal?