Dolphin Entertainment, Inc. (NASDAQ: DLPN), a publicly-traded independent producer of premium feature films and digital content, and parent company of 42West, one of the largest public relations and marketing services firms in the entertainment industry, today announced a major expansion of its marketing capabilities and footprint through its acquisition of The Door, a leading lifestyle and hospitality public relations, creative branding, and marketing services agency.
This past December, the New York Observer listed The Door and 42West, respectively, as the third and fourth most powerful PR firms of any kind in the United States.
The Door boasts a formidable client list that ranges from celebrity chefs such as Rachael Ray to hotel groups such as Viceroy Hotels and Resorts to restaurant groups such as Starr Restaurants to consumer brands such as FAO Schwarz.
Under the terms of the transaction agreement, the aggregate consideration will be up to $11 million, which includes performance-based contingent consideration of up to $7 million. The $4 million of fixed consideration will be paid in two equal installments, the first of which was paid upon closing and the second of which will be paid on January 2, 2019. Each installment of fixed consideration consists of $1,000,000 of cash and 307,692 shares of common stock valued at $3.25 per share. The first $5 million of contingent consideration, if earned, will be paid with shares of common stock also valued at $3.25 per share, with the final $2 million of contingent consideration, if earned, paid in cash. The full contingent consideration will be earned if Adjusted EBITDA of The Door, as defined in the transaction agreement, reaches $2.5 million for any calendar year through 2021.
In 2017, revenue for The Door was $5,503,609 and operating income before guaranteed payments to partners was $568,794. During Q1 2018, revenue for The Door was $1,598,628 and operating income before guaranteed payments to partnerswas $203,832.
“There are strategic competitive advantages in bringing the leading entertainment PR firm and the leading lifestyle and hospitality PR firm under one roof,” said Dolphin Entertainment CEO Bill O’Dowd. “We expect additional revenue opportunities and operating synergies from this transaction, beginning with the opportunity to cross-sell services between the clients of 42West and The Door. Many of the world’s leading brands want to be part of the pop culture conversation. And many of the entertainment industry’s top projects and personalities covet the global reach of the world’s leading brands. Our ability to speak, work, and market fluently across the entire entertainment and lifestyle spectrum—from movies, television, and music, to hospitality, epicurean, and consumer products—multiplies the impact of each individual firm and makes the combination uniquely powerful.”
“We will continue to be focused on seeking quality opportunities to expand our Marketing Group,” continued O’Dowd. “The Door and 42West together represent a platform that we believe will be extremely attractive for leaders in a wide variety of marketing disciplines who will see the numerous opportunities to leverage our relationships and reach for mutual growth.”
“In joining forces with Dolphin and 42West, we are creating a formidable marketing and communications group that combines experience, expertise, and powerful client partnerships,” said The Door co-founders Lois Najarian O’Neill and Charlie Dougiello. “Ten years ago, we started The Door because we wanted to help brands find authentic pathways to success, at a time when technology and social media were just beginning to disrupt the public relations business. Now, having accomplished what we set out to do, we’re ready to take everything we’ve learned and, with the opportunity to offer access to the full range of resources of 42West, provide current and future clients with a specialized suite of cutting-edge, brand-elevating services. Simply put, we’re now in a position to execute more good ideas that will benefit our clients seamlessly and at scale.”
“We are beyond thrilled to welcome The Door as a sister agency in the Dolphin family,” 42West co-CEOs Leslee Dart, Amanda Lundberg, and Allan Mayer said in a joint statement. “We’ve long admired the intelligence and creativity with which Lois and Charlie have built The Door, and we share a common vision and excitement for the possibilities of what we can do together. In terms of our respective business operations, not only do we extend each other’s range in terms of the added services and expertise each of us can now offer, but by working together, we expect to be able to attract and service a much wider range of clients than ever before. Indeed, as a result of our access to the services and expertise of The Door, we look forward to developing entirely new lines of business.”
As a subsidiary of Dolphin Entertainment, The Door will continue to focus on media relations, social media and design, digital content marketing and strategic communications counsel for the lifestyle, consumer package goods, hospitality, entertainment and epicurean industries, operating under its own name, led by its existing management team, out of its existing offices in New York, Chicago, and Los Angeles, with Najarian O’Neill serving as President and Dougiello as Chief Executive Officer.
Tom Strauss of Strauss Capital Partners advised The Door. Greenberg Traurig LLP served as legal counsel to Dolphin Entertainment and Golenbock Eiseman Assor Bell & Peskoe LLP for The Door.
This press release does not constitute an offer of any securities for sale. The shares of common stock to be issued in the acquisition have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.