Building an Empire: What we can learn from Reese Witherspoon 🎬
Athletes from LeBron James to Naomi Osaka are starting their own production companies and they could do worse than to emulate the Legally Blonde actress turned entrepreneur's script.
Not yet a subscriber? Join 1000+ sports business leaders from AC Milan to Zoomph that read Sports Pundit every week to get impactful industry insights.
In August last year, Reese Witherspoon sold her production company, Hello Sunshine, for $900 million.
The company, which made ‘Morning show’ for Apple TV and ‘Big Little Lies’ for HBO, was acquired by Candle Media, a company backed by the private-equity firm Blackstone.
(Image: Hello Sunshine)
Witherspoon, like many other personalities, realised a huge opportunity to integrate vertically.
Rather than just being the talent that helps sell the tickets at the box office, she recognised the value in being part of the production company that was creating the content and seeing the upside there, too. Then, partnering or selling to the streaming platforms – as that part is much harder and too expensive to execute individually.
This trend has no doubt been fuelled by the streaming wars. Netflix, Disney, Hulu, etc. are all fighting for subscribers and looking for ways to differentiate from one another, creating a massive demand for original content.
As Shaan Puri explains on his podcast My First Million, “[The streaming wars have] created this huge imbalance. There used to be a lot of content and a small amount of distribution, whereas now there is a lot of distribution fighting for small amount of content.”
(Image: YouTube/ My First Million)
This is amplified as the distribution players have, according to Puri, “Decided the prize is big and are willing to lose money for several years and invest billions into content and, essentially just be the last person standing.”
This is called investing into a J curve. “The curve goes down and you lose a bunch of money and then goes way up and makes money later.”
What this means for the production companies is that streaming platforms will overpay. This has led to personalities like Witherspoon and Kevin Hart, as well as athletes like LeBron James and Naomi Osaka, creating or co-founding their own media production companies.
With all these personalities from sports and beyond pouring into the market, what has made Witherspoon’s Hello Sunshine, in particular, so special?
Focus on An Underrepresented Demographic
Besides being fairly early to the trend, the first point of genius for Hello Sunshine was that it ‘puts women at the centre of all we create, celebrate and discover’ – something that Hollywood has, traditionally, neglected to do. All their content has a very clear purpose and is directed at a specific, and underserved audience. This purpose can’t be underplayed.
(Image: Matt Winkelmeyer/ WireImage)
Like Witherspoon, LeBron James’ media company aims to target another traditionally neglected demographic. The NBA All-Star stated that he aims to ‘give a voice to Black creators and consumers who’ve been pandered to, ignored, or underserved’.
He recently made the news for his involvement in an upcoming documentary on the Coloured Hockey League, called “Black Ice” – which, according to reports, had already sold film rights to another party. It does, however, demonstrate his direction of travel.
Going Direct to Consumer
Hello Sunshine has also leveraged Witherspoon’s network and extended into direct-to-consumer brands. And this is where it gets really clever.
In addition to producing content, Hello Sunshine also curates a book club called Reese's Book Club. Here, Witherspoon announces a new book pick every month to over 2.4 million followers. The book club, like with Hello Sunshine, aims to bring women's stories forward.
This all plays into a wider business model which Puri explains. “She goes to those books [authors] and says, ‘Hey, I'm about to blow your *** up’ but also, I want the option rights to make a show out of your book if I can get that.”
“She’s essentially market testing the books with her book club and making money there, and then using that leverage to get the rights to the book to make a show out of it, which she can then sell to the streaming platform… [It’s] an amazing model.”
Books that have made the jump from page to screen include ‘Where The Crawdads Sing’, ‘Little Fires Everywhere’, ‘Eleanor Oliphant is Completely Fine’, ‘Daisy Jones & The Six’, and ‘The Last Thing He Told Me’.
Other books endorsed by Witherspoon have been monetised in different ways. Take ‘Fair Play’, for example. The book written by Eve Rodsky unpacks a unique, solutions-oriented answer to rebalancing the domestic responsibilities at home. It has since been turned into a podcast, documentary, and even a card game (of sorts).
On the flip side, Hello Sunshine have also taken an ownership in The Home Edit, a business which features in a Witherspoon-produced reality TV series on Netflix called ‘Get Organised With The Home Edit’.
The show, which features expert home organisers helping celebrities and everyday clients contain their clutter, has been a big hit and returned for a second season. The business has gone from strength to strength as a result. The website sells both consultancy services and branded organisational tools.
How personalities, athletes, and sports organisations utilise these lessons is up for debate, but it certainly provides an eye-opening playbook.