Backstory: Providing liquidity in the entertainment world

Hollywood is a small town but not so small that some of its leading denizens would care to live, and in some cases die, without the liquidity-generating services of Content Partners LLC.

Those services, available for just seven years, have already supplied much-needed cash to royalty owners with interests in 119 films and five television series. And though the Los Angeles-based company prefers to operate under the radar -- for reasons soon to be explained if not already apparent -- it surfaced in a big way this month by acquiring a 50% interest in TV's high-profile "CSI: Crime Scene Investigation" franchise.

The "CSI" deal, struck between Content Partners and the private equity arm of Goldman Sachs Group Inc., delivered a half-interest not only in the original CBS blockbuster but also in its two spinoffs, "CSI: Miami" and "CSI: NY." While terms weren't disclosed, press accounts put the price of Content Partners' stake in the three-show package at or above $400 million.

This price range for "CSI" made the investment by Content Partners its largest not by percentages but, most likely, by factors. So, for reasons of size and visibility ("CSI" is TV's most successful franchise after "Law & Order"), the entertainment finance firm that clinched the deal parted with tradition and issued a news release about its investment and, by extension, itself.

The release even laid out Content Partners' business model: "It is the only firm that specializes in buying back-end profit participations from service participants (writers, directors, producers, actors, talent agencies, and estates) and financial participants (investors, banks, financial institutions, hedge funds, and insurance companies)."

This list of potential clients, which in informal discussions was extended to include widows, progeny and ex-wives, essentially encompasses anyone blessed with a passive revenue income stream from a profitable TV or film property. Actual clients, however, are those who lack the flexibility or the patience to wait for those income streams to pay out.

Content Partners serves these clients as a special kind of liquidator: one that can be trusted to keep quiet about whatever it is that prompts any such beneficiary to sell, that knows showbiz well enough to place a fair value on yet-to-be generated back-end profits and that has access to enough capital to buy out between 50% and 100% of any one client's participation in those profits.

"It's always a soft sell," says a person who's familiar with the practice and, being beholden to its custom of confidentiality, asks for anonymity. "Content Partners would never go in and say, 'Hey, Charlie Sheen, you should sell.' But the firm does know his representatives well enough so that, should Charlie Sheen ever want to sell, they'd know just where to go."

All they'd have to take with them, should they decide to go, are the relevant contracts, accounting statements, audit reports and any projections for the income stream they represent. Then, as Content Partners explains on its website, "We take it from there and present you with a firm offer."

That offer is, at its most basic, the result of a discounted cash flow analysis. But it then gets massaged by Content Partners' co-founders -- Steven H. Kram and Steven E. Blume -- who between them have 60 years of entertainment industry experience. It is this experience that makes them so confident, even in the fast-changing field of entertainment, of not only analyzing a client's forward participation but putting real money behind their analysis.

Here's how they got that way: Kram spent nearly two decades as the COO of the William Morris Agency LLC, where, in addition to supervising its film, TV and commercial departments, he oversaw all business affairs, human resources and litigation activities; Blume served as the CFO of talent-rep firm Brillstein-Grey Management from 1997 through 2005 -- a stint preceded as CFO at Hemdale Film Corp. when it produced and financed such classics as "Hoosiers" and "Terminator" as well as back-to-back Academy Award Best Picture winners "Platoon" and "The Last Emperor."

The two longtime friends opened Content Partners in 2006 with $100 million in funding, much of it from Broadcast.com co-founders Mark Cuban and Todd Wagner. They've since amassed a portfolio that includes income streams from films representing more than $12.4 billion in worldwide box office sales. And, as the "CSI" TV deal indicates, they've no sense of slowing down. But why should they when, in an almost literal sense, Kram and Blume wrote the very contracts they're now in business to buy?