‘Top Chef’ Company Explores Possible Sale (Exclusive)

Variety

Magical Elves, the reality TV shingle behind “Top Chef” and “Project Runway,” is evaluating bids for part or all of the company, sources close to the situation have confirmed to Variety.

Elves’ toppers Dan Cutforth and Jane Lipsitz have selected European bank About Corporate Finance to run the sale process. The shingle has already attracted a handful of bidders, according to individuals with direct knowledge of the talks, who also caution that any potential negotiations are in their early stages.

Insiders estimate that Magical Elves is valued at around $80 million to $100 million.  Like other reality TV companies, however, the value in Magical Elves is largely tied up in the skill of Cutforth and Lipsitz as producers, and their deep industry relationships. Magical Elves does not control outright “Top Chef” and other franchises it produces, so long-term profits derived from the company’s roster of shows are limited.

Cutford and Lipsitz founded Elves more than a decade ago, and have produced long-running skeins including “Runway” and “Chef,” as well as “Fashion Star,” “Project Greenlight,” “The L Word” and “Last Comic Standing.”

Magical Elves also broke into the true crime space recently, partnering with Dick Wolf for TNT’s “Cold Justice,” which debuted earlier this month.

Even with a flourishing slate of shows, reality TV shingles’ annual earnings rarely meet that of their scripted counterparts, underscoring that a successful unscripted biz doesn’t give producers the same back-end value that the scripted business does. Several powerhouse indie reality shingles have been sold to larger studios in recent months, including “Duck Dynasty” production company Gurney Prods. to ITV Studios (About Corporate Finance helped advise on that transaction). As high volume output is key to a reality company’s financial bottom line, sale to a larger studio offers an indie shingle the needed resources to pump out more content.

Any new investment would help fund Elves’ general corporate purposes and expansion, including more production.

Elves’ interest in a potential sale or investment comes amid heightened interest in the reality production space. Cable networks like TNT, TBS, USA and AMC turn more and more to unscripted programming to help bolster their lineup of original programs, and younger nets like Esquire and Pivot are aligned primarily with the unscripted space. What’s more, cablers including TLC, A&E and GSN have seen ratings spikes within the last year thanks to original reality formats like “Here Comes Honey Boo Boo” and “American Bible Challenge.”


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