Kevin Mayer, former CEO of Tiktok and former Disney exec and Carl Daikeler, co-founder, CEO, and Chairman of The Beachbody Company joined Yahoo Finance Live to discuss Beachbody going public in a $2.9B SPAC merger deal.
SEANA SMITH: Former TikTok CEO Kevin Mayer, his Forest Road SPAC making a big acquisition, setting its sights on BeachBody. It's a three-way merger that values the combined entity at $2.9 billion. We want to bring in Kevin Mayer, the former CEO of TikTok and former Disney executive. We're also joined by Carl Daikeler. He is the co-founder and CEO and chairman of BeachBody, and of course, our very own Brian Sozzi joining the conversation.
Kevin and Carl, congratulations to you both on this deal. Kevin, I'm going to go to you first, just, why BeachBody? Why does it make sense? And what's the opportunity that you see in the space?
KEVIN MAYER: Well, BeachBody really is the Peloton for everyone else, for the masses. They're adding a connected fitness bicycle to their already very successful business, which has been in-- they've been in business profitably and growing for 22 years. And they have a great subscription video on-demand business for fitness, which fits my background pretty well, having launched Disney Plus.
They also have a great nutrition business that's growing. And it takes advantage of social commerce. And that's one thing I noticed at TikTok, is that one of the highest growth opportunities in that ecosystem is for influencers to sell products that they believe in to their followers. And that's another thing that BeachBody does really well. And they're just a really well-positioned company with world class executives, world class product, and now three business platforms that are all very exciting.
So when it came time for FRX to find a partner, we were inundated with more than 50 different companies that were interested in combining with us. Given my background and my partner Tom Staggs' background and the Forest Road team's background in Disney and premium IP and digital subscriptions and the rest, we felt this was just a great company to be partnered with.
BRIAN SOZZI: You know, Kevin, given that background, we saw what you did. You built Disney Plus, really, from the ground floor. So you understand markets and transitions. Why do you think Peloton doesn't have a lock on the connected fitness market?
KEVIN MAYER: Well, it's a big market with a massive TAM, and it's global. And no one has a lock on it. And the one thing I noticed at Disney is that people will subscribe. There's no winner take all dynamic in the video streaming service business, nor is there one in the fitness business. And there's no better company I think that's better positioned already with a foundation of 2.6 million paying subscribers, which is bigger than Peloton, there's no company better positioned than BeachBody to take advantage of this challenge.
And by the way, there are several growth vectors that are happening, that are buoying the prospects of BeachBody. There is the streaming business that I worked on at Disney. That is a very high growth underlying marketplace that BeachBody is taking advantage of. There is a connected fitness. They're very similar to Peloton and bringing on a connected bike and at a much less expensive price point, a very high quality product. And also, health and wellness generally speaking, there are three big growth opportunities, and BeachBody is positioned across all three in a way that I think is quite unique.
ADAM SHAPIRO: Hey, Carl, who are you going to target? I mean, some of us are more dad bod than beach bod. Who's the target audience for this?
CARL DAIKELER: Well, that's a really-- that's exactly the point, quite honestly, is, as Kevin said, the price point of the MYX bike is around $1,300, which is exceptionally accessible. But it's not just that. What they are creating is very similar to what the BeachBody ethos has been for two decades. And that is making in-home fitness a gratifying and really enjoyable experience, a little bit less competitive than perhaps the leaderboard.
And again, this is not a zero sum game. Peloton does a terrific job, but what our goal is, is to get people results and reach the masses. Probably two to three times the prospective audience that Peloton has because of our price point for our bike and our subscription service.
And quite frankly, our approach to content, to Kevin's point, that is truly gratifying, interesting. It's like watching a reality show. This is what we've done for two decades to make that experience with the screen more than a workout that you dread, but instead an experience that you look forward to because it's going to be entertaining at the same time that you're getting results.
BRIAN SOZZI: Carl, you have a big goal. Last year, if I have it right, 30 million sales. You have a goal to reach, what, 700 million sales just on the bike side. Are you having problems getting bikes to market? You know, it's something that Peloton continues to highlight. They just can't get the supply to market, in many respects, to meet some of the goals they have.
CARL DAIKELER: Well, again, I can't speak to Peloton's situation, except, you know, it's a problem of their own making because the product is so popular. We're lucky that, in fact, one of the reasons that we decided to bring MYX Fitness into this merger with FRX and BeachBody was the fact that their supply chain was so strong. They've literally got four times the capacity than they currently satisfy. And they sold 27,000 bikes in their very first year in business.
So it's a really strong supply chain, but obviously, we're going to go about this in a way that makes sure that it puts the customer first. We don't want people waiting three months for a bike. We want people to get their bike in a couple of weeks, three weeks on the outside.
But that means that we're going to have to manage our marketing at the same time that the good news is, we've got 86 programs on BeachBody on-demand. We've got over 4,000 workouts on the Openfit Platform. We have every modality of fitness that we stream into households and on every connected device of our 2.6 million subscribers. We streamed 180 million workouts last year alone. So our job is going to be to keep people engaged, give them all the options that they want, and then also include a great piece of equipment that's connected to great content.
SEANA SMITH: Kvein, switching gears just a little bit, I want to get your thoughts on the TikTok news that we got out this morning. TikTok's deal with Oracle on hold, Biden administration looking into this. First, just your thoughts on this. Did you see it coming? And then, two, what do you think the Biden administration should focus on as they look into this?
KEVIN MAYER: Yeah, look, I read the same headlines that you read. I don't know how accurate it is. I don't-- clearly, it's not at the top of the agenda for the Biden administration, and it probably shouldn't be. I'm not sure it should have been at the top of the agenda for the Trump administration.
So I'm not sure what to make of the news. I do know what I think is the right way to go. And I don't think forcing a sale of a company is the right thing to do. I think that was a mistake. I do think that forcing or asking these social media companies-- and it's not just TikTok, it's all of them-- to be more transparent with the moderation policies, more transparent with how their algorithm works.
So algorithms are very powerful. That's what consumers see. And those algorithms control the streams that people engage with. So transparency and accountability and security for data. So I think that that's what the government should focus on, making sure that TikTok maybe leads the way in those three areas, frankly. And I wrote a blog in July when I was CEO of TikTok outlining that. And I still believe that's the right way to go.
ADAM SHAPIRO: Kevin, real quick, because you do know media so well-- you were there with the acquisition of 21st Century over at Disney. When you look at Fox and what they're going on, you think they're for sale? Fox News, would they be an attractive property to a Jeff Bezos or somebody?
KEVIN MAYER: I'm not sure Jeff Bezos would buy Fox News. That's probably not the politics that he shares. Look, I think that they are a standalone company. I have a lot of respect for Fox. I did-- I led that transaction for Disney, like the other transactions I led. And I have no idea what their plans are. I think they're a good, profitable business positioned pretty well in the market. You probably should ask the Fox guys what they think of that.
SEANA SMITH: Kevin Mayer, always great to speak with you, and Carl Daikeler, thank you so much for joining the show. Congratulations to you both again, and thanks for making the time to join us. And of course, our thanks to Brian Sozzi as well.