Print On July 4, 2023, a firm out of Provo, Utah, called Angel Studios released one of the biggest out-of-nowhere surprise hits and cultural flash points of the year, the child trafficking drama “Sound of Freedom.” But will investors take a leap of faith with the company’s plans to go public? Angel Studios last week announced its intention to become a publicly traded company through a merger with a so-called “blank check” company. According to public filings, the deal values the upstart entertainment operation at $1.6 billion, despite posting revenue of $45 million for the first half of 2024, up 6% from the same period of time last year. Advertisement The firm combining with Angel Studios is called Southport Acquisition Corp., which is a special purpose acquisition company, a.k.a., a SPAC, essentially a shell corporation created for the express purpose of buying a real company and thus taking it public. Southport’s shares currently trade on an over-the-counter marketplace, after having been de-listed from the New York Stock Exchange earlier this year. Angel is looking to list its shares on the NYSE or Nasdaq once the transaction closes. Once obscure and sometimes controversial on Wall Street, SPACs exploded in popularity a few years ago as an attractive way for companies to raise money without having to subject themselves to the scrutiny involved in a typical initial public offering, or IPO. This was a particularly enticing option at a time when the COVID-19 pandemic had ravaged an already shaky IPO marketplace. Advertisement How it works: The blank check company goes public, raising capital typically at an arbitrary stock price of $10 a share. The firm then goes out deal-hunting, looking for something to acquire. Once the SPAC identifies an acquisition target, the people who bought into the IPO sight unseen can decide whether to stay the course. Or, if they don’t like the deal, they can pull their money out. The strategy fell significantly out of favor in recent years as many SPAC-ified companies struggled or failed after hitting the stock market. Regulators started looking at SPACs more closely. The rap on SPACs has long been that they allowed firms to go public when they really had no business doing so, many of which were early-stage or “pre-revenue,” to use a financial analyst’s term of art (though more established companies have used SPACs as well). There’s a reason IPOs receive the kind of under-the-microscope treatment they do. So for Angel Studios to go public through a SPAC might be an unconventional move. But then again, little about the company’s path has been conventional so far. In fact, much of its persona has been built on defying standard Hollywood wisdom. Advertisement Angel Studios describes itself as a “values-based distribution company” for stories that “amplify light.” In practice, that means it specializes in films and TV shows that either reflect a certain faith-based worldview or have an inspirational bent. “Hollywood is selling conflict, power and war, but global audiences want more faith, inspiration and morality,” according to the company’s investor presentation, included with its public filings. There are plenty of companies that do faith-based material, but Angel Studios’ model is unusual even among that subset because of its reliance on a crowdfunding-like model. Members of the company’s Angel Guild pay annual or monthly fees and get to influence what shows and movies are green-lighted for release, based on concepts, trailers and other materials. The Guild numbers 375,000 members, including 153,000 non-paying accounts, according to Angel. Members receive benefits including early streaming access and, at a higher-paying tier, complimentary movie tickets. The company expects to hit 1 million members next year. The ethos of getting fans to buy in was a key component of the success of “Sound of Freedom,” which employed a pay-it-forward ticket selling strategy that allowed moviegoers to buy passes for others after seeing the Jim Caviezel picture. The movie grossed $250 million at the global box office, an astounding success for an independent production. Angel Studios hasn’t reached those lofty heights since, though it has put out a steady slate of theatrical releases, including “The Shift” ($12.2 million in box office), “Cabrini” ($20 million), “Sight” ($7.2 million) and “Sound of Hope: The Story of Possum Trot” ($11.6 million). Angel’s crowdfunding model has also supported the launch of shows including “The Chosen,” “Tuttle Twins” and “The Wingfeather Saga.” While some of its innovations have won admirers, the company has also ruffled feathers. In a recent setback, Angel Studios lost its deal for “The Chosen,” a huge hit, following an arbitrator’s decision in a dispute with the show’s producers, who accused the company of breach of contract. The company in May said it would appeal. Advertisement