HPS, Oaktree Take Control of Hollywood's MBS Group

In a significant shift within the entertainment production services sector, HPS Investment Partners and Oaktree Capital have assumed control of MBS Group, a critical supplier of lighting and production equipment to major Hollywood studios. This transition follows a debt default by MBS Group, signaling a challenging period for companies supporting the film and television industry amidst evolving content spending patterns.

The private credit powerhouses, HPS Investment Partners (acquired by BlackRock in 2025) and Oaktree Capital (now fully owned by Brookfield), are part of a broader creditor consortium that has effectively taken over the business. This move involves converting hundreds of millions of dollars in outstanding debt into equity. Reports indicate that approximately $900 million in debt has been restructured, with lenders injecting $40 million in fresh capital to stabilize operations and fuel future expansion. This infusion aims to reposition MBS Group for renewed growth after navigating significant financial headwinds.

The financial strain on MBS Group appears linked to a broader contraction in the entertainment sector. Since the peak of the streaming boom in 2022, spending on scripted television has reportedly declined by as much as 20%, according to industry trackers. This slowdown has impacted the demand for production services, forcing companies like MBS Group to contend with reduced budgets and project pipelines. Even a recent uptick in film production during 2025 has been largely attributed to smaller, independent projects, which may not require the same scale of equipment and services.

The previous owners, Hackman Capital Partners and Affinius Capital, have exited their investment as part of this transaction. They had acquired MBS Group from Carlyle in 2019 for $650 million, a period characterized by low interest rates and aggressive expansion fueled by a content creation surge. However, the subsequent market recalibration and financial pressures experienced by Hackman Capital Partners itself contributed to the need for this debt restructuring. MBS Group also faced internal complexities, including payment arrangements across Hackman Capital Partners' extensive property portfolio, with about 14% of the stages it services being owned by Hackman.

MBS Group, which supports over 600 sound stages globally, including prominent facilities like New York’s Silvercup Studios and Los Angeles’ Television City, has publicly stated its commitment to commercial growth and market share expansion. Nevertheless, the company's operational scale and debt obligations proved difficult to manage under the prevailing economic conditions. The current situation underscores a broader trend in private credit, where default rates have reached record highs, as noted by Fitch Ratings, reaching 6% in the year ending July. This environment necessitates strategic interventions by major credit investors like HPS Investment Partners and Oaktree Capital.

This acquisition by two of the most prominent distressed debt and private credit specialists highlights the ongoing consolidation and restructuring within the media and business services sectors. The ability of firms like HPS Investment Partners and Oaktree Capital to navigate complex financial situations and inject capital for operational turnarounds will be crucial for the resilience of the entertainment production ecosystem.