““Sailing Smart: What Makes Investors Say Yes to Your Production Company and Is It Worth It?” And how can TV producers gain scale without losing creative control? Those were some of the big questions in focus during a panel at the Industry@Tallinn & Baltic Event portion of the Tallinn Black Nights Film Festival (PÖFF) on Tuesday, as M&A, and”, — write: www.hollywoodreporter.com
Marina Williams, co-founder of Fremantle-owned Asacha Media Group, Kjartan Thor Thordarsson, CEO of Sagafilm Nordic at Icelandic production firm Sagafilm (Stella Blómkvist), in which Beta Film owns a 25 percent stake, and UK-based consultant Tim Robinson, the former COO of Fifth Season (Severance), took the stage in the Estonian capital to share their insights into dealmaking and some expert tips. After all, the panel description promised “a practical guide to investment, collaboration and survival in today’s global TV landscape.”
The company did indeed go to “practically everybody, and we quickly learned we were a very different company, doing everything,” meaning “producing across genres,” Thordarsson shared. And that didn’t fit the market focus at the time. “They were all looking for drama only,” he concluded. “We were doing so many different things that we realized our company didn’t fit the model. So we made a lot of changes in order to be a sellable company.” For example, the company stopped doing live broadcasts and closed down other businesses to make it “a clear target” for investors or buyers.
Meanwhile, Asacha grew through deals to fit new market needs, Williams told the Tallinn panel. “We saw that streamers were expanding in 2020 from the US and UK to continental Europe,” she recalled. “And it was obvious… that American streamers would need European content, and they would need to meet quotas for European content.” So they wanted to find companies that fit that need in big markets, with a focus on France and Italy.
“We needed to be attractive enough [to them] as well,” she highlighted. “So it was not only about are these companies good enough for us, it was actually also: Are we good enough for them as a buyer? Because the synergy has to work.”
Asacha’s approach, also used by other buyers, was to acquire companies and make sure to retain its founders and creatives. That meant making sure “our partners could reinvest money into their parent company, so we wanted to have a family sort of business,” Williams explained. “We all became partners.”
The company chose to buy labels that would ensure a mix of content in Italy, as it did not want to create competition between its labels and also balance the faster-arriving cash flows from entertainment shows and the more delayed cash flows from dramas.
“In the end, we also entered the UK because it’s hard to be without English-language content,” Williams added in reference to deals for UK factual producer Arrow International Media and producer/distributor WAG Entertainment. “And the synergy within the group, between England and France, between France and Italy, became quite significant.”
Robinson on Tuesday pointed to roughly four types of investors and buyers. “If you think about a broadcaster or streamer-related investor, then they’re normally looking for a pipeline. So, are you a supplier of pipeline for them?” he said. “Secondly, if it’s a studio or a super indie group, they’re normally looking for genre or creative depth. Another deal option is an acquirer, usually private equity groups, looking for “quick value creation,” which tends to mean the buyer will soon sell a company on to yet another buyer. Finally, “brands and talent-related investors,” including advertisers, have emerged as a newer category of buyers.
“Culture determines whether a deal is going to work or not,” Robinson emphasized. “But it is often cash” that is in focus at the time of the deal, whether a founder is looking for an exit or a company needs investment for growth, or faces special financial pressures or needs.
Speaking of founders of production companies who are looking for a sale, Williams highlighted that a quick exit is increasingly rare. “It’s very rare that the producer will be allowed to leave the company completely,” she said. “They usually want you to stay for at least five years,” added Thordarsson. “You have to believe that it’s a long-term relationship that you’re going to be part of.”
Robinson shared that most people contacting his consultancy come too early, with many needing 12-24 months to be really ready for a sale, with various things needing work before then. Sellers particularly need three things, he said: strategy — “are you an IP, talent, or infrastructure/capability engine?” — financial clarity, and operational maturity.
Williams added that margins and their sustainability have become an increasingly key metric at a time of rising production and other budgets and a focus on the bottom line.
Robinson wrapped up Tuesday’s Tallinn panel with two thoughts. “It’s really interesting. There’s actually no shortage of successful, creative entrepreneurs,” he observed. “But there is a shortage of good business people to partner them with to help them grow and be a trusted source of guidance and support, both before and after.”
And he concluded with thoughts on the importance of intellectual property, or IP. “IP ownership is the only way to build enterprise value. So you have to have IP ownership,” Robinson said. “Secondly… you have to demonstrate the capability to build an ecosystem around that IP. You have to be able to show that you can commercialize that, because there’s no excuse now not to try and commercialize that directly with the audience in some way, because of the platforms and distribution methods that are available. So you have to think about that. It’s not just enough to own IP. You have to be able to do something with it in a 360-degree way.”