TV production deals in Tallinn Focus: money, strategy, intellectual property, commitment

“Navigating Smart: What Makes Investors Say Yes to Your Production Company and Is It Worth It?” » And how can television producers gain scale without losing creative control? These were some of the big questions discussed on Tuesday during a panel at the Industry@Tallinn & Baltic Event part of the Tallinn Black Nights Film Festival (PÖFF), as mergers and acquisitions, and in particular the consolidation of the television production sector, are a priority for many in the industry.

Marina Williams, co-founder of Fremantle-owned Asacha Media Group, Kjartan Thor Thordarsson, CEO of Sagafilm Nordic from Icelandic production company Sagafilm (Stella Blomkvist), in which Beta Film has a 25 percent stake, and British consultant Tim Robinson, former COO of Fifth Season (Breakup), took to the stage in the Estonian capital to share their insights on negotiation and some expert advice. After all, the panel’s description promised “a practical guide to investing, collaborating and surviving in today’s global television landscape.”

Why did Sagafilm feel it needed more scale? “We represented about a third of the total [Icelandic] “Selling to Disney, Netflix and Amazon is very, very difficult, because they require certain back-ends. [commitments]. Go to bed with [or] working with a big streamer [means] they have to trust that you will be there during the process. So we needed to be bought by someone or supported by someone, in order to be a relevant seller in the market, a relevant producer.

The company effectively went to “almost everyone, and we quickly learned that we were a very different company, doing everything,” meaning “producing in every genre,” Thordarsson explained. And that didn’t fit the direction of the market at the time. “They were all just looking for drama,” he concluded. “We were doing so many different things that we realized our business didn’t fit the model, so we made a lot of changes in order to become a sellable business.” For example, the company stopped broadcasting live broadcasts and closed other businesses to make it “a clear target” for investors or buyers.

Meanwhile, Asacha has grown through deals to meet new market needs, Williams told the Tallinn panel. “We saw streamers expanding in 2020 from the US and UK to continental Europe,” she recalls. “And it was obvious… that American streamers would need European content, and they would have to respect European content quotas. » So they wanted to find companies meeting this need in major markets, with a focus on France and Italy.

“We had to be sufficiently attractive [to them] “So it wasn’t just a question of were these companies good enough for us, but also were we good enough for them as buyers? Because the synergy must 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 business,” Williams explained. “We all became partners.”

The company chose to buy labels that would guarantee a mix of content in Italy, because it did not want to create competition between its labels and balance the faster-arriving cash flows from entertainment shows and the more delayed cash flows from drama series.

“Ultimately we also entered the UK because it’s hard to do without English-language content,” Williams added in reference to deals with 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, has become quite important.”

Robinson highlighted about four types of investors and buyers on Tuesday. “If you think about a broadcaster or an investor related to streamers, then they’re normally looking for a pipeline. So are you a pipeline provider to them?” he said. “Second, if it’s a super indie studio or group, they’re usually looking for genre or creative depth. Another deal option is an acquirer, usually private equity groups, looking for ‘rapid value creation,’ meaning the buyer will soon sell a business to another buyer. Finally, ‘brand and talent investors,’ including advertisers, have emerged as a new category of buyers.

“Culture determines whether a deal is going to work or not,” Robinson emphasized. “But it’s often cash” that is the focus at deal time, whether a founder is looking for an exit or a company needs investment for growth, or is facing special financial pressures or needs.

Speaking about production company founders looking for a sale, Williams pointed out that a quick exit is increasingly rare. “It’s very rare that a producer is allowed to leave the business completely,” she said. “They usually want you to stay at least five years,” Thordarsson added. “You have to believe that this is a long-term relationship that you’re going to be a part of.”

Robinson explained that most people contacting his consultancy arrive too early, with many needing 12 to 24 months to be truly ready for a sale, and various things needing work before then. Sellers particularly need three things, he said: Strategy: “Are you driving IP, talent, or infrastructure/capability? » — financial clarity and operational maturity.

Williams added that margins and their sustainability have become an increasingly important metric in an era where production and other budgets are increasing and the focus is on the bottom line.

Robinson concluded Tuesday’s panel in Tallinn with two thoughts. “It’s really interesting. There’s no shortage of creative and successful entrepreneurs,” he observed. “But there is a shortage of good business people to partner them with to help them grow and be a reliable source of advice and support, before and after. »

And he concluded with thoughts on the importance of intellectual property, or IP. “Intellectual property is the only way to create value for the business, so you have to own the intellectual property,” Robinson said. “Second… you have to demonstrate your ability to build an ecosystem around that intellectual property. You have to be able to show that you can commercialize it, because there’s no excuse now not to try to market it directly to the public in some way, because of the platforms and distribution methods that are available. So you have to think about it. It’s not enough to own intellectual property. You have to be able to do something 360 degrees with it.”