The new super groups: Red Arrow Entertainment

In the second part of our two-part report on emerging international production groups, TBI talks to the executives behind Red Arrow Entertainment, the ProSiebenSat.1-owned group that comprises leading production companies across Europe and the US.

Red Arrow was launched in 2010 and has gone on to build a network of production companies across Europe and the US that includes CPL, Endor, Fabrik Entertainment (fka Fuse), Kinetic Content, Magic Flight Film, The Mob Film Co., NERD, Producers at Work, Snowman and Sultan Sushi.

Last August it added Left/Right, the New York-based indie producer behind Mob Wives, to the group.

The deal illustrates Red Arrow’s approach to M&A, which has seen it move for majority stakes in more modest sized producers, which it can grow and that are keen to be part of a larger, international group.

“We have taken a more boutique approach, more modest in size than other roll up groups; Left/Right was by far the biggest deal we have done and it is still small-to-medium sized compared with many other production companies,” says group managing director Jan Frouman. “Left/Right have done fabulously in New York, but they wanted to grow and wanted the partnership and scale we could offer.”

Frouman adds: “We do want a majority stake, you can’t roll a minority stake into the business in the same way, but we want a structure where everyone is incentivised by the group’s long term success. The 49% you retain will be worth more because you are part of the group.”

One challenge facing Red Arrow is that a rationale for its creation was to serve the parent ProSiebenSat.1 Group’s channels in Europe – and the broadcasting giant has subsequently sold several including, last December, the 12 SBS Nordic channels to Discovery Communications in a US$1.7 billion deal.

A vast majority of Red Arrow revenue is now generated from outside territories where P7S1 has a presence and it has had to take a hard look at its network of production businesses in light of the changes at the parent group.

“The obvious question is do the assets in place make sense when you don’t have channels in those markets,” Frouman says. “More often than not the answer is yes as these producers have established themselves and are not beholden to the [P7S1] channels. A lot works well, but some things don’t. When you have a portfolio, which has grown like ours, there is a constant state of review and seeing what’s working.”

The company’s distribution unit, Red Arrow International, run by Red Arrow managing director Jens Richter, handles content from the group’s companies, such as Endor’s drama series Restless or Kinetic’s cooking format The Taste as well as from third parties including Shelter’s Benidorm Bastards or Atlantique’s Jean Reno-fronted cop drama Jo (pictured).

Having completed a flurry of deals, this year is about growing the pieces that have been put in place, Frouman says. “We expect this to be a year of digesting what we have done and one of operational execution and focus.”

However, there will be some additions to the group, although perhaps in the form of joint ventures. Red Arrow has development and production deals with top-level creatives including game show guru Dick de Rijk.

“We think globally we are a top-ten player in production and distribution,” Frouman concludes. “FremantleMedia, Endemol and others are ahead of us in size and revenues and we do aspire to be bigger. But to put it in perspective, if we remain at our current size we will still have double-digit revenue growth.”