‘Netflix to lead new wave of UK production M&A’

Netflix is among the emerging players set to lead a new wave of consolidation in the UK production sector, a media M&A specialist has predicted.

Ben Tolley, partner at Clarity Capital Partners, a technology and media advisor that aided Twofour on its merger with Boom Pictures, said the “value of distinctive content is being recognised with increasing investment from both broadcasters and non-traditional players such as Microsoft, Yahoo! and Netflix and marketing agencies such as WPP’s GroupM Entertainment”.

“It is only a matter of time before non-traditional players start to acquire their own production assets,” he added.

To this point, Netflix has shown no outward interest in acquiring producers but has been active in commissioning originals since its well-received first series, House of Cards. GroupM, meanwhile, has become a key investor in numerous UK shows, though some indies and broadcasters have voiced concern over the terms of these agreements due to the WPP-owned company’s TV advertising connections.

The UK production market has undergone a sustained period of consolidation but has been quieter of late, with ITV’s £18 million (US$28.9 million) acquisition of factual indie The Garden and Tinopolis’s deal for Big Fat Gypsy Wedding producer Firecracker Films being the only major deals of note in the past 12 months.

Tolley also pointed to increasing interest in the production market from private equity firms. “Many other significant players in the UK and Europe such as All3Media, Tinopolis and Eyeworks are private equity-backed and it will be interesting to see what their owners do next,” he added.

Besides this week’s deal, Clarity advised Optomen before it sold to All3Media in 2011 and counts more than 20 technology deals among its credits. Tolley’s comments were backed up by others from another firm that advised on the Twofour-Boom tie-up.

Daniel Sasaki, managing director of LDC London, said: “The UK TV production area is one of the most exciting in the media sector, with excellent growth prospects as the impact of digital, social and mobile media is significantly expanding traditional TV programming and video content distribution models.”

Yesterday, it emerged Lorraine Heggessey’s emerging production powerhouse Boom had partnered with with Charles Wace’s Twofour, which is behind shows such as The Hotel Inspector and Splash!, to create the UK’s largest new media group.