TBI Weekly: How Red Arrow Studios fits into M&A frenzy (Column)

Deep State

A flurry of deals yesterday highlighted the surging appetite for acquisitions and with companies including Red Arrow Studios on the block, the M&A frenzy has some way to run yet.

Chances are, if you’re a production company in Europe or North America that has a smattering of successful shows on the slate – or even in development, there will be someone, somewhere considering buying you.

That isn’t new of course, but talking to sources across the industry this week, the takeaway is clear: we are in the midst of an M&A frenzy arguably like never before, as companies look for scale to compete in an industry that is transforming in the space of months where once it took years.

The Taste

On Thursday, Canada’s Boat Rocker Media revealed it had acquired LA-based production outfit Platform One Media just minutes after Entertainment One (eOne), fresh from its own buy-out by Hasbro for US$4bn, said it was picking up Finding Escobar’s Millions prodco Blackfin.

That followed news earlier in the month that ProSieben had triggered a strategic review that could see the business offload Red Arrow Studios, which houses the likes of Deep State producer Endor Productions, The Circus firm Left/Right and Old People’s Home For Four-Year-Olds’ CPL Productions. It will also impact its sales arm, Red Arrow Studios International, which recently struck a deal with CBS for its hit scripted format Einstein.

Investors had until today to express their interest in the business, which is set to be sold without The Taste prodco Redseven Entertainment and multichannel network Studio71, which ProSieben will retain to fuel its domestic outlets.

It will, however, include 20 production companies including 11 in the US, such as 44 Blue Productions, Kinetic Content and Dorsey Pictures, as well as other businesses in Denmark, Israel and the UK, providing interest to a gamut of different outfits looking for scale to compete.

North American interest

TBI sources suggest that while private equity groups are interested, others such as US studio MGM could be in the running for a company that would offer them an immediate boost in TV production scale across North America.

Einstein

Last year, it promoted Survivor and Shark Tank producer Mark Burnett to chairman of its Worldwide Television Group and expanded the scope of its unscripted arm, building on long-held ambitions to grow the company’s operations in the genre. That includes picking up The Real Housewives of Orange County and Vanderpump Rules prodco Evolution Media in 2017, as well as Live PD outfit Big Fish Entertainment.

Another in the mix is eOne, which has proven it is in acquisitive mode with its Blackfin deal despite the company’s acquisition by Hasbro. How a toy brand-backed company might square away putting more dollars into unscripted TV isn’t immediately clear, but the company clearly has a plan.

Indeed, following its deal for Blackfin, founder and CEO Geno McDermott will now oversee US alternative programming for eOne, reporting into global unscripted TV chief Tara Long. And the transatlantic firm has also been rapidly expanding its interests in the genre, with UK outfit Daisybeck Studios joining others such as Creature Films, Marwar Junction Productions and Fired Up Films in July.

Back to Europe

Closer to Red Arrow’s European roots, Nordic Entertainment (NENT) Group is another that sources suggest could be an interested party. TBI understands that NENT, prior to its flotation on the Swedish Nasdaq in March, had looked at a tie-up with the German production outfit earlier in the year.

Although the companies ultimately chose against pursuing a deal, those in the know suggest a partnership could make sense on a strategic level, particularly given NENT’s recent restructuring that will see it launch dedicated UK and US divisions.

For its part, ProSiebenSat.1 reiterated its statement from the start of September, confirming that it was “evaluating all different kinds of scenarios.” None of those scenarios, however, look likely to involve either Banijay Group or ITV, which TBI understands have chosen against pursuing a deal for the company.

ITV, however, did look at NENT last year, TBI understands, and the Nordic company continues to attract interest following its flotation, with Scandinavian telco Telenor also exploring a potential acquisition. Formed when Modern Times Group split its TV and production assets, NENT has broadcasting, streaming and distribution operations across Sweden, Denmark, Norway and Finland, including SVOD offering Viaplay and AVOD service Viafree.

Old People’s Home For Four-Year-Olds

It is also behind free and pay TV channel brands such as TV3, TV6, TV8 and TV10, as well as the Viasat satellite network. On the production front, it has NENT Studios, one of Europe’s biggest production groups with more than 30 outfits including Nice Drama, Baluba, Monster, Moskito, Strix and Novemberfilm, and has commissioned a vast amount of original content over the past 18 months for streamer Viaplay.

A fit with Red Arrow Studios could make sense from a content and production point of view then, but others suggest we could see under-the-radar entrants into the market: private equity certainly, but even players such as BeIN Media, which is looking to sell its 50% stake in Miramax and has previously bought Turkish pay operator Digiturk.

The other of yesterday’s acquisitors, Boat Rocker Media, could also be involved. The company, backed by Toronto-based Fairfax Financial Holdings, is already behind shows such as Lip Sync Battle for Paramount Network, Iron Chef Canada for Food Network and The Amazing Race Canada for CTV, and a fit could make sense. Indeed, it was Boat Rocker’s CEO John Young who yesterday provided perhaps the most telling narrative about the current M&A frenzy while describing his rationale for acquiring Platform One.

It was, he said, the “additional horsepower” provided by his company that would allow Platform One “to push forward on its ambitions of becoming a leader in producing high-end, world-beating entertainment.” It seems scale envy will continue to fuel the M&A frenzy for some time yet.