TBI Weekly: Unpacking Banijay’s scale play for Endemol Shine

Marco Bassetti

Banijay’s pursuit of Endemol Shine Group dragged on for nearly two years but now, with the deal formally completed, attention is focused on just how these two giants of the international content business will combine their operations.

What is abundantly clear is that the deal is premised on scale. France-based, Vivendi-backed Banijay – fattened up by its acquisition of Zodiak Media in 2016 – has now moved into the unprecedented position of housing approximately 200 entities across 22 countries.

It is a production-distribution company the scale of which has never been seen outside of the US before. And it is that scale that Banijay’s CEO Marco Bassetti – taking the top job as Endemol Shine’s Sophie Turner Laing departs –highlighted as so vital in the current Covid-19 climate and its aftermath.

Survivor

Scale & efficiencies

Yet scale provides challenges of its own.

Timing and circumstances beyond their control – in the unlikely form of a global pandemic – mean quickly turning the combined group into a more efficient single unit will be even more of a priority, something industry execs have highlighted to TBI.

Banijay, like its competitors, has faced a turbulent few months with Covid-19 hitting shows and revenues, with ratings firms downgrading the company’s prospects. Having managed to raise $2.6bn funding for the Endemol Shine deal, the attention will now be on keeping costs down and Bassetti himself has spoken today of the necessity to “deleverage” the enlarged firm.

Yet while rumours have swirled for several months that Banijay looked at its options as the impact of Covid-19 deepened – to be expected given the size and nature of the acquisition – in an interview with the FT today, Bassetti claims the deal makes “even more sense” in the current climate.

“The stronger and more well known your IP, the less you are impacted by this,” he said, conceding that there is “a huge pressure on margin, because at least for 2020, we can see our clients have to face a difficult financial situation.”

That suggests there will likely be a focus on achieving the €60m ($67m) ‘cost synergies’ already identified, something decidedly unpalatable in the current economic climate.

Ratings agency Fitch said in January that the acquisition should result in “significant savings in overheads and operational costs” where both Banijay and Endemol are present, and the giant, newly enlarged company – to be known simply as Banijay – has already made some moves that perhaps shed light on how wider exec moves might go.

Hunted

Endemol Shine’s network

Not only did Bassetti bring Endemol Shine’s Cathy Payne back as head of the distribution division earlier this year, the sales arm has also drafted in her former colleague John Richards, who has been installed as chief financial officer at Banijay Rights.

Existing chief operating officer Roisin Thomas remains in place, with both reporting to CEO Payne, but the newly devised team has also meant a rejig for Tim Mutimer, who has taken up the post of EVP of EMEA sales & acquisitions.

Industry insiders tell TBI that such a reshuffle could reflect wider moves in the coming months, with Payne’s appointment atop distribution likely to bode well for others from the Endemol Shine International side. And while Banijay is the acquiring firm – this is a takeover, of course, not a merger – several execs highlight that it is Endemol Shine that has the more expansive, pre-existing infrastructure in place around many parts of the world, rather than the French firm.

Nevertheless, there is considerable exec overlap, not least in key markets such as North America, where David Goldberg has expanded the business for Banijay. He previously oversaw the region for Endemol Shine, where the highly rated Cris Abrego is now in place, yet it seems unlikely both will remain as the new-look structure emerges.

There are also numerous question marks on creative: some senior figures have already departed, such as Endemol Shine’s formats guru Lisa Perrin who joined ITV Studios, while the future of major players such as Endemol Shine’s Peter Salmon is unclear.

Production-wise, the discussion goes on and on, with a vast array of assets worldwide. Banijay is of course stronger in France – 22% of its turnover came from the country in 2018 – while Endemol Shine is well set in the UK and the US, from where more than 40% of its revenues came from last year.

Unlike Banijay, Endemol Shine also has interests in Latin America – Endemol Shine Brazil and Endemol Shine Boomdog in Mexico – while Banijay launched a joint venture with Deepak Dhar last year via Banijay Asia, which is making progress at speed.

Black Mirror

Scale, strength & opportunities

That will play into the scale play for Bassetti, Banijay and its chairman Stéphane Courbit. It is he who controls LDH, which has a 67.1% stake in the new company, alongside Vivendi, which owns the remainder. And it is Bassetti who is tasked with making the takeover work, adding today that the Endemol Shine acquisition would create a “resilient” outfit, an intriguing adjective to use, perhaps, but also not surprising given the current environment.

What might come as more of a surprise are his comments around future activity. Bassetti spoke of Banijay’s “newfound scale and increased strength in the industry” in the release confirming the acquisition’s completion, while he told the FT that following the Covid outbreak, “it made even more sense to do [the deal] because we have more opportunities in the market. Today scale is even more important.”