Are we about to see a new wave of buyouts in the indie TV production sector?
Last week, after a long courtship, Twofour merged with Boom Pictures to create a regional indie powerhouse.
Independent TV production companies are proving attractive to private equity buyers. The Boom/Twofour deal was funded by private equity outfit LDC, part of the Lloyds Banking Group. Tinopolis’ acquistions, meanwhile, have been financed by private equity player Vitruvian Partners.
US firms like Core Media, the owner of American Idol-producer 19 Entertainment and part of private equity firm Apollo Global Management, are also looking to build their UK presence.
FremantleMedia and ITV are also said to be eyeing more purchases in the UK, while Entertainment One, Lionsgate and Pawn Stars producers Leftfield Pictures are also reported to be exploring the market.
They recognise the potential for UK producers to grow even more in international markets. With a global reputation for creativity, British producers are well set to meet demand for quality programmes from established markets like the US, from digital and VOD players like Netflix, and from growing economies like China, Brazil, India and Russia.
Tom Manwaring, managing director of About Corporate Finance, says: "Independent TV production remains a buoyant sector. We will see a number of deals in the UK in the next 12 months. There is no shortage of buyers for UK companies – it is a seller’s market. From a seller’s perspective, the big question is when is the right time to sell."
Ben Tolley, a partner at Clarity, which advised on the Boom/Twofour merger, said the deal is evidence that private equity buyers are returning to the indie TV sector: “It is an exciting time for the TV production sector. 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.”
Tolley added: “This makes companies with a proven record of producing quality programming extremely valuable – hence the rising interest from private equity players. 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.”
There are, however, some concerns about valuations in the sector, so buyers are wary.
It is also felt that there are a limited number of targets because many of the leading mid-sized production companies have already been acquired.
It means that many buyers, like ITV, Tinopolis and Leftfield Pictures, have looked outside the UK for deals, acquiring production companies in the US or other international territories. Many big production groups, noted Mediateque director Mathew Horsman in a Televisual column last month, are focusing on tying in talent with production deals rather than paying a premium to buy an indie outright.
However, it will be interesting to note what happens to many of the UK’s leading mid-sized indies over the next 12 months, among them Raw TV, Red Production, Love Productions, Keo Films, Nutopia, Atlantic, Windfall, October and Outline.
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