TV Investors want to exploit their own content

Content is proving to be truly king as Hollywood mogul Jeffrey Katzenberg successfully raises a whopping $1bn to fund the temporarily named NewTV, a start-up dedicated to creating mobile-delivered original short-form series. Scheduled to launch next year, Katzenberg’s radical concept for digital video understandably attracted investors from the global TV business, including The Walt Disney Company, Warner Media and Viacom.

Keshet International's Sebastian Burkhardt

Keshet International’s Sebastian Burkhardt

But the investment’s core element came from venture-capital firm Madrone Capital Partners, supported by investment banks Goldman Sachs and JP Morgan Chase. This deal is separate from the $750m already raised by WndrCo, an investment fund co-founded by Katzenberg and a major NewTV shareholder.

Investors feel there is a tremendous upside in owning content and exploiting that content because of the proliferation of platforms globally,” says Sebastian Burkhardt, senior vice-president of digital and acquisitions at Israel-headquartered Keshet International (KI) and Keshet Digital Studios.

KI launched a $55m global content fund earlier this year to invest in premium drama. Its backers include private-investment companies Altshuler Shaham Investment, Phoenix Insurance, Arxcis Global Wealth Management and Halman Aldubi Investment House. “Owning a share of that [premium drama]content is a very attractive investment proposition,” Burkhardt adds.

What NewTV and KI have achieved in terms of raising privately owned cash to fund TV entertainment is a big deal. Some may remember 2005, when UK-based Sparrowhawk Media Group, led by former Channel 5 CEO David Elstein, baffled the industry by successfully persuading banks and private-equity firms 3i and Providence Equity Partners to contribute to its $242m takeover of since disbanded Hallmark International, a network-TV owner with almost 600 TV and film titles. An approach then considered unusual is now gaining acceptability, following the decline in broadcasters’ ability to back most or all of the shows commissioned, including the increasingly expensive cinema-quality dramas and scripted content in demand these days.

Deep-pocketed streaming platforms such as Netflix, which is reportedly spending $8bn on original content in 2018, have filled part of the gap. Other media-tech conglomerates, including Apple, Facebook, Hulu and Amazon, are hiking their SVOD original-content budgets too. But in return for that generous bankrolling, the tech giants ask for total global rights, which several independent producers are unhappy about.

Meanwhile, demand for high-end content continues to exceed supply as international broadcast groups launch rival SVOD platforms. These include the newly announced Discovery Communications and ProSiebenSat.1 joint venture, Disney’s ambitions to rival Netflix and US retailer Walmart’s plans to challenge Amazon in the SVOD space. Their activities are being complemented by a new generation of intellectual-property (IP) financiers.

The financing process

Media investor Anton Capital Entertainment has joined forces with BBC Studios (formerly BBC Worldwide), the commercial arm of the UK public broadcaster, to form The Drama Investment Partnership to fund scripted fiction with £2.5m-plus-per-hour budgets.

This partnership is designed to accelerate the financial green light of premium scripted drama by providing early-stage commitment to deficit finance,” says Colin Waters, BBC Studios’ content investment director. “BBC Studios is actively sourcing projects and should be approached in the first instance regarding potential opportunities.”

Atrium TV's Richard Halliwell

Atrium TV’s Richard Halliwell

Atrium TV is another finance venture supporting producers making content specifically for national SVOD operators. These platforms are competing against the likes of Netflix and Amazon in their respective home markets, but do not necessarily have the streaming giant’s large coffers.

“We have two layers of investments,” says UK-based Richard Halliwell, Atrium TV’s co-founder and CEO of international distributor DRG. “There is the initial investment that Atrium TV makes in those ideas it believes in. And then, when developed and presented, we are looking for our members to invest in projects to take them into production.”

Among the Atrium TV projects in the works are several by the business’ acclaimed creators, which include Oscar-winning Hollywood scion Michael Douglas, multi-award-winner Ava DuVernay (director of Selma and A Wrinkle In Time) and legendary Hollywood producer Mike Medavoy.

The concept and a desire to finance comes first — how we actually do it comes second,” Halliwell adds.

Toronto-headquartered Kew Media Group (KMG) has become a major player following a $100m-plus-acquisition spree, during which it snapped up several prolific production companies and rights-owners, including Content Media Group.

“We try to partner with companies that are looking to plug into something bigger, and who we feel are well placed to exploit what the Kew platform offers,” says Steven Silver, KMG’s CEO and co-founder. “Once inside Kew, companies we have bought are able to utilise the Kew platform, our resources, our relationships and, most importantly, our distribution arms, Kew Media Distribution and TCB Media Rights, to supercharge their growth.”

The profile of Finnish media venture-capital company IPR.VC is rising thanks to some imaginative investment choices. These include Nordic multimedia production group Gigglebug Entertainment and, most recently, the development cycle of the TV series based on The Red Harlequin fantasy novels. But, interestingly, IPR.VC says that producers seeking its financial assistance must have an anchor broadcaster on board, illustrating the value that is still placed on knowing that content is definitely going to be seen. “IPR.VC does not want to be the sole investor. Some basis for one or two broadcasters and, possibly, an SVOD platform is desirable. All other platforms will then be open for business,” says IPR.VC advisor Jorma Sairanen.

Alison Warner has similar opinions in her role as vice-president of IP sales, acquisitions and co-productions at the special-effects multinational Technicolor. She focuses on projects within the Technicolor Creative Development unit in Hollywood and the Paris-based Technicolor Animation Productions division.

Technicolor's Alison Warner

Technicolor’s Alison Warner

Among the concepts Technicolor has funded and developed is the Tom Taylor graphic novel The Deep, which it optioned about five years ago. Currently in its third season, The Deep is where it is today thanks to the early involvement of Australian co-producer A Stark Production, which helped clinch a commission from Australia’s ABC network. Technicolor then felt assured it would get its money back. The Deep has also been licensed to Bloomsbury for books and Simba Toys for toys, among other IP brand extensions

Institutions like banks are still wary of IP, so producers should secure an anchor broadcaster, ideally in the country of origin,” Warner says. “It’s proof that everything is going to work. They expect you to have kicked the tyres — you don’t go to investors without having done that.”

Creativity is the key to success

Neil Zeiger is a producer at London-based Nevision, the independent content producer/financier behind breakout dramas Keeping Faith and Oil, as well as HBO documentary Rolling Stone and factual feature film Manolo: The Boy Who Made Shoes For Lizards.

In the way it is funded, TV is now more like feature films, because budgets have shot up to £1m-£2m an hour for dramas. Meanwhile getting funds for factual is getting tougher unless you find specific broadcasters,” Zeiger says.

He argues that investors must, in turn, be prepared to take on a bit of creative responsibility, serving as producer or executive producer, for example, in order to understand what is being done with their money.

“As investors, we look to earn a percentage of the equity of a show,” he adds. “The pull for us is the creativity on the one side and the money on the other. You want something that sells. That really means moving forward and working with other people. It’s therefore about sharing. From a pure investor’s point of view, that can be a difficult thing to do.”

Vertigo Films is also bringing its long-established skills in financing feature films to the TV sector. You now need to be as creative in sourcing funding as you are in developing shows, says Jane Moore, Vertigo’s CEO. “You are no longer depending on one commissioning entity,” she adds. “But then, not only are you free to seek the finance, it also leaves you free in how you work creatively. You have to be business savvy in TV today, in the way we have always had to be in the film business.”

You also need to offer investors a long-term outlook, such as plans to adopt the emerging ultra-high resolution 4K technology, to help them feel confident that the IP will keep yielding royalties — as was the case with Vertigo’s Horrid Henry: The Movie.

Gaumont's Nicolas Atlan

Gaumont’s Nicolas Atlan

That financial shrewdness is all the more important in view of the variety of options for sourcing budgets now available to producers. Nicolas Atlan, Gaumont’s president of animation and family, argues that producers need to work with like-minded investors. He says he likes working with subscription-funded investors such as Netflix because “they are ready to take risks”. He emphasises how the streaming giant’s dependence on subscriptions means its shows are not restricted by the regulations enforced on ad-funded platforms. “They want to be able to tell stories in original ways and be ready to push the envelope,” Atlan says.

The resulting demand for a greater variety of quality content has encouraged Gaumont to expand its children’s animation portfolio. New titles include Noddy, Toyland Detective, a co-production with DreamWorks Animation, Bionic Max, which is being developed for French kids’ network Gulli and another co-production of Stan Sakai’s Usagi Yojimbo. “Groundbreaking IP is always king of our industry. Platforms and broadcasters need this,” Atlan adds.

Sometimes after an idea has been successfully developed, finance is needed to make a pilot episode — and UK-based Wildseed Studios has made this area one of its specialities. “We invest directly into piloting new ideas, so all we need in place is a great scripted idea aimed at audiences below 30 and a creator we believe has the chops to deliver it creatively,” says Wildseed’s creative director Jesse Cleverly. But he cautions that those seeking finance should never underestimate the challenges: “It’s a long tough road and not all creative talents are suited to the level of collaboration required.”

Colin Callender, CEO of Playground Entertainment, the international independent that has been wowing the industry with acclaimed adaptations such as Little Women, Howards End and Wolf Hall, reminds private investors that there is more to IP creativity than money. “It always helps when the different investing parties understand how the creative process works,” he says.

“The process of making a show is different in each market. It’s not just a question of what’s on the screen, but also what it takes for it to get there. If you have good work, it will always find funding.”


This article was written by Juliana Koranteng, edited by Julian Newby, and appears in the MIPCOM Preview Magazine.

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