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PERSPECTIVE

Viewpoints from the frontline of content.

Perverse engineering?

By Jonathan Webdale 19-06-2015

A year into his job as the new CEO of Zodiak Media, Marc-Antoine d’Halluin sat down with C21TV at Mipcom in Cannes. The interview took place days after Endemol, Shine Group and Core Media confirmed they had reached agreement on the terms of a merger and a few weeks after Discovery and Liberty Global closed their acquisition of All3Media.

With FremantleMedia having missed out on the latter, questions about how the industry’s next biggest players in entertainment would respond inevitably turned to Zodiak and Banijay Group.

Marc-Antoine d’Halluin

Marc-Antoine d’Halluin

Both have their headquarters in France and both claim a common investor in the shape of Italy’s De Agostini, which owns 85.8% of Zodiak and a minority stake in Banijay via private equity vehicle DeA Capital.

More significantly perhaps, both companies are in need of a break-out format that traverses the globe. By d’Halluin’s own admission, Zodiak is a different story to Endemol or Fremantle. “We didn’t come together around a particular format success like Big Brother or Pop Idol,” he said.

The same is true of Banijay.

Zodiak’s first attempt at establishing itself on the international stage came in 2010 with the acquisition of UK-based Wife Swap maker RDF Media. The same year Banijay bought The Real World producer Bunim-Murray Productions in the US.

Five years, several more acquisitions and a string of senior management changes later, neither company has come up with a hit with which its brand has become synonymous.

At Mipcom, d’Halluin had high hopes for adventure reality format Dropped, from Zodiak’s Mastiff business in Sweden. It was the first show to be the focus of a new group-wide International Development Board set up with the appointment of former Endemol global head of format acquisitions Grant Ross as co-chair in May last year, along with Zodiak Nordic creative chief Joel Karsberg.

Things were looking promising for Dropped until tragedy struck this March. Ten people – including Olympic athlete contestants and staff from French subsidiary Adventure Line Productions – were killed when two helicopters collided during filming in Argentina for TF1’s version of the show.

The last time a Banijay format made headlines and notable sales was two years ago when it was embroiled in a rip-off row with Eyeworks over competing diving shows – the former’s Stars in Danger: High Diving and the latter’s Celebrity Splash – with Banijay losing its claim that the Dutch company had infringed on its copyright.

Other than that, the firm’s most successful titles to date have been two 25-year-old reality formats – talent competition show Popstars and fidelity challenge series Temptation Island – added to the business through a string of acquisitions.

There are, of course, incredible talents and successes within the individual Zodiak and Banijay companies. The former has more than 45 prodcos in 15 markets, including RDF (Wife Swap, Secret Millionaire), Touchpaper (Being Human) and Bwark (The Inbetweeners) in the UK; Yellow Bird (Wallander, The Girl With the Dragon Tattoo) in Sweden; Adventure Line (Fort Boyard) in France; and Zodiak Kids (Totally Spies!, Waybuloo) in France and the UK.

Banijay comprises 12 production companies spanning 13 countries, including Banijay Productions France, H2O and Air Productions in its domestic market; Nordisk Film TV in Norway (71 Degrees North) and Denmark (FC Nerds); Brainpool (Stars in Danger, Beat Your Host) in Germany; and Screentime (Popstars, Underbelly) in Australia and New Zealand. Bunim/Murray (The Real World, Keeping Up With the Kardashians) was joined in January by Stephen David Entertainment (The Men Who Built America, Sons of Liberty) in the US, where former Endemol USA chief David Goldberg has been overseeing operations since April 2014.

Former Endemol president Marco Bassetti took over as Banijay CEO a year earlier, appointed by main shareholder Stéphan Courbit, previously boss of Endemol France. Courbit set up Banijay with backing from Bernard Arnault’s French luxury goods firm LMVH in 2008 after the pair lost out to Mediaset, Cyrte Investments and Goldman Sachs in the bidding for Endemol in 2007.

But Courbit, who controls Banijay through his investment vehicle LOV Group, ran foul of the French authorities this May when he was found guilty of taking advantage of 92-year-old Loréal heiress Liliale Bettenourt, France’s richest woman, after she was persuaded to part with €143m (US$160m) for a 20% stake in LOV in 2011.

Unperturbed, it is Courbit and Bassetti who are pushing for the merger, according to C21 sources. Banijay is thought to be in better financial shape than Zodiak, which is said to be heavily in debt – not to the same extent as Endemol as a result of the 2008 global economic meltdown, but still in a precarious state. Rather than being a merger, some suggest it would be a case of Courbit bailing out Zodiak, although Banijay is also said to be burdened by loan repayments.

For his part, d’Halluin – an exec who, by his own admission, is short on production experience but with plenty in consolidation, having steered Showtime Arabia through its 2009 merger with Orbit Communications – has inevitably made himself unpopular by the depth of the restructure he has undertaken. But he is not thought to be in favour of a deal with Banijay and isn’t expected to stick around should one happen.

Asked in that C21TV Mipcom interview whether such a combination was a possibility, d’Halluin said: “We have shareholders that are very committed to supporting what we’re trying to do right now in bringing the company together and they understand it’s a delicate process. They understand that any kind of combination can destabilise such processes. It’s true that we have some joint interest with Banijay but there is no such thing as discussions or an agenda for bringing these companies together at the table.”

But that was October last year and investors’ patience wanes. He also pointed out some “distant relations” with Talpa via John de Mol affiliate Dasym Investment Strategies (fka Cyrte), which has a minority holding in Zodiak. Talpa has also changed hands since the interview, following ITV’s £355m (US$530m) buy-out of the company this March.

“Whether we want to be part of this consolidation game is another question, because what is the right size for a company like Zodiak? Are we the right size in terms of a superindie? Should we be bigger? I tend to believe that the size we have – operations in 15 markets, all of the key ones but Germany – is right,” d’Halluin told C21.

The question is whether De Agostini agrees. Courbit, certainly, is said to be concerned about being ‘left behind’ by the wave of high-level M&As that have taken place over the past two years.

At MipTV this April, when d’Halluin took to the Palais des Festival stage at MipFormats, he was talking up the idea that tech giants like Facebook or Google might be close to buying into TV production. “For companies that have creative talent like Zodiak, it’s a phenomenal opportunity,” he said. Some saw this as him effectively hanging a ‘for sale’ sign on the business.

For some, combining Zodiak and Banijay makes total sense. In an environment where mega-mergers are putting players of all sizes under pressure, there is perceived strength in scale and there are gaps in either’s geographic footprint that such a deal would fill. Zodiak has become weak in the US, where Banijay has some strength, and the reverse is true of the UK, for example.

Historically, Zodiak had a more significant kids’ TV business, though with the sector under pressure this is not necessarily a plus and the division has been at the sharp end of restructuring. The company is stronger than Banijay in scripted, with big-budget Canal+ English-language copro Versailles poised for success. Zodiak has strength in distribution, while Banijay is thought to be more profitable on the production side.

But the counter view is that bringing together two dysfunctional companies only creates one bigger dysfunctional company. These detractors point to the revolving door at Endemol Shine Group as evidence of the dictum that one plus one does not always equal two.

Where a ‘merger’ of Zodiak and Banijay would differ significantly is where the central problem remains, the one d’Halluin identified in that interview. The job of ‘fixing’ Zodiak (and the same argument can be applied to Banijay too) is one of “reverse engineering.” The challenge is to unite a collection of disparate entities so that should one come up with something vaguely resembling ‘the next big thing’ the group is optimised to ensure it has the best chance of becoming exactly this.

But there is no existing programme brand of stature for an enlarged company to cohere around in the meantime, so the challenge simply becomes greater.

today's correspondent

Jonathan Webdale Editor C21Media

Jonathan Webdale is a journalist with more than two decades of experience covering the international television business. He joined C21Media in 2004 after four years at New Media Age and oversees C21’s audiovisual output and online presence, having previously run the organisation’s daily news operation, special reports, FutureMedia print magazine and annual conference.



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