On the heels of a year that witnessed an unprecedented move towards consolidation among U.K. indies, RDF Media has completed a deal that sees approximately 20% of the company sold to venture capitalist Sagitta Private Equity for £3.2 million (US$4.6 million). Says managing director and founder David Frank, ‘There’s a polarization of the business into fewer hands and I think that’s a process that will inevitably continue, with or without raising capital. But, having a cushion – having a fighting fund – enables one to react faster than our competitors to opportunities in the marketplace.’ The bulk of Sagitta’s buy was made on newly issued stock, although some shares were purchased from existing shareholders. ‘It took us a long time to find the right partner because, traditionally, venture capitalists structure deals such that they’re looking for a particular return on their money,’ explains Frank. ‘That’s an unattractive way of doing it, because after the initial investment, nobody is completely clear about who owns how much of the company; it’s dependent on future performance. Our deal is in no way dependent on future performance. If it’s successful they’ll get their share and if not, they won’t.’
RDF is currently valued at £20 million (US$29 million). Frank estimates this new infusion of money will allow RDF to grow beyond the 20% the sale currently dilutes it by, readying the company for a U.K. stock market listing within three to five years. To that end, Frank looks at the transaction as an investment rather than a sale, for both the production and the distribution sides of the business: ‘On the distribution side, it means we’ll be in the market to acquire some of the top quality programs we’ve been excluded from in the past because we couldn’t risk the kind of advances some of the bigger distributors were putting up. A significant amount of the £3.2 million is earmarked for programs by third parties that we wish to distribute.
‘On the production side, as a bigger production company, we’re prepared to take more risk in the development of shows. In exchange for that, we want to control the exploitation of those programs.’