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Canadian consolidation

It's summer, it's hot and Canadians are busy hooking up. In the steamy months usually reserved for cottage retreats and midday cocktails, four of Canada's most significant production and distribution players inked a marriage with fellow domestic Entertainment One that promises the parties involved better odds at seducing international funds and opportunities. Among the lusty bunch are Toronto tv prodcos Blueprint Entertainment and Barna-Alper Productions, as well as neighboring distributors Oasis International and Maximum Films. The merger hopes to fill a gap created when Alliance Atlantis' sales arm was purchased by us firm Goldman Sachs, which many feel left domestic producers without a globally strong, locally based distribution partner. But it's unlikely this will be a singular event. Most industry insiders see such activity as only the beginning of a trend towards consolidation in Canada, one widely recognized as inevitable, necessary and beneficial. It's also a trend that is already changing the domestic landscape and its relationship with potential partners in the us and overseas.
August 1, 2008

It’s summer, it’s hot and Canadians are busy hooking up. In the steamy months usually reserved for cottage retreats and midday cocktails, four of Canada’s most significant production and distribution players inked a marriage with fellow domestic Entertainment One that promises the parties involved better odds at seducing international funds and opportunities. Among the lusty bunch are Toronto TV prodcos Blueprint Entertainment and Barna-Alper Productions, as well as neighboring distributors Oasis International and Maximum Films. The merger hopes to fill a gap created when Alliance Atlantis’ sales arm was purchased by us firm Goldman Sachs, which many feel left domestic producers without a globally strong, locally based distribution partner. But it’s unlikely this will be a singular event. Most industry insiders see such activity as only the beginning of a trend towards consolidation in Canada, one widely recognized as inevitable, necessary and beneficial. It’s also a trend that is already changing the domestic landscape and its relationship with potential partners in the US and overseas.

First base: Combining Assets
‘The only thing that’s changed about Barna-Alper is it now has a stronger corporate home,’ says Laszlo Barna. He founded the prodco 28 years ago. Over that time, the company has produced both dramatic and factual hits, including Mega Builders (Discovery Channel), Turning Points of History (History Television), Blue Murder (Global) and Da Vinci’s Inquest (CBC, Showcase). In E1′s warm embrace, Barna-Alper streamlines its business operations by sharing its backroom operations with the new partners, resulting in better economies of scale all around. The merged parties also gain immediate access to the others’ assets and expertise. ‘In one swoop, we acquired offices in London and LA, a relationship with a mature distributor [Oasis], and the ability to go out into the world to complete financing,’ says Barna. Indeed, E1 estimates about CDN$1.5 million in annual cost savings will be achieved by moving product from Blueprint, Barna-Alper and Oasis through its multi-territory distribution network. The deal also includes bonus payments based on the future performance of Barna-Alper, Blueprint and Oasis after their acquisition.

Further, the merger with E1 helped close the combining of Maximum Films, which handles Atom Egoyan’s Adoration and Guy Maddin’s My Winnipeg, and Seville Entertainment, thereby strengthening the entire group’s position in the theatrical market. The partnership also brings the Canadian companies together with Contender Entertainment Group in Britain and Benelux distributor RCV Entertainment under E1′s film entertainment umbrella (led by Patrice Theroux). A true marriage, the top talents connected to each company contribute to the partnership. Blueprint’s John Morayniss is now CEO of E1′s TV Group, Barna serves as president of TV production and Blueprint’s Noren Halpern is based in LA and takes the title of president of US TV production. Oasis’ Peter Emerson is president of E1′s international TV distribution.

Second base: Foreign funding
‘Everyone in the production sector recognizes that the key to success is to be able to finance your own development, interim finance your production and have more access to credit or equity,’ says Norm Bolen, a former Alliance Atlantis broadcast exec turned consultant. ‘If I was a small indie running my own legal affairs, managing my own overhead, etcetera, I would try to get bigger – if I wanted to build my business,’ he adds.

Like many in the Canadian marketplace, Bolen believes there’s an oversupply of mom-and-pop production companies chasing limited production funds. While he notes that it’s important to maintain a healthy number of minor players to infuse the system with variety and fresh ideas, at the moment the balance is askew. Consolidation among these outfits, he says, is inevitable and needed. ‘Better capitalized companies can create higher-quality programs at lower costs. Consolidation isn’t a bad thing if it brings more distribution, foreign dollars, and reduces overhead costs per production. In terms of quality, it makes Canadian content more competitive and it’s not going to squeeze out the little players.’

Those foreign dollars are key, as more and more broadcasters require producers to bring third-party funding to the table. ‘You have to be more agile in the world, pre-selling your ideas, to be successful domestically,’ says Barna. But finding those international funding sources is an expensive proposition – a trip to MIP alone can easily ring in at $15,000. The merger with E1 instantly gives Blueprint and Barna-Alper a permanent sales staff. ‘They’re selling to Latin America, Asia and Europe on a regular basis. That’s new for our company,’ says Barna.

Such perks work in favor of the distribution partners as well, who win a cache of proven programming. Shortly before the E1 merger was announced, Toronto-based Temple Street Productions confirmed a deal with BBC Worldwide that saw the Beeb’s distribution biz buy a 25% stake in the format-savvy prodco. The transaction gives BBC Worldwide access to Temple’s scripted and unscripted programming, as well as its formats, for overseas exploitation. Its current crop includes How Do You Solve a Problem Like Maria?, Mr. Friday and Spoiled Rotten. In return, Temple toppers Ivan Schneeberg and David Fortier have first look at formats for which BBC Worldwide holds Canadian rights. ‘I think we’ll see two or three more consolidations in the Canadian independent sector over the next couple of years,’ says Bolen. Citing rumors swirling to this effect, he adds: ‘It has happened in the UK, in Europe and now here. It’s just a matter of when.’

Third base: finding new partners
E1 is doing its best to make when, now. ‘To say I’ve had an eye on other production companies is an understatement,’ says Barna. ‘I know a lot of the prodcos in Canada who face the same problems we did: not enough resources to produce, not enough resources to manage the distribution and financing of our shows. I’m hoping to work with all of those producers so we can benefit from each other’s labor.’ In addition to coproduction opportunities, E1 is also looking to pick up catalogs that complement its existing offerings.

Home base: longevity [going all the way]
So can these consolidated companies stand the test of time? As predictions of television’s future turn questionable over concerns of piracy and declining ad dollars, the long-term remains uncertain. Says Bolen, ‘There’s quite a bit of new money in the Canadian system right now because of all the mergers and acquisitions benefit money – several hundred millions of dollars worth. But what happens when that Canadian benefit money dissipates?’ He continues, ‘I see the strategy behind these consolidations as getting as much access to that money as they can, doing as much production as possible, and distributing or co-licensing it internationally to diversify, so that when the Canadian market gets flatter – and it will in terms of production – they’ll be in a better position to survive and grow in an international context.’

Barna, however, doesn’t see it that way. ‘I question that there will be less money in the system,’ he says. ‘Yes, there are fewer ownership groups but there are just as many networks and there are more opportunities for coproduction than ever before. I don’t think we’re looking at a long-term decline. The dollars are available for factual.’ So, are there any negative consequences to consolidation among indies? ‘Call me in a year,’ quips Barna.

About The Author
Managing editor with realscreen publication, an international print and online magazine that covers the non-fiction film and television industries. Darah is an award-winning journalist who has spent over two decades covering a wide range of issues from real estate and urban development to immigration, politics and human rights, primarily with The Vancouver Sun. Prior to joining realscreen, she was editor of Stream Daily, realscreen's sister publication covering the dynamic global digital video industry. She also served a stint as a war reporter in Afghanistan for television and print, and was a national business blogger with Yahoo Canada.

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