Perspective on mega-mergers: “Big seems to be beautiful”

When word broke that Endemol Shine Group was going up on the buyer’s block this past June, it caused a flurry of intrigue and discussion about who would be looking ...
October 2, 2018

When word broke that Endemol Shine Group was going up on the buyer’s block this past June, it caused a flurry of intrigue and discussion about who would be looking to buy the global superindie producer/distributor.

At that time, CNBC reported that the producer behind MasterChef and The Island had hired Deutsche Bank and Liontree to search out a buyer to purchase the company which could be valued between US$2.5 billion and $4 billion, including debt.

Endemol Shine is equally co-owned by 21st Century Fox and Apollo Global Management. Both Fox and Apollo have reportedly agreed to sell their stakes if the right buyer comes forward.

Rumors have been swirling of multiple major players who might be interested in purchasing the media company, including Endeavor and ITV, with both said to have made bids. Neither party has confirmed their interest officially. European network group RTL bowed out of the competition in September, citing a desire to grow its Fremantle studio brand and search out smaller acquisitions.

For a look at what the acquisition of ESG could mean for the industry, Realscreen reached out to two executives from different sectors of the industry: John Ford, general manager of U.S.-based production organization NPACT (pictured, right), and Thomas Dey, founder and CEO of ACF Investment Bank (pictured, left).

Ford says the move to put the company up for sale in the latest evolution of an industry trend that has seen networks, OTT services and prodcos busy consolidating resources – including Endemol Shine Group itself, which Ford says, “was one of the aggressive consolidators itself in the past decade.”

Ford notes that ESG’s global footprint and formidable IP across genres makes it an attractive target. In the ever-changing media landscape, Dey concurs that owning content creators becomes more important – and there aren’t many assets around the size of ESG on the market.

“It’s a one-off opportunity to really get deep into a global content creator,” says Dey.

Furthermore, Dey adds that an asset of this size on the market draws a number of non-traditional buyers – including telecommunications behemoths – out of the woodwork. But the FAANGs may not yet be looking to sink their teeth into such companies.

“I think the asset is a bit early for the likes of Netflix, Amazon and Apple,” he says. “I still think they are gearing up their acquisition strategy – but I’d expect they’d be players in the future on this kind of deal.”

Still, such a sizable global enterprise should appeal to buyers on both sides of the Atlantic, says Ford.

“Any owner would be looking for global impact so the appeal would be similar,” he explained. “It’s more about the specific market, library, and other advantages a new owner already has.”

But while many bemoan the impact upon creativity from such mega-deals, with consolidation potentially squeezing out opportunities for smaller players, Ford opts to be optimistic, saying it can also foster creativity by removing overhead costs and distribution concerns for prodcos within the merged/acquired entity, thereby allowing producers to focus on their product.

With technology and globalization of content being two key trends driving the industry at present, Dey says it’s making for “an exciting, dynamic market.” But for major media players, adds Dey, “big seems to be beautiful.

“When you are seeing Apple cross the trillion dollar mark, when you are competing with companies of that scale, it seems that people feel that you have to be bigger to be relevant.”

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