Posted Feb 1 2022 at 01:10 PMUpdated Feb 1. 2022 at 01:35 PM
“We are currently living in a golden age of content production. Almost endless opportunities are open to creators. It was Madeleine de Cock Buning, Ms. “public policy” at Netflix for Europe, who made this observation at the end of January in Paris during a conference devoted to “creative independence”. The proof that content is king: this year, eight American video giants, Netflix, Amazon and others, will spend more than 100 billion dollars in audiovisual and film production, according to data aggregated by analysts from Morgan Stanley .
In response to this windfall, the hitherto fragmented European audiovisual production landscape is becoming more and more concentrated and is even whetting the appetite of American funds such as KKR and Oaktree. Alongside historical players such as the British ITV, the German Fremantle (Bertelsmann) or the French StudioCanal (Canal+), a handful of French groups play the leading roles in Europe. In the wake of Banijay and Mediawan (supported by KKR), Newen (subsidiary of TF1), Asacha (Oaktree) or even Federation Entertainment are also increasing their “deals” to grow and internationalize.
A movement powered by fiction
Everything has accelerated since 2020, the year when KKR became the majority shareholder at Mediawan (“Ten percent”, “HPI”…). Controlled by the Capton-Niel-Pigasse trio and having grown thanks to a slew of acquisitions, Mediawan exceeds one billion euros in revenue per year.
The same year, Banijay finalized the takeover of Endemol Shine, giving birth to the world leader in so-called “flow” shows (“Koh-Lanta”, “Fort Boyard”, “Taratata”, etc.) with Stéphane Courbit at the helm. and Vivendi in the capital. Also very active in the series (“Germinal”, “Peaky Blinders”…), Banijay weighs in at 3 billion euros in revenue.
“It’s a movement propelled above all by fiction because of the colossal demand from the platforms,” explains Daniel Weisslinger, co-head of the TMT sector at Societe Generale in London. When a Netflix orders from European producers, this has a reassuring effect for investors. It is the promise of international distribution and a budget that will attract the stars of the big screen. »
“Our customers have changed”
In France, to date, the latest examples of merger have concerned Federation, controlled by Pascal Breton, which took a majority stake in Robin & Co at the beginning of January – whose subsidiaries produce, among other things, the fiction “Kaamelott” – and in the process 51 % of the capital of Bonne Pioche, producer in particular of “La Marche de l’Empereur”.
“There is a part of economic opportunism, of course, but it’s also because our customers have changed,” explains Romain Bessi, head of Newen. Five or ten years ago, opportunities were concentrated at TF1, France Télévisions and Canal. Today, the market has grown. But it is more difficult to weigh against global platforms whose decision-making centers are most often in the United States or London. Concentration is a way to be more visible with a more complete offer and greater means. »
For a producer, entering the fold of a larger group has several advantages. This facilitates access to international co-production schemes and gives the possibility of “relying on sales teams which make it possible to market a program in several territories by finding financing upstream”, notes Manuel Alduy, in charge of cinema and international development at France Télévisions.
Financial stake
The issue is also financial. In France, the average hourly cost of a prime time drama is around 1.5 million euros, but when the principal is a platform like Netflix or Amazon, the budget rises to 2 million or more, which which makes tens of millions for a series of ten episodes, observes a connoisseur. Hence the interest, for a small producer, to lean on a bigger one in order to avoid cash flow problems.
If this consolidation movement is significant in France, it is certainly thanks to an enviable pool of talent, but also thanks to the French regulatory framework, built around quotas protecting independent production (not backed by a broadcaster). In addition, since the beginning of January, Netflix and consorts have been definitively integrated into the financing of works in France – a new windfall representing up to 300 million euros per year. “When you have a market guaranteed in this way in a predictable way, it’s like an Eldorado which inevitably stirs up entrepreneurial vocations and the appetite for funds”, notes Manuel Alduy.
A fragmented market
Still, there are downsides. With platforms, producers often work according to a so-called “cost+” remuneration system where the margin is determined by the platform, which often aims to keep as many rights as possible. However, according to some professionals, this can leave the producer in the position of a subcontractor rather than a true creator. A criticism generally rejected by the companies concerned.
Be that as it may, the market remains fragmented, especially in fiction. According to the European Audiovisual Observatory, the top 20 production groups were responsible for only 38% of titles created in 2020. In France alone, there are more than 4,500 companies active in production. audiovisual. And there are always new ones trying the adventure.