WLTM: Big media seeks small indie for profitable relationship

Posted by Stewart Clarke Tuesday, December 2nd, 2008

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The economic downturn won’t, it seems, put an end to larger producers, distributors and broadcasters hoovering up indie programme makers.

Last week, as UK indie RDF finalised its £52 million management buyout, a raft of Big Media companies were scouting for indie producers, with several deals in the offing.

But could the deal flow to be slowed by indie owners placing unrealistic, pre-Credit Crunch, valuations on their businesses? The companies looking to buy will be putting less on the table than 12 months ago and while lower valuations might deter some indie bosses from selling the companies they have toiled to build, others will have little choice.

Broadcasters are suffering as the ad market stalls and that impacts what they pay programme suppliers and how much original fare they order. In the UK Channel 4 spends over £300 million annually on indie-originated content but is slashing its programming costs. The BBC spends even more on indie programming but has committed to a ‘fewer and better’ programming policy. The UK broadcasters are hardly alone in cutting back.

Unless a company is producing a primetime ratings juggernaut that goes out in peak time it will be squeezed. Producers of daytime fare or kids programming for example will feel the pinch.

Medium sized indies are the most vulnerable, lacking the scale and the range of operating activities of their larger counterparts or the modest overheads and ambitions of the boutique producers that can get by with one or two regular orders.

So, who’s shopping and what’s on their shopping lists? Speaking at the Media Leaders Summit in London senior executives from Fremantle, Endemol, NBC, ITV and Zodiak were among those that said they want to buy content companies.

ITV is scouting for indies as it attempts to change its mindset from UK broadcaster to “global entertainment company”. DeAgostini is keen to acquire and, somewhat quietly, it provided a chunk of the finance for the RDF deal. Endemol is also looking to buy into production companies. US studio NBC is also keen to do deals and about to buy a Russian producer.

So, there are buyers. The economic downturn means that either by choice or circumstance there are also sellers. The question is where the two meet on valuation.