Behind the Business: Mick Pilsworth

Mick Pilsworth

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Motive Television is preparing to take advantage of the opportunities it believes come hand in hand with a downturn.

While most of the TV industry is tightening its belt and insisting that home entertainment will benefit from the economic downturn, Motive Television is one of the few companies that sounds like it really means it.

"I always quote Confucius: 'The Chinese characters for crisis and opportunity are the same'," declares its ebullient chairman, Mick Pilsworth.

Motive listed in May 2005 but its growth has been sporadic. It controls five operating production businesses in London, Manchester and Dublin, but last month told the City that completing deals is challenging.

Pilsworth said at the time that "deal progression" had been slower than anticipated.

"While valuations for independent production companies have fallen back to more realistic levels, potential sellers appear to be reluctant to move forward with transactions," he said.

"We had intended to acquire a drama producer during the period, and were in negotiations with four target companies, but their lack of earnings visibility caused us to withdraw."

At that point, he also flagged up the possibility that Motive could "benefit from any fallout from the downturn", by looking for opportunities among the smaller production companies.

Since then the group has been carefully conserving its cash and is now offering a £1m "lifeboat fund" to help struggling, quality indies through the rough times. Of course the indies will have to hand over something in return - a sizable minority stake to be precise - but many may find that appealing.

"A lot of medium-sized companies will find their revenues down because of the squeeze on commercial broadcasters," explains Pilsworth. "The difficulty is they have some fixed level of overheads - with premises, a computer system, probably staff. Smaller companies tend to revert to kitchen table size."

By contrast, Motive, which is expected to turn over £6m by the end of this year, has structured itself with an eye on the squeeze. "We're still relatively small but have relatively low fixed costs in our production units - we share space for example - and we have money in the bank to get us through," Pilsworth says.

The company revealed a cash balance of £1.2m at its last half-year results in September and raised £250,000 through issuing rights. "Even if our own companies are affected, we have the funds to see us through 2009 and beyond," said Pilsworth.

By mopping up the credit crunch fall-out, Motive aims to hit £20m turnover "as soon as we possibly can".

"I'd like to say we'll hit that three years from now, but we're way behind on our business plan because of the prices that companies have been selling for between 2003 and 2007.

"Now we're approaching [price tags of] six or seven times Ebitda and at that level we can participate.

"I don't think prices will ever go up again to the madness of 20 or 25 times Ebitda, but they might creep up to eight times, which is rational.

"Our primary target is to do some kind of transformational reverse takeover."

He won't expand on what type of company his next deal is likely to involve, but points out that Motive has no presence in the kids market and that there are "many types of factual production" it has yet to make progress in.

The downturn might be hard work, but it could turn out to be a boost to Motive's strategic plans.