Tying the knot: what’s next for Banijay-All3?

It was always a matter of when, not if Banijay Entertainment and RedBird IMI-owned All3Media would formally combine operations, but news that their merger had completed late Thursday still came quicker than expected for most.

That included Jane Turton, most recently chief executive of All3 and now installed as deputy chief exec at Banijay Entertainment – the largest production-distribution group outside of the US studios, with a valuation of $8bn (6bn), combined annual revenues north of €4.3bn (£3.7bn) and profits in the region of €700m (£597m).

“You can never tell exactly how long clearance takes for these types of deals, but it is definitely earlier than we had anticipated at the beginning,” she tells Broadcast as news of the merger’s completion broke.

Formalisation of deals such as this tend not to illicit much new information and the creation of the new Banijay Entertainment is not so different. We already knew there would be a capital injection from RedBird IMI, that its chief Jeff Zucker would be chairman of the enlarged entity, that Marco Bassetti would be chief exec and Turton his deputy – but there were still nuggets of news to be had and subtle suggestions of what this European behemoth’s strategy might look like in coming years.

UK-based, globally facing 

For one, the company’s corporate management team will be headquartered out of All3’s London HQ with UK-based labels and the distribution team located at Banijay’s West London HQ. That, plus Bassetti’s relocation to London, speak to the importance of the UK market and the English-speaking world to this French company.

“There’s a recognition on Marco’s part that London and the British market are really very important in the world of media, and so it is a very logical place for us to be based,” Turton adds, with the combined group’s footprint now extending to 25 countries.

For those on the All3 side, it’s a huge jump from the six-country reach it had previously, with the UK, the US and Germany its core markets, plus hub operations in Belgium, the Netherlands and New Zealand. Indeed, All3 is predominantly a UK-based company – 40 of its 50-odd labels are in the country.

Banijay Entertainment – a division of the larger Banijay Group that will continue to house the expanded company – is a different beast, with revenues roughly three times higher than All3. It has extensive operations across Europe, in Brazil, in Asia and in the US, but the UK remains its biggest market by revenue. And while Banijay’s global production revenues skew around 25%-75% in favour of unscripted, the combined company’s scripted footprint in the UK will be large.

Eleven of its 24 UK labels are scripted – think House of Guinness producer Kudos or The Rig’s Wild Mercury – while All3 houses around 15 drama-skewing outfits such as Call the Midwife’s Neal Street and The Tourist’s Two Brothers Pictures. Combined, the scripted heft will be considerable.

Management and structure

There has been little detail on who will be brought inside Zucker, Bassetti and Turton’s inner circle, but Banijay’s “de-centralised” structure will remain, with country managers overseeing operations.

“They’ve obviously got lots of markets that have the territory management system, with people to oversee those different labels within each market, and obviously it makes complete sense to continue to use that model, Turton adds.

“We’ve been slightly different, we’ve always had six markets, it’s just a function of their considerable geographic reach compared to our much narrower geography, but [the country manager model] means you have a very savvy market approach strategically. Your management is also aware of their market and able to respond in that specific territory.”

What seems to interest Turton far more than what type of management model will be implemented is the 25-country footprint that her labels will now get to exploit.

“It’s one of the most exciting things for the All3 producers – they have access in both directions for IP in and out of those markets. Producers developing IP can now find colleagues within Banijay who can talk to them about those programmes, and they can travel the world and produce in-house under the Banijay label – that relationship will be a new thing. And for them, it’s a very positive new thing.”

Turton also sees talent and formats coming back to All3 labels as well. “The foreign language element of it is very exciting, the new talent, the whole breadth of culture, the new platforms emerging, it’s all very healthy.”

Distribution, cuts and growth

The synergy savings of just €50m took many by surprise when they were first announced three months ago and that figure was confirmed today. Turton reiterated that creative would be protected – see more on that below – but back office corporate functions and distribution are likely to be hit.

All3Media International will run alongside Banijay Rights until the integration process starts in earnest, but distribution will ultimately be under the latter’s name (indeed the All3Media label is also to be retired).

Around 265,000 hours will be in the catalogue and available to buyers around the world, but expect All3’s Little Dot Studios to play an increasingly large role in how that content gets distributed too. The YouTube, brand and social outfit has been put front and centre in all press releases since the merger was announced, and that’s for a simple reason, Turton says.

“Little Dot is prominent because we see it as a real growth opportunity. It’s a growth opportunity that is in every respect additive, incremental. It’s not winning market shares from our conventional competitors, it’s actually creating new value in a new space. That’s quite exciting strategically.

“It’s also entirely global,” she continued, pointing to content being produced originally in the UK then consumed in North America where the ad dollar provides greater returns. And she also points to History Hit as another “really interesting example of something where they’re serving a super fan”.

Which takes us neatly onto a key premise for this deal: with such a deep talent base of producers and a rich, hefty catalogue, the opportunity to drive growing revenue streams, particularly by tapping into fandoms and the opportunities around digital and social, is clear.

“If you can start to develop brands, franchises, products for that type of audience, again, that’s slightly different from what we do. It’s adjacent to traditional television production, and you’re diversifying out from your normal business to a model that’s more business to consumer,” Turton says.

She also points to different monetisation models, brand partnerships, a world “that’s been disintermediated” and in which her company will have quite a bit of agency in as being exciting prospects.

“The opportunity to grow Little Dot is considerable,” she continues, adding that both organic and inorganic moves will be explored over the next few years. That inorganic growth story could be one to watch, given the deal will deleverage Banijay and see RedBird IMI injecting capital into the business to ensure the deal can be a 50/50 split.

“We’ll be looking at companies, individuals, opportunities that might be startup or we might acquire businesses that pre-exist, that are established, that are young but growing,” she explains.

There is also a growth story around live experiences, building on creating events as All3 has attempted to do with The Traitors. Turton is bullish – “the margins are nice” – and the strategy is clear. “If you have a big franchise, what do you do with it nowadays? You need to be doing far more with it in terms of the breadth of your exploitation, and live is one aspect of that.”

Production and scale

While exploiting IP on YouTube, FAST and social, alongside creating fandoms and delivering live events, might all be growth stories for investors, what about the more traditional fare of producing TV shows in a clearly challenged market? Will Banijay Entertainment’s focus start shifting away from its TV, and more latterly streaming, roots? 

“Look, you’re talking to someone who would always refute that we’re pivoting anywhere away from the original core business, because I still believe the core business is very much at the heart of this,” Turton says.

“Why? Because a lot of the things that we describe are adjacent to the core business only happen because of the core business. If you can create a brand franchise in the entertainment sphere, it is a [wider] product you are creating. The product may come originally from a game that you then take into television, and you might take it into scripted or unscripted, or into an immersive experience. You can start that journey anywhere, but what we are world class at is developing and producing and exploiting television, so if that’s what we’re calling the core business.

“I would be absolutely astounded if any decision is going to be made to say that our strategy is to take the emphasis off that core business.”

The scale of Banijay Entertainment will assist in this regard. Turton points to the diversity of production within the group but also the ability to explore new funding models.

“What are those models and how do they work? How do we leverage our position to make sure that we’re well placed to exploit our IP? Risk profiles change as you look at new models so a well-capitalised bigger producer is obviously quite well placed to explore some of those opportunities.

“The breadth of the geography, of the slate, the multi-genre nature of it, the multi-talent nature of it – that whole portfolio surely gives us an opportunity,” Turton says. 

Leverage

That scale may also assist the group in leveraging its power over global – increasingly consolidated – buyers, namely streamers. But Turton adds it is less about commercial leveraging and more about expanding the talent base to draw in buyers.

“For me, leverage you get is more about the creation of multiple opportunities through size and diversity versus just pure size.

“We’ll still be dealing with a very big Netflix, even as a bigger producer. Having spent a lot of years as a seller, you still feel very much like you know the power sits with the buyer, so my argument would be that it’s the richness of the offer and this complex, very fertile and productive portfolio that we have with our increased size that gives you more opportunities versus just pure muscle.”

One way to add more creative muscle would be to acquire one of the mid-sized groups, say ITV Studios, which is set to become a standalone – and eminently acquirable – entity within 18 months. But Turton admits she is being “coy” in downplaying any M&A plans.

“There are multiple opportunities, and you could probably name six or seven pillars that we’d be looking at for growth. Like most businesses, we don’t narrowly restrict ourselves to one, but I don’t think that production companies would ever be off the cards, particularly if they bring talent and IP.” She also points to AI-related firms, live event outfits and digital companies, adding “watch this space”.

But the core focus will inevitably remain on creative, Turton adds. “These businesses are very dynamic, let’s be clear about that. They change all the time, they bring new people in and some people go, that’s how it works because these are people businesses.

“The intention is absolutely to preserve and strengthen the creative in the business from this merger. Our people are strong market leading developers and sellers and producers. The last thing you would do as a rational and strategic brain is to damage that.”