By Nico Franks 29-07-2014
A surge in mergers and acquisitions (M&A) over the past few months has given the global production business a shake-up. Nico Franks ponders the implications for the kids TV sector.
So far, 2014 has seen a flurry of headline-grabbing M&A deals, but the biggest may be yet to come. Rupert Murdoch’s 21st Century Fox is still expected to make an improved offer to buy Time Warner, after its first bid of US$80bn was rejected earlier this month.
And if Murdoch, a man used to getting what he wants, does manage to pull off his latest and potentially greatest deal, it would give him ownership of a heady mix of kids media assets, including Cartoon Network and Warner Bros Animation.
Incidentally, Murdoch owes a lot to animation. Back in the early 1990s, a quirky cartoon called The Simpsons, now the longest running animation of all time, turned his fledgling Fox network into a serious player in the US almost overnight.
Meanwhile, 21st Century Fox’s deal with Apollo Global Management to create a production and distribution giant comprising Shine Group, Endemol and Core Media, the combined owners of hit formats such as MasterChef, Big Brother and American Idol, is still on the cards.
Both Endemol and Shine, though primarily focused on content for grown-ups, have previously dipped their toes into the children’s sector. The Big Brother company has distributed toons such as The 99 and The Matt Hatter Chronicles in the past, while Shine launched a prodco with In the Night Garden creator Andrew Davenport in 2012.
Could coming under new ownership give these companies the confidence to step up their efforts in the kids’ TV business? Or could they soon have the financial clout to begin acquiring children’s companies of their own as a quick way in? It’s a fascinating time, with the deals so far likely to be the tip of the iceberg while broadcasters, producers and distributors are all still clamouring for growth.
Kids channels could have a totally different complexion by this time next year as a result of some of these multimillion dollar deals. In Canada, producer and distributor DHX Media this week received final approval for its proposed C$170m (US$160m) acquisition of the Canuck kids’ cable networks Family Channel, Disney XD and Disney Junior.
Many of the Disney series that have helped make Family Channel the number one network across all kids’ audiences in Canada will likely stay. However, DHX does plan to place content from its vast library on those networks, alongside new original programming.
Elsewhere, US media giant Viacom, owner of Nickelodeon and MTV, has swooped on UK free-to-air broadcaster Channel 5, terrestrial home to Peppa Pig and preschool block Milkshake!, for £450m (US$759m). The deal is likely to have many interesting ramifications for producers in the kids’ TV business, given that it could mean C5 has a bigger budget to play with.
Soon after the deal was announced, Viacom said Milkshake will grow as a result of its takeover of C5. Whether or not this will mean more commissions – but fewer rights – for indies is a big talking point among UK producers at the moment.
The wind of change is sure to put pressure on the giants in the kids’ TV business, such as DreamWorks and Disney, to make more M&A moves. Disney’s last major acquisition was of Maker Studios, one of YouTube’s largest multi-channel networks (MCN). Its name, alongside those of Apple, Amazon and Google, has been thrown into the ring as a potential rival bidder to 21st Century Fox for Time Warner.
The acquisition of similar companies operating in the increasingly lucrative MCN space are also likely to be high up the agendas of companies such as DHX and Entertainment One. However, as consolidation increases, these firms, which in recent years have been hunters, steadily acquiring IP owners and producers, could soon become the hunted.