Sony Pictures Television recently took majority control of Alex Rider prodco Eleventh Hour Films in a deal facilitated by Helion Partners’ Tom Manwaring. The exec tells C21 the transaction is indicative of a sector still in good health, with plenty more M&A to come.

Tom Manwaring

Seven years ago, Sony Pictures Television (SPT) embarked on a mission with young adult spy drama Alex Rider, the first ever project the US studio had decided to fully fund without a platform attached.

Based on the books of bestselling author Anthony Horowitz, the series was initiated at Eleventh Hour Films, the UK independent producer headed by Horowitz’s wife Jill Green and behind adaptations of some of his other myriad novels including the BBC’s Magpie Murders and ITV’s Foyle’s War.

Around the same time, SPT went a step further and took a minority stake in Eleventh Hour, in a deal that gave it distribution rights to non-Horowitz titles like New Blood and Safe House, also for the BBC and ITV.

But the conviction SPT showed in Alex Rider and the subsequent pact it struck for the programme, was perhaps indicative of the broader thesis behind investing in the business. Amazon Prime Video kicked off the buying in the UK with a flurry of another 100 channels and platforms around the world. The streamer subsequently stepped up to commission a second and third season, the latter debuting earlier this year, not only on its UK subscription service but ad-supported Freevee in the US.

Earlier this month, SPT upped its stake in Eleventh Hour to a majority share, with another Horowitz drama on the way – Nine Bodies in a Mexican Morgue for Amazon’s MGM+ and the BBC – and an expanded catalogue of series from other scribes. These include a new take on Ian Rankin’s Rebus crime detective novels for the BBC and Irish author Jane Casey’s The Killing Kind adapted for Paramount+ UK.

Sony Pictures Television recently took majority control of Alex Rider prodco Eleventh Hour Films

At the heart of the SPT/Eleventh Hour transaction, as well as brokering SPT’s 2020 purchase of Sex Education prodco Eleven Film, was Tom Manwaring, partner at UK mergers and acquisitions advisor Helion Partners.

“The relationship has been a good one both for Eleventh Hour and Sony because there’s been a number of shows that Eleventh Hour has made that Sony has sold internationally,” he says. “When you roll forward five or six years, there was an opportunity for Sony to go from a minority shareholder to majority and provide help with succession planning, so it was a natural evolution.”

Manwaring is referring to the fact that, coinciding with SPT’s increased involvement, Eleventh Hour founder and CEO Green will transition to creative executive producer and chair in September, while head of talent and exec producer Eve Gutierrez and creative director Paula Cuddy have already been appointed co-CEOs. Former Gaumont and BBC Studios exec Sarah Woolway, meanwhile, has joined in the newly created role of chief commercial officer.

Though Alex Rider ended with its third season, SPT still clearly sees plenty more value in the company and the approach the two parties employed with the teen spy drama.

“There was no primary commissioner on that,” says Manwaring. “Sony fully funded it on the basis they thought the better route to market and maximising profit was to produce it and fund it all themselves and then find a buyer, which they did.

SPT also bought His Dark Materials producer Bad Wolf

The strategy is certainly high risk/high reward as rather than anchoring the production with a broadcaster in a major market like the US or UK, these markets turn from being places where the rights are already taken by the commissioning broadcaster to ones that can command a hefty licence fee.

“The model for fully financing a whole show is relatively rare because it’s quite a significant outlay. But increasingly at Eleventh Hour and other producers, there’s more of a coproduction model where the risk is laid off between commissioners. Various companies we work with will try and find both a UK and US commissioning partner, which will fund a significant portion of the show and together with a significant deficit will get the show made. That generates more value for a distributor than going straight to streamer.”

Aside from Eleventh Hour and the previously mentioned Eleven, SPT has also in recent years exercised options to take majority ownership of companies including The Crown producer Left Bank Pictures and His Dark Materials maker Bad Wolf. Manwaring believes the US studio, which was this year in the running for a much bigger transaction in the shape of Paramount, will be back for more.

“They still have a keen eye for high-quality producers, not just in scripted but non-scripted as well,” he says. “They remain active and – despite what sometimes people might say in the press – for the right opportunity, there is always an open door.”

Indeed, for the Helion exec – who this year has also helped steer Australian scripted producer Werner Film Productions (maker of hit ABC series The Newsreader and Netflix teen drama Surviving Summer) through its sale to BBC Studios, and transatlantic prodco Two Cities (behind Patrick Melrose for Sky/Showtime and Blue Lights for the BBC) to Scotland’s STV Studios – the level of M&A activity across TV points to an industry that, contrary to perceptions of being in the doldrums, in fact remains in rude health.

“I don’t think the market as a whole is necessarily in contraction,” says Manwaring. “Some companies who are positioned with the right broadcasters are doing well and having strong years. That’s not universal but the M&A market remains pretty robust.”

BAFTA-winning Top Boy

Last year’s writers’ and actors’ strikes had an impact in the US and beyond but a general downturn in TV advertising has been the broader story affecting major legacy linear businesses. Warner Bros Discovery (WBD), for example, is grappling with a debt burden of US$39bn and is reportedly considering a break-up two years after the US$43bn merger that created the company.

Manwaring points out that the WBD deal was done prior to Russia’s war on Ukraine, which intensified global economic pressures, and that the Discovery channel is at the sharp end of audience migration to digital, with YouTube in particular the beneficiary.

In the UK, ITV and Channel 4 have been similarly exposed, though the former has to its advantage a significant studios operation (expanded recently with the purchase of Sherlock maker Hartswood Films – its first prodco acquisition since wildlife specialist Plimsoll in 2022) whose contribution to the bottom line is now on a par with its broadcast business.

Amid all this, streamers remain strong, as per SPT’s confidence in its ability to sell Alex Rider and Amazon’s recent purchase of the UK’s Bray Films Studios –backdrop for its series Rings of Power and Citadel. As Manwaring notes, Netflix will spend around £1.2bn (US$1.5bn) on UK content in 2024 and, while this is roughly the same as last year, a number of major series coming to a close means sizeable chunks of that budget are in need of reallocation.

“They’re spending the same amount of money, but within that some of their big shows – The Crown, Sex Education, Top Boy, even The Last Kingdom – have all come to an end. Those are significant budgets – probably several hundred million dollars collectively, each year – and Netflix needs to find new homes for that money, whether it will be scripted or non-scripted,” he says.

All3Media’s The Traitors

Another positive for Manwaring is the conclusion of the All3Media sale process in May, when Abu Dhabi-backed private equity firm Redbird IMI paid £1.15bn (US$1.45bn) for the UK company behind hits The Traitors, Squid Game: The Challenge, The Tourist, Fleabag and many more.

“We’ve sold multiple companies to All3 in the past, but the last major deal they did with us was in December 2020 when they bought Silverback Films, then nothing since then – firstly, because they had no money, then latterly because they were in a sale process and so weren’t buying,” he explains.

“That in itself was something we could cope with but the challenge we had last year was that all the major media groups were looking at All3 and were generally too preoccupied doing that to buy smaller companies.”

All that changed, however, when Redbird outbid the likes of ITV, Banijay, Mediawan, SPT, Goldman Sachs and Peter Chernin’s North Road Company for the business that was previously a 50/50 joint venture between Liberty Global and Warner Bros Discovery.

“We very much expect they [All3Media] will be out looking for M&A in the future and, separately, all those larger groups that were looking to buy All3 and had sign-offs probably varying in size of around £1bn from their boards to buy All3 now have money to spend on other TV production assets.”

So, despite the doom and gloom pervading some parts of the industry right now, Manwaring is upbeat and the M&A activity he is seeing, either close-up or from afar, is indicative of businesses doing well and selling as a result of this rather than because they have to.

“We’re still seeing some companies in the TV production space having their strongest years yet, but they tend to be producing high-value shows for a mix of customers – quite often Netflix, Apple or Amazon. Maybe they do some work in the UK with the BBC or ITV, but a large part of their profitability is driven by the big streaming platforms,” he says.

“The companies that are often more challenged are those supplying a lot of content to Channel 4 because as Channel 4 cuts its spend then either they’re going to cut shows or they’re going to reduce the budgets of those shows.”

For the rest, SPT, ITV, Banijay, Mediawan, Newen, Fremantle, BBC Studios and others all remain potential suitors. “The fact there are a number of the major trade groups in the marketplace looking for M&A opportunities to grow their businesses and there remain companies that are, despite the economic environment, performing well means we see the outlook as being pretty good,” says Manwaring.