Seeking profit across the pond
By Kate Bulkley
For Broadcast August 11, 2011
US producers aim to take a leaf out of UK book, says Kate Bulkley.
Throughout history, the British have often felt years behind the US in terms of making money from cultural trends - from the hoola hoop to the iPad. That may be changing in the TV business because we UK guys now have two things that the US guys donít have - and itís thanks to The X Factor, Supernanny, Hellís Kitchen and all the other UK formats that are so successful on both sides of the Atlantic.
UK indies have benefited by controlling their intellectual property and retaining the profits it generates - and itís dawned on independent US producers who have been under the heavy foot of US broadcasters for so long.
If CBS, Fox or whoever wants a show, a US independent producer is pretty much a supplier for hire. They seem to get higher fees to compensate for the lack of a back end, but itís a tough business and one in which it is very difficult to build scale.
Now two US production companies have sold to UK super-indie Tinopolis in the space of two months, and the implication is clear: US producers are keen to become more international and less hostage to the IP tyranny of the US broadcasters.
Being owned by a UK indie also offers an extra knowledge base and the opportunity for a launch pad - if they get shows commissioned in the UK first and then bring them to the US, they could retain IP and potentially have more leverage with US broadcasters.
In the world of formatted TV, that sounds like a format that could bring considerable success.
In fact, About Corporate Finance chief executive Thomas Dey tells me that US indies can be as profitable as their UK counterparts despite not owning IP because they have developed ďstylesĒ of production that are appreciated (and paid for) by US broadcasters.
Dey helped Tinopolis buy Base Productions for a reported £45m. He says Base programmes such as ESPNís Sport Science, which has CG and an intelligent, male-skewing way of presenting its subject, makes it a go-to indie for that kind of show in the US.
Tinopolis also bought A Smith & Co in June for an estimated £60m because it is a master craftsman when it comes to translating UK formats such as Hellís Kitchen into all-singing, all-dancing US versions. For Tinopolis, these relationships are crucial to its move to get more programmes away in the big US market.
Thatís not to say that opening a US production arm, rather than buying, doesnít work as well. It has for UK indies such as Shed Media, but all UK producers doing well in the US will tell you itís a steep learning curve; the US is just different, both in terms of taste and how you pitch.
The bottom line for any indie interested in growth is how to retain IP and access the US market in the most efficient way possible. In the global content creation game, marrying UK and US assets looks like the way to go, especially if the UK indie is the buyer because they pack a lot of knowledge of the growth areas: IP and international.
It helps that Tinopolis is private equity-backed and able to take financial punts, but in any case, the most recent punts look to have the right risk profile.