Kate Bulkley, Media Analyst.

Reducing Complexity is Key to Endemol Shine

By Kate Bulkley

Broadcast News

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For Broadcast January 30, 2019

Chief executive Sophie Turner Laing reveals plans to reshape the business after it failed to find a buyer during last year’s sales process

Deal or no deal? It was a case of the latter for Endemol Shine Group (ESG) in 2018, when the UK’s biggest super-indie group failed to attract a buyer despite a high-profile sales process.

The likes of ITV, Endeavor Content and Banijay were all linked to the Black Mirror and Big Brother producer, but a combination of highly indebted balance sheet and a high minimum price expectation ($2.5bn/£1.9bn) derailed the process, amid questions about whether the company is generating new shows of comparable scale to its back catalogue of hits.

Big Brother: Endemol Shine stalwart aired for the last time in the UK on C5 in 2018

Big Brother: Endemol Shine stalwart aired for the last time in the UK on C5 in 2018

The sales process was time-consuming for management and must have been highly frustrating, although ESG chief executive Sophie Turner Laing remains upbeat and believes the lessons she learned during that period can help to reshape the business.

She is confident about the 2018 numbers ESG will announce imminently – “our CAGR [compound annual growth rate] is looking good” – and believes potential buyers were put off because they believed the business was too complex.

“Our shareholders will decide what they want to do, but we’re an enormous asset and we were never going to be a fire sale,” said Turner Laing. “What was interesting during the sales process was that when we were presenting to people who run the same type of companies, we were understood.

But a lot of the American companies are used to command and control out of the West Coast, and it was hard to get them to understand that it’s not that complicated to run a portfolio company in 24 countries.”

“It’s about reducing the complexities at the centre of the company. I want to get this place humming” Sophie Turner Laing, Endemol Shine Group

Turner Laing’s new year’s resolution is to get the business into a shape that makes it easy to understand.

“Predominantly, that’s about reducing the complexities at the centre of the company,” she said. “I really want to build further speed into action, so we get this place humming.”

Earlier this month, she sent an email to Endemol Shine country heads, which was passed on to the respective production labels, that explained her desire to “reduce the complexity” of the business structure.

It spoke of helping the company operate “at scale and speed, while allowing creativity and entrepreneurism to thrive”.

Dark: German-language drama made for Netflix

Dark: German-language drama made for Netflix

She said “simplicity is absolutely key”, and underlined the opportunities afforded by the FAANGs, extra demand for non-English-language scripted programmes and the need to make the organisation “futureproof with these changing viewing needs” by ensuring routes to market are “seamless”.

Intended as a call to arms, some of Endemol Shine’s 4,000 employees read it as prelude to job losses and cost-cutting.

When Broadcast asked Turner Laing about these fears, she said: “It’s not about head-cutting. It’s about tuning systems that don’t talk to each other, like storing assets and detailed administrative tasks at the group level. It’s not very sexy stuff.”

Though competition for programming has never been higher, Turner Laing wants the group to have the ability to “turn on a sixpence”.

She said: “I had 13 years at Sky, which runs like a rocket train, so trying to catch this business up to the speed that Sky runs at is something I am keen to do.”

One financial analyst summed up the challenge facing the business thus: “Endemol Shine must prove it can push IP onto multiple platforms and enhance its margin, which is tough as Netflix is getting tighter on its deals.

“The catalogue is a good one [55,000 finished programming hours and more than 4,000 registered formats], but it is mature. ESG has to show growth and breakout hits, otherwise it’s simply chasing EBITDA to service the debt, and not growing.”

There are some positive signs: a recent report from analyst K7 Media suggested The Wall is the top-selling format since 2015; Big Bounce Battle launched on TF1 in France this month and is headed for Fox in the US; and Family Food Fight debuts on ABC this year.

All Together Now: format has sold to 12 territories

All Together Now: format has sold to 12 territories

Plus, Remarkable Television’s BBC1 format All Together Now has already sold to 12 territories and earned the label a company “blockbuster bonus” for a break-out hit.

Also on the agenda is a significant push into non-English-language scripted programming off the back of the German-language Dark and Spanish-language La Catedral Del Mar, both made for Netflix.

Turner Laing wants better production and sales practices to protect margins and believes central office functions, such as rights management systems, need to improve to increase ESG programming’s “speed to market”.

Sophie Tuner Laing

Sophie Tuner Laing

“We have 35-plus scripted adaptations in place, either sold or in development now,” said Turner Laing.

These include a remake of Channel 4’s Utopia for Amazon, Humans for China, while Fox is developing French drama Quadras.

“There is no barrier to entry now for global taste,” she said. “We don’t get a lot of details out of Netflix, but we do know that 90% of Dark’s viewership was from outside of Germany, with a big base of that in Brazil.”

The world’s highest-profile SVoD is a key target for ESG, as are the many direct-to-consumer services being planned by the big US networks.

Turner Laing believes there is plenty of appetite for Endemol Shine’s diverse range of programming: “I’ve had five calls from streamers in the past week who are all super-anxious that they don’t have access to the right kind of content out of Europe.

“That is music to my ears because, with a creative network of 120 companies in 23 countries, we have ideas coming through every pore of our skin.”

Certainly, new platforms increase demand for programming, but storm clouds are gathering as traditional TV consumption declines and online video grows.




Scripted up 14.9%

Unscripted up 9.7%

Overall hours down 7.9%


All figures are Compound Annual Growth Rate (CAGR)


Source: Broadcast Intelligence

A recent Bank of America Merrill Lynch report claimed the UK is the European television market “most ripe for disruption” and forecast heavier TV share falls than in the rest of the region.

Enders Analysis pointed to “significant challenges” for Endemol Shine as a result of the decline in revenues in the UK broadcast media over the past two years. A large part of the company is UK-based, with 22 production and distribution entities in Britain contributing £453.2m of the group’s ¤1.85bn (£1.63bn) 2017 turnover.

“ESG must look to a new clientele for commissions, who will offer them less attractive terms of trade” Alice Enders, Enders Analysis

“We see peak licence and commercial TV revenues as being behind us, mainly because of audience decline to the benefit of SVoD,” said Alice Enders of Enders Analysis.

“UK broadcasters – the traditional customers of domestic indies – have the most attractive secondary rights regime in the world, but are inexorably bound to reduce their programming budgets for the broadcast window. ESG must look to a new clientele for commissions, who will offer them new and less attractive terms of trade. That’s much riskier than the status quo.”

Enders said there is concern whether Endemol Shine “has the mindset” to pitch Netflix the right kinds of creative projects. However, she added that the super-indie does produce “a diversity of shows for a diverse group of broadcasters, particularly the quirky audience of Channel 4”, so can remain fit for purpose in the age of SVoD.

On a corporate level, a degree of uncertainty remains. After a year-long hiatus on the indie acquisitions front, Turner Laing said she would “absolutely” be interested in deals “with the right fit and at the right price”.

But there will be more focus on ESG’s own slightly complicated ownership: co-owners 21st Century Fox and Apollo Global Management “suspended” the sale process last year, but the former is in the process of selling its entertainment assets (including its 50% of Endemol Shine) to Disney.

What Disney intends for the company is unclear and sources suggest Banijay is still interested in buying ESG at the “right price”. The next chapter in the ESG story could be just as compelling as the last.

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