De Agostini sets €200m aside in bid to become next Endemol
By Kate Bulkley
Wednesday November 26, 2008
Italian media and finance company De Agostini is seeking to emulate the likes of Big Brother producer Endemol and build a global content business with a €200m (£169m) fund to buy TV production and digital media companies.
De Agostini, best known in the UK as a "part work" magazine publisher, is planning to double the size of its Zodiak Entertainment TV subsidiary through further acquisitions over the next three years.
The company is unite its existing TV subsidiaries, which include UK independent producer Diverse under the Zodiak banner, with the newly enlarged operation to have dual headquarters in London and Paris.
De Agostini is aiming to build the TV business into an €800m-€1bn turnover operation by 2011, according to Lorenzo Pellicioli, the chief executive of De Agostini Group and Zodiak Entertainment.
Zodiak, which produces Beat the Star for ITV, has an annual turnover of €400m and earnings before interest, tax, depreciation and amortisation of €70m.
"We want to develop a new era in TV content. That may sound a bit emphatic but in these days of the credit crunch it is what we have to do. Today we have to buy with equity due to the credit crunch," Pellicioli said.
He added that in addition to the €200m earmarked for acquisitions, he could increase this fund by selling down De Agostini's stake in Zodiak to 51% if necessary.
Pellicioli said De Agostini would be looking to float Zodiak, most likely in the UK, within three years, depending on how well stock markets have recovered from the current slump.
The target markets for De Agnostini are the UK, US and emerging markets such as India, where Zodiak already has a small presence in a producer.
"I strongly believe we have to buy something in new media because it is better not to replicate from the old model but to start from the new model," Pellicioli added.
"The future in terms of margin is more on the content side than the distribution side. The erosion of broadcasters by new platforms is happening more quickly than anyone thought.
"So the challenge is to restructure the group to cope with having less rich clients than before."