EXCLUSIVE: Ynon Kreiz: Endemol finances OK

CEO addresses rumors that financial restructuring is imminent


Ynon Kreiz
 
Since taking the top job in 2007, Endemol chairman and CEO Ynon Kreiz has had the global TV production group on an expansion and buying spree. The kite-surfing fanatic has diversified the private-equity-backed reality giant into sports, drama, comedy and scripted programming, combining organic growth with a slew of acquisitions from Australia to North America -- and a few stops in between. But the economic crunch, an estimated $3 billion debt burden taken on as part of Endemol's acquisition in 2007 and the sheer pace of its expansion have led to speculation that financial restructuring is imminent.

The Hollywood Reporter: How are you financing acquisition after acquisition when you are carrying so much debt?

Ynon Kreiz: Our strategy is to grow the company through a combination of organic expansion and acquisitions. Our capital structure is designed for that, and it has always been part of the plan.

THR:
Even during a period of unprecedented financial turmoil?

Kreiz: If you look at the companies we've bought, you can see that they are all (cash-flow) accretive and make business sense; they are leaders in their fields and either strengthen our current activities or take us into a new area of business. Because of our debt we have to make the right choices, and so far we believe we have done exactly that. What's more, we are well resourced to make further acquisitions should the right opportunities arise.

THR: There are a lot of rumors that Endemol is having trouble servicing its loans. Are you at a crisis point, and will you need to restructure?

Kreiz: Because we are privately owned, we do not comment on our financial details. Inevitably, this means that there are rumors and speculation. As we have said all along, we strongly expect to continue to fully comply with our debt covenants for the foreseeable future, given our current outlook and taking into account the resources already available to the company and its shareholders.

THR: Isn't there just too much debt on the books?

Kreiz: Would we have like to have less debt? Yes. But so far, it has not been a predicament or a handicap to drive the company forward, make acquisitions, hire world-class executives and retain our best people. This does not mean we will not look to improve and strengthen our capital structure as every company that carries debt would.

THR: What do you want out of the deal to acquire Authentic Entertainment?

Kreiz: North America is a key part of our growth strategy, and the U.S. cable market is a big opportunity for Endemol. Authentic has an exceptional track record of creating and producing hit programming in this space.

THR: What do you watch on Thursday nights when you are in the U.S.?

Kreiz: Good question. We've been very fortunate to have two of our shows being No. 1 on two of the main networks ["Wipeout" on ABC, "Big Brother" on CBS]. What is interesting is that "Wipeout," which is one of the most successful broadcast reality series launched in recent years, is part of a new generation of reality game-show formats, while "Big Brother" is an Endemol classic in its 12th season in the U.S. -- and it still proves that it has a very long staying power.

THR: Were you disappointed that "The Marriage Ref" didn't do better?

Kreiz: "The Marriage Ref" is doing very well. It was a very successful show in its first season and as a result was immediately recommissioned by NBC for another season. This in itself doesn't happen often and speaks for the quality and value of the program. In the wake of that, we have sold the format and the U.S. version in some of the world's biggest markets, and a number of these are yet to be announced. We're very proud of the show, and it's a real privilege to be working with an international comedy legend like Jerry Seinfeld.

THR: Where does "Big Brother" go from here?

Kreiz: It's an incredible phenomenon; it never ceases to amaze us. After more than a decade, the format continues to evolve, and it is still the leading program in almost every country where it is broadcast, including some of the world's largest and most competitive TV markets.

THR: You're happy with the show, then?

Kreiz: What more can you ask? It's here to stay for a loooong time.

THR: Do you wake up at night worrying that reality is running out of steam, that you have too much of it in your portfolio?

Kreiz: Reality is a firmly established genre that will not run out of steam. It is mainstream and a core part of every broadcaster's schedule. It's a great space to be in, and we fully intend to keep growing that part of our business, but we are far from being overly reliant on any one genre. We make shows in every entertainment genre, and in recent years we have diversified our output still further, including in scripted genres in particular. In 2009, we produced more than 1,800 hours of scripted programming, and we expect that to increase to 2,000 in 2010. Our drama catalog has now grown to 10,000 hours, and we expect it to continue to go further. It may not be a genre that people associated with Endemol in the past, but it is now a core and rapidly expanding part of our business.

THR: You run a business with a global outlook. What are your biggest worries?

Kreiz: A good friend of mine once said that running a global business means you have worries all over the place. The biggest challenge is to make sure all the dots are connected and that our platform is coordinated and synchronized. That's no small achievement with in a company diverse as ours.

THR: You're getting into feature films. Why have you chosen to do this through the sports unit?

Kreiz: We have been making feature films through several local divisions around the world, including in the U.K., Germany, Holland and Russia, so this is not a new area for us. In the case of Endemol Sport, we had entered a global media partnership with Manchester City FC and saw a great opportunity to do something different that could play theatrically, on TV and on DVD around the world. It's a feature-length documentary that tells the story of the club's dramatic reversal of fortune under new ownership, seen through the eyes of the most passionate football fans in the world. It's a really great piece of film, and we're extremely excited about its launch this [month].
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