U.K. independent prod'n sector rebounds

Bounce-back driven by activity from BBC Worldwide, Shine

LONDON -- Mergers and acquisitions activity in the U.K. independent production sector bounced back to deal values of £164 million ($244 million), driven by activity from the BBC's commercial arm BBC Worldwide and Elisabeth Murdoch's Shine Group, according to new research published Thursday by Content Economics Research.

The total value of deals done within the sector more than doubled a low of £76 million ($113 million) in 2008 but still remains well below the height of the market in 2007, which logged £253 million ($376 million) in M&A deals.

In 2009 13 deals were transacted, compared to 20 in 2007 and 13 in 2008. Over the three-year period, Shine acquired £74 million ($110 million) in U.K. indies including Kudos and Princess Production, while BBC Worldwide invested £10 million ($15 million) in minority stakes in eight indies over the period, including Steve Coogan's Baby Cow. All3Media, Endemol, ITV and Zodiak also made acquisitions.

Deal multiples have also declined from the 2007 peak, when buyers paid an average of 2.1xsales in 2007, falling to 0.6xsales in 2008.

"The credit-crunch brought the indie consolidation bubble to a resounding halt during 2008," said James Healey, director of research at Content Economics, who mentiond that while there were some signs of deal activity, currency issues meant that buyers were more likely to come from overseas.

"With the ongoing weakness of the pound, it is European indies who are likely to be the key players, as they continue to cherry-pick U.K. production assets," he added.
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