M&A, Brexit in Focus at Winston Baker U.K. Summit

Parliament in London
Dan Kitwood/Getty Images

Parliament in London

Representatives of the British Film Institute, Film London, Village Roadshow owner Vine Alternative Investments and the Ink Factory discuss hot industry topics.

Entertainment industry mega-mergers and the impact of Brexit were among the topics in focus at Winston Baker's inaugural U.K. Summit in London on Friday.

Jonathan Norman, partner at investment bank Stella EOC, said amid the recent consolidation of sector giants that size for size’s sake doesn’t make sense, but it is worth it when a company can leverage its intellectual property across revenue streams and use it to promote other products. "Big can be great if it’s trojan horse to sell more stuff," he said, citing Walt Disney's ability to use content acquired in its Fox deal for its upcoming streaming service, merchandise and more. "If not, small is better."

Stephen Kovach, partner and CFO at Vine Alternative Investments, which has over its 12-year history acquired content libraries and in 2017 became a co-owner of Village Roadshow, said about the recent consolidation moves across the entertainment sector: "You see these cycles ebb and flow all the time. People get bigger, and then they decide the new strategy is to break apart and start being a little more focused in smaller businesses."

Saying that Vine likes to be "small and nimble," he said the company's focus on content libraries remains "an important part of our strategy," especially at a time when the industry sees "more and more of the studios now wanting to potentially buy back their own content" to boost planned streaming services and increase their level of control over programming.

But at the same time it has started diversifying its business beyond this traditional focus to build additional revenue opportunities. "Now a new part of our business is looking at how we can take those libraries and overlay them into some of our portfolio companies," Kovach explained.

When the firm acquired Village Roadshow, it also moved in a new management team that “transitioned the company that historically used to be more of a co-financing partner with Warner Bros. to a company that is now a purely independent studio that is creating their own content and working with both Warner Bros....as well levering off of all these other film libraries that we acquired over the last 12 years," he explained. "We own rights to titles like Star Search, Lifestyles of the Rich and Famous, Nash Bridges. We now have a studio company that we can work with that can mine our library." One example of this early push is Village Roadshow’s previously announced Hogan’s Heroes reboot with a modern spin, he highlighted.

The growing reach and market power of global streaming services was also in focus at Friday's Winston Baker event. Simon Cornwell, co-founder and co-CEO at Ink Factory, said on one panel about the rise of entertainment and streaming giants that "there has always been room for independents in the market," and these are, including for smaller indies, "better times and with more opportunity than we have ever had."

Brexit, naturally, was also a key topic of debate. Harriet Finney, director of external affairs at the British Film Institute, highlighted during one panel that, importantly, creative works originated in Britain will even after Brexit continue to qualify as "European" content under quotas for European TV programming. That is because this is covered by the Council of Europe’s Convention on Transfrontier Television, and Brexit will not affect the U.K.'s position in it. So British content can continue to get sold to other European countries, she emphasized. 

Meanwhile, Adrian Wootton, CEO of Film London and the British Film Commission, on the same panel said he expects British and continental European creatives will want to continue working together on productions. "It's just going to be more complicated for them to negotiate that" after Brexit, he said, emphasizing that he hopes that film commissions will be able to keep collaborating to help them.

Similarly, Darren Drake, partner at accountancy Saffery Champness, told the Winston Baker event that he expects U.S. productions to continue coming to Britain after Brexit, calling it their "first port of call." Arguing that "they also love coming here," he concluded that "they are always going to come here first. It's just a question of where they are going next."

In a Winston Baker session on the state of the film and TV Industries, Julia Lamaison, head of research and statistics at the British Film Institute, on Friday highlighted that U.K. cinema admissions in 2018 were up 3.7 percent to hit the highest mark since 1970. "This year so far we are about minus 3 percent in box office revenues," compared with a drop of about 6 percent in the U.S. and a 4 percent drop in France, she said. She cited an increase in the number of movie screens in Britain and the number of films released as key drivers behind last year's growth, along with little change to ticket prices.