Investing Amid a Pandemic: Why Coronavirus Hasn't Stopped a U.K. Studio Fund

Piers Read, Jeremy Rainbird - H - 2020
Credit: Jeff Moore

The co-founder of The Creative District Improvement Company — a $600 million fund aimed at U.K. studios that launched just days before film and TV production shut down — explains why it is moving ahead.

On March 2, just days before the new James Bond film No Time to Die was pushed back until November, kicking the first domino piece on two weeks in which Hollywood and much of the world’s film and TV industries effectively shut down as the novel coronavirus pandemic took hold, a new fund aimed at investing in U.K. studios was formally unveiled.

Overseen by urban regeneration firm The Creative District Improvement (TCDI) Company and valued at some 500 million pounds (then $640 million, now $600 million due to the fall in the value of the pound), the fund was to invest in a network of film and TV studios across the U.K. — some new builds and some existing — and capitalize on the country’s dramatic boom in production, which hit a record $4.7 billion in 2019, and its shortage of facilities.

As part of the announcement, TCDI Co. unveiled its $50 million acquisition of London’s iconic Twickenham Studios, home to much Hollywood postproduction and an Oscar winner in 2019 thanks to its sound work on Bohemian Rhapsody. The money is scheduled to be used to expand the site and add more stages and workspaces.

Then the COVID-19 crisis struck, and one by one film and TV productions across the U.K. — from big-budget features, such as The Batman and Jurassic World: Dominium  to major TV projects, such as Netflix series The Witcher and long-running British soaps — were all closed down. Work at Twickenham — as with all facilities — was put on hiatus.

Nobody can say for sure when studio doors can open again. But just three weeks after its formal announcement, and amid a constant stream of news reports about mass layoffs and continued industry upheaval, TCDI Co. on March 23 announced another investment. This time, it was a $290 million development, including four studios, to be built on 22,000 square meters of land on a former locomotive factory in Ashford, Kent, just over 30 minutes from London by high-speed rail link and boasting a Eurostar station connecting it with Amsterdam, the home of Netflix’s European headquarters.

Announcing such a major investment amid a global pandemic — and in an industry facing its biggest crisis in history — might appear unorthodox, but the team behind TDCI Co. is bullish about its prospects and why the current situation should have little or no impact on the future.

"I think one has to look across the valley, that’s a term we’re using a lot," says Jeremy Rainbird, who helped launch Sharon Horgan’s label Merman and set up the fund with real estate developer Piers Read, producer of hit Brit comedies The Inbetweeners and Peep Show. "Yes, we’re going to go deeper into this. But by the time we’re out the ground and we’re building, this thing is going to be history."

According to Rainbird, although the initial announcement put the project as scheduled for 2021, the new facilities are unlikely to be completely finished and fully occupied until late 2022/early 2023, although he says one studio could be up and ready next year. And should it get approval from local authorities (who were due to meet this week, but are now working remotely, with a decision expected soon), he says ground wouldn’t be broken for "some time," also pointing out that British construction is currently under no coronavirus-related restrictions. "And if you look at the early side of construction, it’s not hundreds of men working closely together fitting out bedrooms, it’s a very, very large excavation with cranes and large machinery clearing the ground, where it’s easier for people to observe social distancing."

Aside from the four stages — which each come around the 20,000-square-foot (1,850-square-meter) size mark and are geared more for TV than feature films — the site will house a university aimed at TV, film, animation and postproduction tech with space for around 200 graduates each year, and a high-end hotel to accommodate those working at the studios.

The university and hotel will be run by established institutions and brands, and Rainbird admits the coronavirus crisis might see contracts put on hold for the time being, but it doesn’t change anything on site.

"Who’s going to sign a 25-year lease on a hotel right now? Nobody. But who’s going to build one knowing that in a year’s time you’d like someone to sign a lease, or rather in two year’s time? Sure, that’s not a problem," he says.

“So, for us, we're not seeing any letup in our plans. We’ve just got to crack on and get the planning confirmed and then we're into preliminaries where we start pooling all of the professional services, getting all the contracts together, lining up finance. So that's a six-to-nine month process in itself, by which point I think we all know that we'll have a lot of clarity around the future and the financial markets will come back with a vengeance.”

Right now, the industry estimate — according to Rainbird — is roughly 12 to 16 weeks before production will come back (he says that a "minimum of three months" is the general consensus from the various studio boards he sits on).

But even if this estimate falls short of the actual downtime, he predicts that such will be the pressure from projects held back, coupled with the demand for fresh content from broadcasters and streamers experiencing high viewing and subscription rates, that once studio doors do reopen business will restart with a bang.

"There’s a bottleneck forming at the moment," he says. "People are waiting for the starting pistol to go off. And when it does, we're going to finish all the productions on hiatus, and they're going to bring forward all of the other productions that perhaps might have been slated for next year. All this is doing is delaying the enormous spend to sate the enormous appetite that we have for content."

With this in mind, the $290 million Ashford studio development is unlikely to be the only investment announced by the TCDI Co. fund during the coronavirus pandemic, with Rainbird saying that its backers — a global consortium consisting of private equity and institutional money, including the British Airways Pension Fund — have actually been pushing the firm to turn things up a notch.

“To be brutally honesty, they’re telling us that they want us to announce nearly a 1 billion pounds ($1.2 billion),” he admits. “When tapping into fund money like this, they need a pipeline. And while they’re happy for us to crack on like this, they’re not satisfied at the scale we’re working.”

The fund is currently working on three further development projects — a blend of new builds and acquisitions, including a “U.K.-wide brand that wants to push into this market” — in Manchester, in Scotland and just outside of London.

"If we add all of those in, then we’re up to the billion-pound mark," says Rainbird. “We’re just not ready to announce them yet.”