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Endemol is wobbling but All3 looks ripe for sale, says Kate Bulkley


A tale of two super-indies L


ife (and the TV industry) is about balance. You can’t really put too much weight on one


side of the seesaw or you’ll never get the other end back down again. The tenure of the freshly departed Endemol boss Ynon Kreiz is a case in


point. In his three years running the global super-pro- ducer, he restructured its debt, cut costs by 20%, built a distribution and a scripted programming business, moved into sports and, most recently, created a joint venture with Viacom to launch a brand new channel. He promoted ‘one Endemol’, where all Endemol


indies were ‘aligned’, and leveraged the entire group’s scale to take advantage of what he calls the “network effect”. But his sudden departure –announced last Sat- urday – seems to underline the overarching problem at Endemol, which is that too much expensive debt is still weighing the company down and limiting its options. Sources close to the situation say that Kreiz had a


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“difference of opinion” with shareholders Goldman Sachs, Cyrte and Mediaset about the next steps for the producer. Knowing Kreiz, his plan likely entailed doing more deals – remember, he was interested in buying Channel 5. But a big part of the problem is that new cash wasn’t being generated fast enough to meet the debt-to-earnings ratios agreed with lenders. So is this bad news for All3Media, another big indie


conglomerate with private equity that part-owner Permira wants to cash out? Analysts say that a valua- tion of 12 x All3’s earnings before interest, taxes, depre- ciation and amortisation (EBITDA) is possible because this is the multiple paid by News Corp for Shine in Feb- ruary. All3 is expected to generate as much as £65m in EBITDA for its 2010/11 year, which at a 12 x multiple, would give it a value of £780m. Others dismiss the


20 | Broadcast | 1 July 2011


‘All3 looks a lot more diversified and about 30 titles produce half its revenue’


Shine benchmark as a “nepotistic multiple” given that Liz Murdoch sold her company to her father Rupert. All3 is in a very different financial position to


Endemol, but it is less certain how buyers will value one of the last available indie conglomerates on the market. All3 has debt of about 4 x EBITDA, or around £250m, compared with Endemol’s ¤2bn (£1.8bn) of debt, more than 14 times its forecast 2011 EBITDA. All3 also looks a lot more diversified than Endemol,


and the pitch to the six or so potential buyers who are kicking All3’s tyres at the moment is that All3 has about 30 recurring programme franchises that produce half of the company’s revenue – everything from Shameless (US version pictured) to Hollyoaks and The Gadget Show. It has a 33% recommissioning rate in the UK and its US business is expected to announce double-digit growth, plus it has a


truly multi-genre slate – from comedies like Peep Show to hot new reality dramas like The Only Way Is Essex. There’s always been a wariness from investors


towards content creators – they worry about whether creative talent’s next idea will be as good as their last – in favour of the more reliable distribution businesses. But maybe that balance is about to shift. Broad-


band penetration has helped barriers to entry in distribution come tumbling down. And All3’s ‘devolved democracy’ of independent producers is designed to ensure a steady flow of new ideas. Despite Endemol’s wobble, I wouldn’t bet against the seesaw tilting towards content creators pretty soon. ➤ Kate Bulkley is a print and TV journalist and awards secretary of the Broadcasting Press Guild


www.broadcastnow.co.uk


Restoration has proved a popular format


with viewers. Where could it go next? Annette Clarke, Behind The Scenes, page 32


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