France's Banijay Group Buys Endemol Shine to Create European Production Giant

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Publication date: 28 Oct 2019 Author: Tim Westcott Director, Research and Analysis, Programming

France's Banijay Group buys Endemol Shine to create European production giant

Brought to you by Informa Tech France's Banijay Group buys Endemol Shine to 1 create European production giant

France-based production company Banijay Group has reached agreement to acquire Endemol Shine Group from Walt Disney Company and US hedge fund Apollo Global Management. The price for the deal was not disclosed but is widely reported to be $2.2 billion. A statement from the group said the deal will be financed through a capital increase of Banijay Group and debt. On closure, subject to regulatory clearances and employee consultations. Post-closing, the combined group will be majority owned (67.1%) by LDH, the holding company controlled by Stephane Courbit's LOV Group, and Vivendi (32.9%), which invested in Banijay in 2014. The merged group said it will own almost 200 production companies in 23 territories and the rights for close to 100,000 hours of content, adding that total pro-forma revenue of the combined group is expected to be €3 billion ($3.3 billion) this year. Endemol Shine Group is jointly owned by Disney, which acquired its 50% stake as part of its acquisition of 21st Century Fox last year, and funds managed by affiliates of Apollo Global Management. Endemol Shine has 120 production labels and owns 66,000 hours of scripted and non- scripted programming and over 4,300 registered formats. Our analysis

Endemol Shine Group has been up for sale since last year, and Banijay Group appears to be have been the only potential buyer to have made an offer, despite reported interest from All3Media, RTL Group-owned Fremantle and others. Banijay is a natural fit for two major reasons: Endemol Shine will more than double its size (Banijay's 2018 revenues were €847 million) and add a number of territories to its network of production companies. Banijay is comfortably the leading entertainment producer in its home market, but is lower profile in other key markets and does not, for example, have a production outfit in the UK. The acquisition will also swell the catalogue of finished programmes and formats owned by Banijay, with long-running entertainment shows like Masterchef and Survivor as well as scripted programmes like Peaky Blinders and Black Mirror strengthening Banijay's position in drama genres, which are riding high on the back of investment by subscription video-on-demand platforms. Many executives at the French company also have a history with Endemol Shine: Courbit previously headed Endemol in France, while Banijay CEO Marco Bassetti ran the company in Italy and headed the whole group at the time of its merger with Shine Group in 2014 While there was a small chance that Walt Disney would decide that owning Endemol Shine would help with the upcoming global roll-out of its Disney+ service, a business which primarliy depends on commissions from third party broadcasters was, as we expected, non-core for the US major. With broadcasters around the world seeing advertising revenues squeezed as their audiences desert linear TV for online, production is no longer quite the business it was when Endemol was in its Big Brother-fuelled heyday. Banijay's annual report reveals that its 2018 revenues slipped 2% on the year before, with production revenues falling more than 3%. Banijay was, however, in the black, reporting an operating profit of €73 million. Endemol Shine Group's parent company Mediarena Aquisitions made a pre-tax loss of €108 million on revenues of €1.8 billion in 2018. The duplication in the businesses in France, the Nordic region and elsewhere will mean that there will have

to be some rationalisation of the operations. Once that process is complete, the merged company's future growth will depend on how successful it is at generating new programming and securing commissions and licensing from new platforms as well as its core customer base. The merged company will be the largest production group in Europe, overtaking ITV Studios (2018 revenues €2.2 billion) and Fremantle (€1.6 billion). Greater scale will not in itself make this more likely, though the acquisition will open more doors for Banijay in markets where it is not present, bring in new production talent and add to its weight in the distribution market thanks to the increased volume of its library. Citation policy Request external citation and usage of Omdia research and data via [email protected]. Omdia consulting We hope that this analysis will help you make informed and imaginative business decisions. If you have further requirements, Omdia’s consulting team may be able to help you. For more information about Omdia’s consulting capabilities, please contact us directly at [email protected]. Copyright notice and disclaimer The Omdia research, data and information referenced herein (the “Omdia Materials”) are the copyrighted property of Informa Tech and its subsidiaries or affiliates (together “Informa Tech”) and represent data, research, opinions or viewpoints published by Informa Tech, and are not representations of fact. The Omdia Materials reflect information and opinions from the original publication date and not from the date of this document. The information and opinions expressed in the Omdia Materials are subject to change without notice and Informa Tech does not have any duty or responsibility to update the Omdia Materials or this publication as a result. Omdia Materials are delivered on an “as-is” and “as-available” basis. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in Omdia Materials. To the maximum extent permitted by law, Informa Tech and its affiliates, officers, directors, employees and agents, disclaim any liability (including, without limitation, any liability arising from fault or negligence) as to the accuracy or completeness or use of the Omdia Materials. Informa Tech will not, under any circumstance whatsoever, be liable for any trading, investment, commercial or other decisions based on or made in reliance of the Omdia Materials.