After buying stakes in four UK indies in 18 months, Red Arrow has set its sights on joining the ranks of the global giants – but first it needs to nurture its new properties.
A year ago, anyone working in British TV would have been forgiven for not being familiar with the name Red Arrow Entertainment. The production offshoot of German media giant ProSiebenSat.1 was barely making ripples in the UK.
Things have changed dramatically since then. Today, four of Red Arrow’s global footprint of 17 production companies are UK-based, including CPL Productions, producer of Sky 1’s A League Of Their Own, and Hilary Bevan Jones’ Endor Productions.
The breathless UK expansion got under way in January last year, when Red Arrow group managing director Jan Frouman hired former Sky 1 controller James Baker and Joel Denton, the former president of production and distribution for mini-series producer RHI Entertainment, as joint managing directors.
Based in the heart of Chelsea, the pair were tasked with using their knowledge of the UK TV market to enable Red Arrow to put down roots. As Frouman reflects, it was a key step in the company’s global production push.
“If you’re going to be serious about building a global group and creating product of size, scale and financial relevance, then you need to be in the US and UK. It wasn’t a big debate,” he says.
In a typical turn of phrase, the American-born executive adds: “On the sex appeal meter, the UK ticks a lot of boxes.”
Push him on why and he reels off a list of advantages in the UK market that should make any domestic producer proud: the favourable rights environment, the power of English-language content internationally, and the local creative ambition. None of this is new, of course, meaning Red Arrow’s content mission on our shores is more indicative of its own strategy than any particular shift in the production landscape.
Baker and Denton didn’t take long to get to work and, within two months of being recruited, they had wrapped up a deal for Mob Film, the indie behind Sky 1’s Terry Pratchett adaptations.
CPL, picked up earlier this year, was next on the hitlist, followed by drama indie Endor. Finally, Red Arrow acquired Nerd TV, which produced mafia code series Mob Rules for the Discovery Channel.
“What we have done in the UK is a direct result of the relationships James and Joel have on the ground,” says Frouman. “I didn’t know any of the companies we acquired before they were introduced to us.”
Most deals have been done on a “word-of-mouth” basis, Baker says, and the company has not run into many formal competitive processes.
Red Arrow’s indies operate in relatively distinct genres, but share one trait: they are nascent businesses. This was always the ambition, says Frouman, who is video conferencing from Germany. “We’ve leaned towards smaller outfits because our fear was that if you assemble a group of big companies, it would be difficult to bring them together. We’re not in the business of buying companies because it’s fun. It needs to fit and make sense.”
Baker, sitting next to me in London, says a lot of time was spent getting the “chemistry right” between the different companies. “There may be a fantastic company that makes great shows, but if the people don’t connect and if it doesn’t feel right, it’s just not going to work,” he says.
He points to CPL managing directors Danielle Lux and Murray Boland, who are prepared to look beyond safeguarding their own interests and share their “enormous production expertise and experience” with other members of the Red Arrow group.
“Spend time with a production team and you get a sense of whether they want to be in a group. You’ve got to be prepared to walk away from deals.”
By the same token, prospective targets are invited to talk to other chief executives within the group – independent of Red Arrow involvement – to get a sense of its operating culture. “That way, there’s no buyer or seller remorse,” Frouman says.
Another hallmark of Red Arrow’s acquisitions is buying low controlling stakes, typically 51%, and creating a “two-tier deal”. Frouman says: “We like the co-ownership model. We buy enough to consolidate the economics, but we like the management team to be incentivised to grow the company.
“In most cases, the management want to realise value for what they own, and we construct a way of doing that. If we have to spend a little bit more for the remaining balance, then it is because the company is doing well.”
Red Arrow has reached what Frouman describes as a “digestion phase” in which it will retreat from the frontline of the M&A market to focus on nurturing its new properties.
Baker uses an alternative metaphor: “This is where our job gets slightly different. We have spent the past few months planting our new companies; now we have to get out there with our watering cans.”
This doesn’t mean the pair’s deal-making antennae are switched off. “We will still be opportunistic if the right proposition presents itself,” says Baker.
But they will now be focused on different objectives: increasing collaboration between the different indies; helping to adapt Red Arrow’s back catalogue of formats for the UK; and working closely with ProSiebenSat.1’s distribution arm, Red Arrow International, run by Jens Richter. This is already in action, with CPL working on a second pilot of pensioner prank show format Benidorm Bastards for BBC1. The show has already been a success in the US, where it has been adapted into Off Their Rockers for NBC and stars Hot In Cleveland’s Betty White.
Central intervention will be kept to a minimum, Frouman stresses, and instead – much like in the All3Media model – creativity will be allowed to “bubble up”. He adds: “It’s not hands-off, nor do we dictate what the companies create. You need a measure of involvement if you want to run the group in a thoughtful way.”
To enable the company to invest in production aggressively, ProSiebenSat.1’s shareholders are stepping up to the plate – but they expect a return. Red Arrow has been tasked with growing annual revenues by 20% for the next five years. To give an indication of the base it is working from, the division’s total income stood at E113m (£88.9m) in 2011.
Frouman believes the group can compete with the global giants, including Fremantle and Endemol, in the years to come. “We have the growth rate to become a significant international player. I hope we would be on anyone’s top 10 list,” he says.
For Baker and his patch of UK indies, the hard work starts now.
Red Arrow Entertainment at a glance
Red Arrow Entertainment was established as ProSiebenSat.1’s production arm in 2010 and now owns 17 indies in nine territories. These include Kinetic Content, the indie run by former RDF USA boss Chris Coelen, and Germany’s Producers At Work. Its UK assets are:
CPL is run by Danielle Lux, Murray Boland, Heather Hampson and Janet Oakes, after they completed a management buyout of former Who Wants To Be A Millionaire? producer Celador Productions in 2006. The company makes Sky 1’s A League Of Their Own and All Star Mr And Mrs for ITV1.
Charlie Parsons Creative made the founding investment in Nerd two years ago. The factual entertainment and factual formats company is run by Jago Lee and John Farrar, and also produces commercials for a variety of clients.
Endor was founded in 1994 by Hilary Bevan Jones and is best known for co-producing Paul Abbott political thriller State Of Play for BBC1. It is currently filming an adaptation of William Boyd’s espionage drama Restless for BBC1.
The Mob Film Company was launched 15 years ago and has offices in London, Manchester and Los Angeles, run by partners Vadim Jean, Ian Sharples and John Brocklehurst. It is best known for its adaptations of Terry Pratchett’s Discworld series for Sky 1, including Hogfather (pictured), The Colour Of Magic and Going Postal.
2010-present: managing director, Red Arrow Entertainment; 2004-2010: various roles including executive vice-president of content acquisitions and production, ProSiebenSat.1
Watches Mad Men, The Killing, 30 Rock, Game Of Thrones, Sons Of Anarchy, Veep
Wishes he’d made The Sopranos, West Wing, Entourage – “and everything on my ‘watch’ list”
2011-present: managing director, Red Arrow Entertainment UK; 2009-2011: general manager, Current TV; 2008: consultant, TwoFour54 Abu Dhabi; 2007-2008: partner, Fleming Media; 2006-2007: managing director, networked media, BSkyB; 1996-2006: controller, Sky 1
Watches Sherlock, Weeds, 30 Rock, The Wire
Wishes he’d made “Anything with the budget of The Newsroom would do.”