Market Insight

Fox and Apollo agree Endemol Shine joint venture

October 14, 2014  | Subscribers Only

Tim Westcott Tim Westcott Director, Research and Analysis, Programming

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US major 21st Century Fox and private equity firm Apollo Management have reached agreement to combine their production companies to create a `leading global multi-platform content provider`. Fox subsidiary Shine Group and Apollo-owned Endemol and Core Media will continue to operate as separate companies on completion of the deal, which is expected by the end of the calendar year. No financial terms were disclosed and the deal is subject to regulatory clearances.

Sophie Turner-Laing, previously director of channels at BSkyB, will act as CEO of the new company. Alex Mahon, CEO of Shine Group, and Just Spee, CEO of Endemol Group, will stay during the transition and integration of business operations but will leave in 2015. Elisabeth Murdoch, who created Shine Group in 2001, will also step down as executive chairman.

Our analysis
The statement released on Friday left many questions unanswered about the new group, including what it will be called, where it will be headquartered, and who will own what. The partners said that Core Media will retain its own capital structure and IHS understands that the new group will most likely be run from London and will be a 50/50 joint venture between Fox and Apollo.

It is also unclear what the process of 'integration' will mean for the Endemol and Shine operations around the world. Both were created outside the US - Endemol in the Netherlands and Shine in the UK - with Endemol having a much larger geographic spread. The Endemol; network is present in more than 30 countries, and distributes more than 33,000 hours of programming a year. Shine's geographical footprint is smaller - 27 production companies in 11 countries - as is its catalogue of 4,000 hours. 

The in-house Fox production business is directed mainly at making scripted drama and comedy for the US market, which makes the Shine and Endemol networks complementary even though both have adding a growing scripted business to their main business in unscripted entertainment shows. The Fox network is airing Gracepoint, a US reversioning of a British crime drama series, and other US production deals are in the works. 

Outside the US, it will remain to be seen whether Endemol and Shine continue to operate separate and competing operations in key markets. In the UK, where the creation of ever larger independent production companies have caused some comcerns among broadcasters (see our insight report, Super indies loom large in debate over future of public service broadcasting), more scale is unlikely to allow the new group two win more commissions. However, it will offer more security in a market where broadcasters are cutting production budgets and margins have been squeezed. 

Shine's network is under-represented in Asia, the Middle East and Latin America, and in developing and emerging markets where one or neither of the two groups is present they are likely to create joint ventures offering formats from both production groups and sharing overheads. Perhaps an even more important aspect of the deal will be the capacity for the two production groups and Core Media to share the cost of developing new digital services.

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