Though the deal to merge RedBird IMI’s All3Media with Banijay’s TV production business only just closed, the combined company’s leadership isn’t ruling out more dealmaking.
“We’re just on day one here today. Obviously, [CEO] Marco [Bassetti] and the team have a tremendous amount of work to do to bring the two companies together, to bring the two cultures together, to find those synergies,” new Banijay Entertainment chairman Jeff Zucker told TheWrap. “But at the same time, we’re also going to be opportunistic about the coming years. We’ll look for other opportunities as they come up. We have nothing in mind today, but feel that given our incredibly strong shareholders and our strength and scale, we’ll be well positioned to take advantage of the new media ecosystem.”
Zucker emphasized that the media business is undergoing a “time of tremendous change” and that “scale is key” to not only compete but to survive in the current landscape.
“That’s one of our competitive advantages here. We’ve got an enormous content library, strong balance sheet, broad international reach and diversified revenue streams and that’s what makes this new Banijay company so well positioned,” he continued. “The reality is you have to have scale in the new world and we made the decision that you just couldn’t get there through three or four smaller acquisitions. This media ecosystem is going to continue to evolve.”
When asked about their interest in specific assets that could become available in the years ahead, such as ITV Studios or the combined NBCUniversal/Sky, Zucker said Banijay remains open to all opportunities.
“We have excellent shareholders who will want us to make sure that we’re opportunistic and take advantage of any opportunities out there,” Zucker said. “We’re not going to focus on anyone today, but we’ll be ready when it’s right.”
Check out the rest of TheWrap’s conversation with Zucker and Banijay Entertainment’s CEO Marco Bassetti below. This conversation has been edited for length and clarity.
Now that the deal is closed, what is your vision for the combined company and how does this better position you for growth moving forward? How much do you see this deal boosting the combined entity’s output? How much and in what areas do you plan to invest?
Zucker: We’re incredibly excited about what today’s combination brings us. This combination connects Banijay’s global footprint with All3Media’s deep English-language strength and that really gives us incredible ability to globalize our intellectual property and deliver even more premium content on a global scale.
One of the great things about this new company is it’s really well diversified in its great scripted and unscripted content, from “Peaky Blinders” to “The Traitors” and “MasterChef,” and it’s also in live events and experiences, like producing the opening ceremony of the Winter Olympics in Milan and much of the pageantry at the World Cup. It’s also very strong in digital, especially through Little Dot Studios.
The diversification of revenue across all of the company is one of the things that makes us very confident about the future and why we’re so excited to be here today.
Bassetti: We did this deal because we believe there will be more opportunity to catch the opportunities of the market in the coming year. So scripted, unscripted, sports, digital and live will all be opportunities for us.
We also have more opportunity to create new IP and there is more opportunity for the actual IP already sitting in All3Media and Banijay because after the merger, there will be more geographic opportunity to use and monetize this IP in different countries with different talent and more opportunity to adapt this IP as well.
We always try to be very opportunistic and very disciplined in our investment. I believe that there are non-organic opportunities for sure that we will have and definitely will take a look at if it makes sense for us. But there’s also opportunity to invest in organic growth. We have more opportunity to do more volume deals or longer deals that will help secure our revenues in the coming year but also launch new shows with the big franchises already sitting in the combination of the two groups.
We would like to be the best home for new talent and to have the platform that can give them what they need in order to create their own IP or better monetize through distribution and social media and marketing. I think we have a big chance to do more joint ventures and distribution deals with individual talent or a small company. We cannot just distribute our own stuff. We can be fantastic for a small producer that are looking for distribution and better pricing on their own stuff.
Where do you expect the €50 million in synergies to come from in the first year following closing?
Bassetti: That will come mostly by saving on rental leasing, procurement and support functions. We will not disinvest and cut costs in creativity and production. We don’t want to touch it.
I believe there are also commercial synergies that are not really in our guidance, but for sure they will come. So, for instance, the opportunity to produce a show like “Traitors” that we are not producing in so many countries like it could be by having such large geographic footprints at Banijay and more leverage on our distribution branch having so many hours in our catalog with such big franchises. There will be more opportunity for digital because of having Little Dot Studios with us. We’ll have more opportunity to brand and more direct-to-consumer opportunity. So there are areas that are not really just pure cost synergies that will for sure give us value in the coming year.
You say you don’t intend to cut costs in creativity, but should we expect layoffs from this deal?
Bassetti: There will be efficiency to be made and sometimes you have to make some tough choices. But what I’m saying is that most of our synergy will come from facilities, procurements and support functions. We will try as much as possible to not cut creative and production head count.
Speaking of efficiencies, how do you see AI impacting the company’s production efforts and are you using the technology?
Bassetti: You know better than I that AI is moving on every day with new stuff coming into the market. We are very active in AI and we’re using between All3Media and Banijay more than 100 AI tools in the combined entity for different reasons. But we have a responsibility to our creative people so we’re very careful. We try to be inspired, but not replace creative people with AI.
For instance, in our distribution activity we have to format our 260,000 hours of programming for dubbing in different countries and having AI can be very helpful and create a lot of opportunity for us in order to better monetize our IP. We have 930 million YouTube subscribers and more than 11 billion views per month only in All3Media, plus the rest of what we have in Banijay. We have 64 FAST channels with more than 600 streams. So AI could definitely be a big opportunity for us to better monetize all our catalog.
I’m also curious about your thoughts on the trend of productions moving overseas and how you’re looking at U.S.-specific productions? What needs to change for more production jobs to remain in the U.S.? Are the efforts by California and other states to sweeten tax incentives making a difference?
Zucker: As we move forward, we think that the U.S. is a growth opportunity for this new company, and we’ll look for the most cost-efficient ways to take advantage of that. Certainly incentives and competition will play a factor in that. It’s in each individual state’s interest to try to attract new business and that’s an opportunity for us as we look at the U.S. as a continuing and new and and growing marketplace.
Bassetti: Most of the money for commissioning is coming from the United States. So it doesn’t make a lot of sense that there is so much production outside of the U.S. and I think that it will change. I don’t know how long its going to take. There’s big competition in Europe to attract more productions between the U.K., Spain, Croatia and Italy. So there will be more and more competition.
I believe it’s not just a matter of incentives but also labor costs need to go down a little bit in order to be attractive, because otherwise that competition could be difficult for the U.S. market.
Lastly Jeff, given your previous experience at the company, I’m curious about your thoughts on the Paramount-Warner Bros. Discovery merger, the state of CNN and the secular pressures its facing? There’s been some reports suggesting that the state AGs could be interested in a divestiture of CNN as a concession to get the deal approved …
Zucker: I would totally expect you to ask that question and I think you’ll fully expect and understand that I’m focused on this deal and I’m going to leave that deal to the others who are involved in it and working on it.
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