2010 is being tipped to be the richest for several years in terms of mergers and acquisitions activity in the UK independent production sector as the weak pound and more realistic valuations spur interest from mainland Europe.
Market research and consultancy company Content Economics says that 2007 was a banner year in terms of M&A activity in the UK indie sector with £253 million worth of transactions completed. This dropped 70% to £76 million in 2008 before rising to £164 million last year.
“I think this year will almost catch up, if not exceed, 2007,” James Healey, director of research at Content Economics said. “There’s likely to be a deal for RDF, Shed’s MBO and Zig Zag has already been bought by Banijay and if you put the value of these together you’re almost at 2007 levels.”
Whereas the first round of M&A and consolidation was the result of UK-based companies like All3Media and Shine buying indies, the current spate of activity is being driven by non-UK companies.
“There’s definitely a strong pick-up in 2010 and it’s being driven by private equity-backed and well-funded companies that are thinking they want to be in the UK and it is good value at the moment,” Healey says.
Banijay, Talpa, Zodiak and others are among the Europe-based TV firms leading the M&A activity in the UK. Currency issues aside, Content Economics says valuations of UK indies have come down from 2.1 times revenues in 2007, to 0.6 x revenues in 2008 and 1.3 times revenues in 2009.