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| Page 1| October 15, 2015 |
October 15, 2015
Growing to the next levelCapital Markets Day 2015Jan Frouman
Content Production & Global Sales
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Red Arrow cordially welcomes you to today‘s presentation
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Red Arrow showing aggressive growth
Founded 2010
Footprint in key P7S1
territories established
through targeted
acquisitions and
start-up investments
Since 2012
Strategic focus on
mature businesses
and key TV markets
(USA & UK)
Since 2013
Further geographic
expansion/
development through
creative partnerships
2014 – 2019
Build scale through identified growth initiatives:
• Organic growth
• M&A to continue to build scale across key markets (US, UK)
• Focus on English-language scripted products
• Strategically launch and own “big swing” formats
• Develop ancillary revenues through digital and brand monetization
External revenues (EUR m)
Rec. EBITDA (EUR m)
202
124
95
3819
11410
20122011 20142013
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CMD target for 2018 already exceeded
150% of our 2018 growth target
already achieved by 2015 …
Growth 2012
– H1 2015
Current 2018
growth target
vs. 2012
[external revenue growth, in EUR m]
… hence we are raising our 2018 target by EUR 175m
New 2018 growth
target
100
275
[external revenue growth, in EUR m]
Key drivers for targeted
growth:
• Growing scripted IP portfolio and increasing market demand
• Creation of traveling
formats, with ancillary
rights potential
• Growing digital presence
• Value accretive bolt-on M&A transactions
+175m
100
150
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Continuous improvement in key KPIs
Note: Shows in the catalogue and territories sold to are cumulative 2010 to H1 2015; Territories include sovereign countries
and administrative territories; Returning shows with revenues booked in H1 2015
800+vs. 600+ in H1 2014
46%vs. 37% in H1 2014
200+vs. 180 in H1 2014
Number of
returning shows
Shows in the
catalogue
Returning
shows’ rate
Territories
sold to
68vs. 49 in H1 2014
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US continues to be the largest TV production market
Source: Ibisworld “Television Production in the US: Market Research Report” (August, 2015); FX/Nielsen
Total est.
production
revenues
USD 35bnProduction
businesses
~6,700Annual
growth
2010-2015
0.8%Outlets
commissioning
scripted
content
~60+Employment
~120,000Original
scripted
series on TV
in 2015
~400
Consolidation has led to more studio attention on non-scripted shows
Proliferation of giant OTT platforms drives growing demand for scripted content
Improving infrastructure and multiple distribution platforms drive digital consumption
High market potential:
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USA accounts for 67% of Red Arrow’s global revenues
1) H1 2015 revenue share of Content Production & Global Sales; only relates to revenues booked in H1 2015
2) Partnerships
China
UAEIL
DK/NO
2)
D/AUUK2)
2)
USA67%1)
16%1) 4%1)
3%1)
10%1)
2)
| Page 8| October 15, 2015 | | Page 8| October 15, 2015 |
Red Arrow’s portfolio is in line with current US content trends …
Source: P7S1 Format Scouting (briefings at MIP, Natpe, RealScreen, etc.)
MILLENIALSE.g.: Ctrl Freaks, My Selfie Life
SOCIAL EXPERIMENTSE.g.: Married At First Sight, Seven Year Switch, The Day The Cash Came
PANELE.g.: A League Of Their Own, Fake Reaction, Safe Word
SCRIPTEDE.g.: Bosch, Odd Mom Out, Donny!, Cleverman, Partners in Crime
REAL REALITYE.g.: Real Men, The Last Alaskans
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… catering to a large array of leading US broadcasters
Note: % of total US production revenues; Includes FY 2015 estimates for US-based production companies (Kinetic Content,
Left Right, Half Yard, Fabrik Entertainment)
0% 5% 10% 15% 20% 25%
OTHER
Producing for
>30US broadcasters
Limited
dependency
on any
single outlet
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Group-wide collaboration enables US rights retention
Note: Sales include format and ready-mades
Denmark
130+ countries, incl.
Denmark Norway
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Key market trends
• Market consolidation
continues (e.g. ITV/Talpa,
Endemol/Shine)
• Larger players struggling with
aging hits and organizational
upheaval
• Small- to mid-size indie M&A
options continue to surface in
the US
• Many talented executives
available for start-ups
• Scripted appetite is growing
• Distributors taking more
investment risk to control IP
• Digital market highly active,
yet still experimental
• Market valuations remain
exceedingly high
• Monetization models remain
challenging and fluid
Global scale Rights retention Digital expansion
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Our three key strategic initiatives
Global scale - Expansion of English-language scripted catalogue
• Investment in scripted IP
• Attractive home for leading US show-runners, creators and talent
• Support P7S1 channels with own produced content
Digital expansion
• Establish an L.A. based digital content production company
• Leverage available IP and talent relationships within RA and P7S1
Rights retention - Creation of traveling formats
• Value accretive M&A transactions in non-scripted genres
• Investments in non-scripted development partnerships
• Strategic deficit funding
• Development of formats with strong ancillary revenue potential
1
2
3
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Drive scale with smart US-centric M&A
Bolt-on non-scripted and scripted acquisitions in key markets
(US and UK) with top creative talent who fit culturally
Deals based on accretive valuations and margins,
and long-term/aligned partnership models
To the extent possible, drive genre and customer breadth
Identify succession plans for key assets in key markets
1 2 3 Expansion of English-language scripted catalogue
M&A approach: Majority and minority investments with path to control and 5-7 year partnership model;
staggered management share sale model to mitigate continuity risk
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Recent investments in English-language scripted IP
1 2 3 Expansion of English-language scripted catalogue
New high-stakes genre drama for ABC
Australia and SundanceTV US
New scripted comedy series starring
real-life TV personality Donny Deutsch
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Smart format investments & rights-friendly market launches
1 2 3 Creation of traveling formats
Major new weight loss reality format for
US network ABC
US producer Half Yard leverages
rights-friendly UK market
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Newly established US digital hub to drive RA's global digital reach
Driving Red Arrow’s digital content strategy and
leveraging existing IP
Building owned and operated media brands and underlying
verticals (e.g. Wedding space via Half Yard Productions)
Unlike CDS and Studio71, Ripple Entertainment is not
an aggregator, but will complement the P7S1 digital strategy by:
Driving established and next-generation
talent access
1 2 3 Digital expansion
Cost-effective L.A. based digital content production hub run by leading industry experts
Gayle Gilman and Jason Ziemianski
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Strong revenue and profitability growth highlight
upward momentum
Group’s creative output achieving international
success and creative recognition
Red Arrow has become a global player with more than
two-thirds of its business originating from the US
Clear and consistent strategy focused on US
growth, smart M&A and expanding talent pool
Summary
