Definition February 2023 - Web

RAISING CASH INDUSTRY.

soft or passive money,” he says. “Growth relies on investment, so I would advise to seek investment partners. Funding Circle and others are offering low-cost debt finance with 0% interest and a fixed fee, so there are options.” If a takeover or studio investment isn’t on the horizon, Tanner says there are other ways to raise cash. “First-look deals and shopping agreements are also popular, and suitable for those companies wanting to try out a corporate partnership before sharing ownership.” In addition to seeking investment, Turbine Studios also diversified into Europe – specifically Germany – by establishing a sister company providing production services to third-party international studios, while also developing and producing domestic European shows. “This proved a vital source of income during the pandemic and is now a driving factor in the company’s growth model,” Tanner says. “It also maintains a critical presence for us in the European market.” “Think about what you own and how it can be used – be wide in your definition of monetisation; think beyond TV into audio, web and so on,” Ryan adds. END OF THE TUNNEL The expression ‘buy in gloom not in boom’ couldn’t be more apt now, and Lazarus says it’s important to turn a negative into a positive. “Lots of successful businesses have taken advantage of downturns to capture market share,” he clarifies. “Make sure you play to your strengths, stay focused, work hard and make your own luck.” Tanner says that while the economic outlook is bleak for many sectors – not just this one – international programming remains an industry in boom. “With the global players such as Disney, Apple,

Amazon and Netflix continuing to view the UK as the epicentre of English- language production and a crucial gateway to Europe (in spite of Brexit), these companies need content. Growth will always be led by the quality of the product, so our advice would be to increase the team in a sustainable and manageable way while maintaining focus on the quality of development.” ALREADY ESTABLISHED? If you already have a rich slate of programming to your name, there are other ways to raise more cash. Fenton says Zig Zag is in a better position to secure cash than most because it has 23 years of programming behind it – and has maintained rights to most of it. “We have had our 1000 hours of programming valued by independent IP specialists and can use it as collateral.” He concludes: “I wouldn’t advise anyone to start a production company today because of the imbalance of supply and demand. There are over 1000 production companies on this island with only five real buyers. The BBC does 50% in-house – and 75% of ITV’s output is via preferred suppliers.”

“First-look deals and shopping agreements are popular for companies wanting to try out a corporate partnership”

DAVID TANNER TURBINE STUDIOS

salaries and to incentivise staff and directors alike. Capital investment has allowed us to increase the team, but we’re balancing that between research and development and staffing, therefore growing our assets as well as our team.” Takeovers are often viewed as one of the best ways to raise funds because the risk is with the buyer. However, Lazarus has his concerns. “There’s plenty of risk that applies when company A acquires company B; lots of takeovers can fail unless properly planned and executed,” he says. “Organic growth is probably the least risky way to grow your company, but it takes time. A faster way is by securing growth capital, either via debt finance or equity finance.” Barry Ryan, founder of The Format Factory and Free@Last TV, points out that there are unscrupulous buyers. “Be wary of the sharky players hoovering companies up to close the competition down – or prevent the earn-out payment,” he warns. Ryan also agrees with Lazarus on debt. “There isn’t anything wrong with debt financing, but it’s only advisable if you have regular cash flow coming in from

73. FEBRUARY 2023

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