ITV eyes new $950m deal with television arm of The Weinstein Company
After buying Talpa in March, ITV is looking to the US again to expand its content creation arm.
It has been less than a month since ITV’s acquisition of Talpa Media, the production company of BBC1’s The Voice. But already the broadcaster is back in the limelight – this time over talks to buy the television arm of The Weinstein Company (TWC) for as much as $950m (£634m), according to reports.
Established by Hollywood moguls Harvey and Bob Weinstein, the US production giant is best known for creating Oscar winning films including The Artist, and this year’s The Imitation Game starring Benedict Cumberbatch.
TWC’s television arm has produced a string of reality TV shows, including Project Runway and was also recently commissioned to make a second series of its historical series Marco Polo for Netflix.
The group announced last summer that it would spin off its TV business to pave the way for a sale. Although it originally looked to digitally-focussed companies like Amazon, it is now understood to be close to signing a deal with ITV.
According to the New York Times, ITV is reportedly set make an initial cash payment of $300m (£201m) upfront for the TV arm, with the rest over the next few years – in a similar structure to its acquisition of Talpa last month.
The Weinstein brothers would also continue to oversee operations, potentially giving ITV access to their black book of Hollywood contacts.
The acquisition, if finalised, would represent a major boost for ITV’s content creation arm ITV Studios and ramp up its presence in the US.
The broadcaster has spent hundreds of millions of pounds bolstering its studio business as part of chief executive Adam Crozier’s plans to offset slower advertising revenue growth.
In March, ITV spent £355m on Talpa and in May last year, it bought an 80 per cent stake in Leftfield – the producer behind hit US reality TV shows such as Pawn Stars – for £212m.
It also completed a string of acquisition in 2013, swallowing up The Garden, the studio behind 24 Hours in A&E, and Cake Boss producer High Noon Entertainment. In December 2012, it bought a controlling stake in Gurney – the studio behind popular US show Duck Dynasty.
But whereas most of these acquisitions have focused on unscripted and reality TV shows, TWC would help boost ITV’s exposure to so-called scripted projects – or drama series. TWC has around 30 television shows of which eight are scripted, including Marco Polo. It is also working on a mini-series with the BBC based on Tolstoy’s War and Peace.
City analysts yesterday welcomed news of the mooted deal, saying it would still leave ITV with room for further acquisitions without overstretching its balance sheet.
Jefferies analyst David Reynolds, told CityAM: “[The acquisition] would be a departure from recent merger and acquisition activity that has focused on unscripted production companies. But that, I sense, is a good thing in adding to the locker in terms of innovative scripted television and indeed film.”
Under Crozier’s watch, ITV’s profits have soared thanks to hits such as Titanic, Mr Selfridge and Downton Abbey. The company posted a 23 per cent jump in pre-tax profits to £712m last year, with revenues at ITV Studios up nine per cent to £933m. The business is expected to increase revenues again this year.
“ITV has been transforming itself into a content production company, and this strategy makes sense,” Bernstein analyst Claudio Asperi told CityAM
“When acquiring a company with iconic founders who are unlikely to be involved in the long run, ultimately the deal has to be supported by expectations that the existing pipeline of new production material will prove worthwhile. Ultimately, it is management’s judgment call – but the underlying strategy is sound.”