David Frank

The Zodiak Media Group was formed last year when the Italian De Agostini Group acquired the RDF Media Group. The combination formed a company that consists of 45 production outfits with a presence in 17 countries, including the U.S., the U.K., France, Italy, Spain, Scandinavia and Russia; and an international-distribution business whose catalogue contains more than 10,000 hours of programming. Zodiak’s content spans a variety of genres, including factual, entertainment, drama, children’s, lifestyle and comedy, and this range is what David Frank, the company’s chief executive, considers to be one Zodiak’s main competitive advantages.

 

TV EUROPE: What benefits were Zodiak and RDF looking to gain from a merger?

FRANK: If we look at Zodiak first, it is a group that was built from about 2008, when our majority shareholder, the De Agostini Group, embarked upon a project to position themselves in the content business. They began with the acquisition of Magnolia Group in Italy and Spain. Next was the acquisition of Marathon Group in France, followed by Zodiak Television, a publicly listed group headquartered in Stockholm. At the point at which Lorenzo Pellicioli [the CEO of the De Agostini Group] got into a dialogue with me at RDF, there was clearly a fairly substantial hole in their ambitions to be a global content player because they didn’t have a meaningful presence in the U.K. or in the U.S. They had a relatively under-developed international rights business. They did have some very strong rights activities attached to some of their local companies, Marathon Media and Marathon Image in France. When looking for the final piece of the puzzle—a content company that had a major presence in the U.K. and a presence in the U.S. and ideally could enhance the international rights exploitation business—that’s what we had. The fit was extremely good for both parties. There is relatively little overlapping in the two businesses even though we were both very active in the creation of TV content and its exploitation.

From an RDF perspective, the RDF Media Group had evolved originally in the U.K., where it was founded, then expanded into a group, and over the course of a decade, became a multi-genre producer. At the same time, we also moved into the U.S. We became a public company to finance this and although we were a U.K.-U.S. company with an international-distribution arm, we had never become a global player. Because the operations in the U.K. and the U.S., two of the most important TV markets, were well financed and used to innovation, we had no economic compulsion to move into new markets in the way that an Italian producer—with all the constraints in the Italian market, where it is very difficult to launch new shows, has relatively few buyers, and is quite political—would have a crying need to expand and grow outside of Italy. Similarly, a Dutch company—that is the story of Endemol, it started in a small territory and expanded rapidly—would have to move outside that market in order to grow.

However, from a longer-term strategic point of view, the RDF management team recognized that in the changing landscape of the global broadcast business, it would be extremely helpful to be part of an international group that would give us direct access to other markets. So when Mr. Pellicioli and I got into a dialogue, it became apparent very quickly to both of us that it was a very strong marriage based on the equal and opposite needs of both parties.

 

TV EUROPE: Would you give us an example of how you are trying to make one of the individual companies more international?

FRANK: Magnolia TV [which is now Zodiak Southern Europe] is a perfect example of where the aggregation of a group works to the benefit of the whole. The greatest experience we have within Zodiak of producing very large entertainment live shows is in Italy, because Magnolia produces The X Factor and Celebrity Survivor—very big, very expensive long-running shows with big audiences. A huge amount of skill and experience is required to put on a show like that. The problem they face is that they don’t have the opportunity to turn that knowledge into new business. What we are doing is using that skill and experience to contribute to our development efforts outside of Italy. We can get the guys who made The X Factor in Italy to connect with the guys who develop shows, let’s say, in the U.K., so that we can then sell a show to a U.K. broadcaster using that experience and expertise. We are crossing a border that would have been impossible for Magnolia to cross unless they were part of a bigger group.

 

TV EUROPE: Is there a challenge to get individual companies to share know-how and best practices?

FRANK: There is a challenge and I would put that as the number one challenge facing me. It’s a very exciting challenge; there are other challenges that I would put into the category of unpleasant! I would say the creative challenge is absolutely central to the success or otherwise of this group over the next five years. Hence, it’s become my single most important priority. I’ve got a team at HQ that is working on all aspects of what I call creative renewals. One element of that is how can we position ourselves so we understand better the audiences that we are trying to serve. Producers are very, very guilty of not bothering to invest enough time in understanding the audience that they are serving. We are locked in a kind of strange world where we are in a B-to-B business developing ideas that we sell to broadcasters. And yet the success of that B-to-B business is based on a B-to-C business, which is our ability to reach people at home to watch our programs. But it’s the broadcasters and the advertisers that fund broadcasters and have the direct relationship with the audiences. So one initiative we are putting in place is essentially a research development center, which is built around consumer trends, audience behavior, and the ability to get audience reaction to content that we are creating before we even pitch it to broadcasters. We’ve got sophisticated tools to assess the merits of what we think is a good idea. Because that is, for the most part, how this business operates: people think they have a good idea and they pitch it to a broadcaster, who also thinks it might be a good idea, and often by the time it’s too late, it’s on the air and it’s failed! [Laughs]. Or it’s been a big success, which is equally by chance.

We are trying to address that. We are putting in place a significant program for the exchange of expertise. One of the things that struck me in my first six months traveling around the group for the first time is the huge and really interesting array of methodologies in development, pitching and in production. In other words, if you look at the way a show is pitched in L.A. versus the way a show is pitched in Norway, they are significantly different. I’m not saying one is better than the other, but I definitely I know that the two parties would benefit from looking at each other’s methods for engaging commissioning editors to buy their shows. There is a huge array of ways people stimulate creativity at the local level with development teams and brainstorms and the methods they use—there is a lot to be shared in that area—and in production techniques, particularly in an environment where cost is becoming absolutely paramount. A production group that puts a premium on its ability to be flexible and embrace new technology enables us to deliver high-quality programs at a slightly different rate and that’s a huge competitive advantage to have. If we can identify some of those advances or practices in one place in the group, we can then transfer them very rapidly to other areas in the group because we can control that communication.

 

TV EUROPE: Of the many genres Zodiak produces and distributes, are there any in particular you are focusing on?

FRANK: One of the key points of differentiation—which I embrace and want to make a virtue of—between us and some of our major competitors, like Endemol and FremantleMedia, is the breadth of our output. People think of Endemol, for which I have enormous admiration, as an entertainment company. Endemol does some other things as well, but its brand is principally built around the fact that it does Big Brother, Deal or No Deal and Wipeout—all entertainment shows.

What I really like about Zodiak is the very fact that we are a significant player in drama, kids’, factual and many other genres. Take kids’, for example. When you aggregate our kids’ businesses we are genuinely a world leader in that area and yet no one from the outside would say, “Oh Zodiak, that’s a kids’ business.” And the reason is because it’s not a kids’ business, but Zodiak has a very large kids’ business within it. Similarly in the scripted area we’ve had great success with our Scandinavian company, Yellow Bird and the Millenium trilogy. We’ve got a very good scripted business in the U.K. and a sizeable one in France, but no one would look at Zodiak and say, “It’s basically a drama house.” If you look at the entertainment area, in certain territories like Italy, Spain or Scandinavia, we are making some of the biggest entertainment shows in Europe, but again no one would say that we are just an entertainment company. So very deliberately I don’t want to prioritize one genre over another. I want to foster an environment in which we celebrate success in any of these genres. We seek out the opportunities in those areas, whether those are transactional opportunities in broadcast schedules, or whether its acquisition of companies or talent.

What we are trying to do is build a very broad portfolio because my theory is that as a point of differentiation we are a pure content player. We do not and we have no interest in owning a broadcast platform. Our business model is built around creating content for audiences and we are neutral as to where those audiences exist.

A company like Zodiak Active is a very sizeable digital business, doing €40 million of sales per annum mostly in the nonstandard platform space. By virtue of our staying a non-broadcast content play, with a very broad geographical and genre base, we position ourselves to be much more attractive to a lot more media partners than would otherwise be the case. For example, in the development of our relationships with brands, which is a key priority and is one which is being executed largely through Zodiak Active, we have become a much more attractive producer for a brand by virtue of the fact that we are not stuck in any one genre. So we can deliver, whether it’s a campaign or a message, in any form and in many territories. I want to develop a philosophy that says we are at out heart a creative people’s business that is just intent on making great programs.