Entertainment One’s Darren Throop

PREMIUM: Darren Throop, the president and CEO of Entertainment One (eOne), shares highlights of the company’s solid growth across TV, film, family entertainment and more.

WS: Tell us how the output deal with AMC Networks came about.
THROOP: Our relationship with AMC started many years ago when we started distributing The Walking Dead internationally. Through that relationship came the opportunity for us to produce and distribute another TV series called Hell on Wheels, which is now going into season four. That was a great start to what’s going to be a very fruitful relationship. They wanted a long-term strategic partner and we sat down and started talking about what that would look like, and that evolved into an output deal. So, all of the scripted series coming out of AMC Networks’ AMC and SundanceTV are coming through eOne, whereby we sell all rights for them internationally. We participate in the productions, so it’s been a great relationship for them, a great relationship for us, and really elevates the quality and stature of the library that we’re selling internationally.

WS: Your television division has shown impressive growth. What’s been driving those gains?
THROOP: The company has grown quite a bit and we’re very strong financially but we really need to be conscious of the fact that we should attach ourselves to the very best opportunities out there. I always tell everyone we have limited resources and limited bandwidth.  Not all opportunities are good opportunities. So, we’re quite selective about what projects we get involved with. With the fragmentation of the marketplace and what’s happening with Netflix and [Amazon] and with so many networks in the multichannel world, there’s a big, big demand for original programming. What’s going to separate everyone from the limited few is quality—quality programming with great writers, great showrunners and excellent casts. So, we’ve really been selective about what we do. The AMC deal was an important deal for us because the quality of the programming coming through that network is indisputable. And that floats all boats! We set up a distribution deal with Robert Rodriguez and the El Rey Network—very edgy, clever, expensive, well-produced, well-written content. We’ve made conscious efforts to do some things, and not to do other things. We can’t be everywhere, so let’s pick our spots, let’s go to the very highest level we can in each one of those spots, and so far it’s been working pretty well for us.

WS: You’ve also been willing to try funding formulas that others haven’t.
THROOP: We’re a very entrepreneurial group and we’re very opportunistic. Our reach has really given us a lot of opportunity; we have an international sales group both in TV and in film, we’ve got our own production capabilities, we’ve got a very strong balance sheet, and we’re really good at international co-pros. Put all that together and we can decide, maybe this project should be funded with Canadian resources and get a Canadian broadcaster sale and a U.S. sale, but maybe none of that should happen at all. Maybe we should produce in Europe and sell to SVOD before we even go back to Canada and the U.S., and save that sale for the last. The TV group is really very strong at exactly that, putting some really clever funding models together, giving us the opportunity to produce things that, as little as three or five years ago, wouldn’t have been produced, because the old model was built on the premise that it has to be for a network. And networks have to do it this way and if you can’t do it that way, it just doesn’t get done. Well, it’s a whole new world out there.

WS: eOne has become a leader in independent film distribution. What’s been the strategy?
THROOP: We’ve had a consistent strategy in film. We have grown an international footprint by doing very similar things over a long period of time. We’ve made quite a few acquisitions and we look for the same things in all of those acquisitions. We want a library of rights, which underpins the cash flow of the business itself. We want a multichannel distribution infrastructure, which means they have relationships with the cinemas, the broadcasters, the DVD retailers, and we really want great management that culturally fits the way we run eOne. So, each one of our acquisitions has followed that protocol and has worked very, very well for us.

WS: Is it important to find a balance between big franchises and independent movies?
THROOP: Yes. As it pertains to the strategy of how we run the companies once we have them, we do like a mixture of output deals and single-picture acquisitions. We’ve got great relationships with some of the best independent film producers in the world: Lionsgate, Summit, The Weinstein Company, Relativity, and the list goes on. They provide a lot of the content for our film-distribution business, but to augment that great Hollywood-style production, we also do single-picture acquisition with independent filmmakers from around the world. So, it’s almost a 50-50 balance of what we’re getting from output deals and what comes through single-picture acquisitions.

WS: The children’s and family business has been challenging for many companies, but not for eOne; how come?
THROOP: Well, we’ve been fortunate in our family business to partner with great creatives; Astley Baker Davies is the creative team that brings us Peppa Pig and Ben & Holly, for instance. And our family business has been successfully anchored by Peppa Pig, which has become a global phenomenon. In the U.K., it’s been the number-one-selling children’s brand for years, number one in Spain, Italy, Australia. It’s now broadcast three-and-a-half hours a day on Nick Jr. in the U.S. Our strategy has been to manage that brand very, very carefully, and we’re in no hurry. We really look at each market and work to find the very best broadcast partner that we can. We get prominent placement on that broadcast channel, and then we let the demand for consumer products grow and grow and grow. Once we think that the awareness for the brand has hit a critical mass, then we start licensing and placing those products in the retail locations. It’s a very patient, slow and methodical process to managing those brands on a global level.

WS: Are you applying the same slow process to the roll out in the U.S.?
THROOP: A lot of questions have come up regarding the U.S., and our strategy is the same, which is, we’re in no hurry. Some of the success, or lack thereof, of certain children’s companies or brands pertains to the fact that a lot of them rush products to retail. There are pressure points from a business standpoint and sometimes companies push things harder than they should be pushed and if products go too early to retail and you never get another chance. With eOne, we’ve got a diverse enough business—film, television, music, family, licensing—that one year, maybe this territory or this business isn’t performing as well, but something else is. It gives us consistency in earnings and revenue and growth, and we don’t need to force it. So, if the time isn’t right to launch Peppa Pig with a certain retailer in the U.S., we’ll wait another year. We own Peppa Pig into perpetuity; it’s a fantastic brand and it’s evergreen in some territories. It has been the number one preschool brand in the U.K. for five years in a row. This year there will be more than $800 million and approaching a billion dollars’ worth of retail merchandise sold on that brand alone. Sometimes people make decisions—I have to hit a number, I have this payment, I have this expectation. We just don’t work like that. It’s very much, let’s do what’s right for the brand. If it takes an extra year, it takes an extra year. We’re completely fine with that.

WS: Are digital platforms providing business opportunities?
THROOP: Absolutely. New entrants bring new opportunities. Everybody’s working with [Amazon] and Netflix. We have a global franchise deal for Trailer Park Boys with Netflix. Seven seasons were already produced in Canada and through Netflix; we’ve revitalized the brand. Netflix came in to take worldwide rights. So, that’s a brand-new opportunity and we would never be able to sell those rights globally in that way without those new platforms. Netflix has been great for our business. The Amazon folks and their digital platform have been fantastic partners too. We secured an output deal with them three years ago in the U.K.; it was transformational for our business. The size and scale of eOne has changed over the last number of years, so that we are competing at the highest levels with the studios. So, we are getting seats at the table in all markets. The new digital platforms are fantastic and it’s just starting. The concept of day-and-date global distribution as these SVOD platforms and the multichannel networks continue to develop and grow, that’s coming and it’s coming very quickly.

WS: And day-and-date helps against piracy, doesn’t it?
THROOP: It does help against piracy. There are some authoring issues and language issues that you’d have to deal with, but where it can be done, they’re great ideas because it brings that piracy number down. Hopefully governments around the world will continue to work against theft, because it is stealing. And if piracy does continue, it’s going to affect the quality of the program that you’re going to get to watch, even if you are a paying consumer, because it takes the lifeblood out a lot of the production companies.