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Market Insight

Banijay Group formed by merger of independent production groups

February 23, 2016  | Subscribers Only

Tim Westcott Tim Westcott Director – Research and Analysis, Programming, IHS Markit
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Banijay and Zodiak have completed their merger, first unveiled in July last year, creating what they claim to be the world's biggest independent production company not controlled by a media group. The new company, Banijay Group, which will be based in Paris, said the two companies have completed the transaction to merge their catalogues and production units.

The newly-created Banijay Group will be majority controlled by a company jointly owned by LOV Group, a company owned by Stéphane Courbit, and DeA Communications, a subsidiary of Italian conglomerate De Agostini. The two companies will own a 73.8% stake, with LOV Group owning 50.1% of the shares. Vivendi will own the balance of 26.2%. Courbit will be chairman with Marco Bassetti CEO of Banijay Group. Total annual revenues are $1 billion.    
 
The new group will be headquartered in Paris with operations in 17 territories, including most major European markets, the US and other key territories including Australia, India and Russia. The combined catalogue includes all major programming genres including drama (Canal Plus series Versailles and Nordic thriller franchise The Girl with the Dragon Tattoo), entertainment, documentary and children's programming.

Our analysis

Banijay's creation is the latest in a wave of consolidations that have created groups of scale in a sector of the media industry which remains mostly fragmented. Zodiak Media was itself formed by a series of mergers. with De Agostini buying up French production group Marathon and Italian groups Mikado and Magnolia in 2007, and taking over the Nordic-based Zodiak Television the following year. The acquisition of the UK-based RDF Media in 2010 was another important milestone. Banijay was created by Courbit in 2008, initially buying up French producer Air Productions and extending into Spain, Germany, the Nordic region, the US and Australia.

The claim to be the largest independent production company is a credible one given that most of Banijay's peers are owned either by major studios or broadcasters. Endemol Shine, created in 2014, is half-owned by 21st Century Fox, while FremantleMedia is a division of RTL Group, All3Media is jointly owned by Liberty Media and Discovery Communications, and ITV Studios is owned by the UK-based broadcaster. US studios Warner Bros and Sony have also started building networks of production companies outside the US.

Expansion to additional territories is a likely target of the newly-formed group. Its network is much smaller outside Europe than most of its competitors, with gaps in Latin America and Asia in particular. Where international networks of production companies justify their existence is in the formats trade - successful new formats can be rapidly internationalised through a network of companies with operations and relationships with broadcasters in multple territories. Zodiak appears to have a much stronger position in the formats buisness than Banijay, which is very much focused on France. Theere is likely to be no shortage of potential takeover targets: sale to a super-indie group is an obvious development (or exit) strategy for production company owners. The challenge is finding acquisitions which actually worth the cash sums, bonuses and earn-outs agreed by the buyer.

The investment by Vivendi may, however, further focus Banijay Group's attention on its home market. The media conglolerate completed its investment in the group today, injecting a reported €100 million. This will create opportunities for Banijay to sell programming - especially entertainment shows - to its new sister company, including its growing free-to-air division.   

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