When NBC Universal president and CEO Jeff Zucker announced plans last year to increase the Hollywood studio’s international film and TV revenues from $2.7 to $5 billion by the end of 2010, it seemed an ambitious target for a company that had lagged behind rivals such as News Corp and Disney when it comes to global expansion. Less than two years into the strategy, though, and after investing several hundred million dollars on new acquisitions and channel launches, the company’s international empire is taking shape, with revenues set to hit $3.6 billion in 2008.
Based in London, Peter Smith, president of NBC Universal International, has been responsible for spearheading the international expansion, which has included a number of significant acquisitions in the last 12 months.
Last year the company acquired Sparrowhawk Media, owner of the international Hallmark Channels, for a reported $350 million and took a 26% stake in NDTV Networks in India, while this August it snapped up UK independent producer Carnival for $55 million. Carnival will now form the cornerstone of NBCU¹s European production business, with CEO Gareth Neame working closely with Angela Bromstad, the former president of NBC Universal’s US television studio, who moved to London last year to ramp up its international production activities.
"In the short term we¹ve opened businesses in the UK, Russia and India," says Smith. "Long term we want it to be multi-territory." He adds that the plan is to build a global production business much like Endemol, but focusing on drama, rather than reality and unscripted programming.
So far the studio has produced local versions of long running US drama Law & Order in France and Russia and a UK version is being produced by Kudos Film & Television, the indie behind Spooks and Life on Mars.
The Carnival deal represents the first acquisition for Bromstad¹s arm and according to Zucker, will jump-start our efforts in the very important UK market. Best known for the hit BBC series Hotel Babylon, Carnival’s priority now will be to develop new shows for both UK and international audiences, as well as adapting US series for the UK market.
"If Carnival empathises with the project they would be our natural home," says Smith. Carnival also comes with a strong library of programmes that NBC Universal will be looking to distribute around the world. And with the studio’s strong domestic broadcast and cable channel businesses, the indie will get an important leg up when it comes to pitching scripted formats to the US market.
"They wanted to get into a global company, particularly one that had scale in the US, so that they can begin to try and produce for the US," he says. The channels’ business is also experiencing huge growth, having gone from just 12 internationally last year to about 60 today. Major launches have included the roll-out of the Sci Fi channel in Japan and Russia two key priority territories, along with the UK and India and the aim is to hit 100 channels by 2010.
Key to the expansion strategy was last October’s Sparrowhawk acquisition, which more than doubled the size of the global networks division, with a total of over 140 million subscribers worldwide. "Sparrowhawk gave us a presence in Asia, which NBC Universal really hadn¹t had, and Eastern Europe," says Smith. "It gave us some good brands and some good people."
With much of Western Europe already crowded with channels from local broadcasters and US rivals, though, there are limited opportunities for expansion in more developed territories. But Smith still sees plenty of room for growth in Asia, as well as Scandinavia, and is also looking at launching more HD channels in Europe, as well as getting into the DTT market. That could well see the company making further acquisitions, and one possible target could be Virgin Media¹s 50% stake in its pay-TV joint venture with BBC Worldwide, UKTV, should the company chose to put it on the market. A buy-out of its partners in children¹s channel Kidsco, could be another option.
"It¹s a very good asset," he says. "It’s certainly something we¹d be happy to discuss with the partners.!" Despite hinting at further acquisitions, Smith suggests the company isn’t about to go on a buying spree. On TV production, I think the growth will probably more organic," he says.
Smith will be speaking at the European Media Leaders Summit 2008 on November 17/18