Company still feels squeeze despite winning formats such as Got Talent and Idol
This week MediaGuardian 25, our survey of Britain's most important media companies, covering TV, radio, newspapers, magazines, music and digital, looks at FremantleMedia.
According to Britain's Got Talent judge David Walliams, the dancing dog discovery show will return to UK screens in April. The question being asked by some analysts, though, is what talent does the programme's co-owner, RTL's global production, distribution and rights business FremantleMedia, have coming through to replace its established mega-hit formats such as … Got Talent, … Idol and The X Factor?
London-based FremantleMedia's recently-published 2012 year-end figures show that revenue was €1.7bn (£1.47bn), up 19.7%. Last year its global network of production companies was responsible for more than 9,100 hours of TV programming in 62 countries. Fremantle also has history. One of its formats, The Price Is Right, launched in 1956 and is the longest-running gameshow in TV history, and is still a huge US hit.
Many other production company executives would give their iPhones if not their eye teeth for the kind of audiences Fremantle's primetime hits generate. If you strip out Olympics and Jubilee coverage, Britain's Got Talent was the highest-rated UK TV show last year with 13.1 million viewers (inc 600,000 on ITV1 +1). However, FremantleMedia's figures show that earnings before interest, tax and amortisation were down 3.5%. Its parent company, pan-European broadcaster RTL Group (itself currently 92% owned by international media company Bertelsmann, which recently indicated it is looking to sell a £1.7bn stake in RTL), blamed the fall on "continued pressure from broadcasters on margins and volumes".
The FremantleMedia UK chief executive, Sara Geater, says the group's 19% revenue growth was mirrored in the UK but agrees "yes, we are being squeezed", putting it down to the recession and less money available within broadcasters. She warns: "That might affect the quality of the show, so you start to question the type of shows you're making."
FremantleMedia's production companies operate across 22 countries. They include FremantleMedia UK, FremantleMedia North America, Germany's UFA, Blu (Denmark), Original Productions in the US and FremantleMedia Australia.According to Tim Westcott, principal television analyst at IHS Screen Digest, "in terms of growth, [the group] have reached a point where they're not increasing their network of production companies. They've got most of the world covered so any growth is not necessarily going to come from organic growth."
Westcott adds: "Looking at formats, if you can find a Big Brother or Survivor, then potentially you can grow the business considerably and they are looking for the next big thing. However, they also have a massive industry presence and a huge library of old programming they are consistently pitching. They do what they do very effectively – they are a good business." But he points out that other companies are now "doing the same thing" as Fremantle, for example Endemol and the big US studios such as Warner Bros, and so asks "where's the growth going to come from?"
Geater says one way to expand is "by creating our own intellectual property", but says of its "golden oldie" hit co-productions "we're not looking to replace them because they are still doing so well". That includes The Apprentice, now preparing its ninth UK series and which she expects "to carry on for many years".
FremantleMedia's new co-productions included Russell T Davies's Wizards vs Aliens, which was CBBC's No 1 new show last year. Also coming through will be the benefits of a five-year co-production agreement with the BBC that Fremantle has signed for children's programming, plus the continuing popularity of ITV's dating show Take Me Out and Celebrity Juice.
However, Fremantle's alliance with Simon Cowell's company Syco is key in the UK because of its effect on the balance sheet. The impact on FremantleMedia UK of ITV axing The Bill is still fresh in some people's minds. The three-year deal signed with ITV for Britain's Got Talent and The X Factor in 2010 is reportedly worth around £50m a year and runs out after the latter's 10th anniversary series in the autumn. Industry talk suggests ITV will push back on price and length of deal this time, especially as the show's ratings declined to 9.3 million for last year's final. Sources say initial talks have taken place. Understandably, all Geater can say is: "We will be negotiating a new deal but we're not going to say when", but she does say Fremantle is yet to set up its planned joint development team with Syco although: "We're still talking about that and obviously we work with and speak a lot to Syco."
Geater rejects one rival's opinion that Fremantle must be worried about "being dependent on other people's IP", instead arguing: "I think there is room for doing both … sometimes the best way is to go into partnership."
A restructure last year separating out Fremantle's Talkback and Thames UK brands, focusing the companies on different genres, appears to have bedded down well. Fremantle's admirers say the group has led the way in translating the popularity of its TV brands such as X Factor into digital opportunities such as apps. It has 102 channels on YouTube.
FremantleMedia also recently set up a new digital and branded entertainment division – part of a wider restructure which also created one new, stand-alone, global division dedicated to distribution and children's and family entertainment.
Looking at the international picture, Fremantle owner RTL highlights X Factor's return to the Fox network last year with an average audience of 8.3 million viewers, while in Germany the ninth series of Deutschland sucht den Superstar (Idols) won an average audience of 5.1 million viewers. American Idol has been the No 1 US entertainment series for the past nine years. However its latest outing on 27 February had 13.1 million viewers, its lowest rating since 2003. Still, The X Factor has been sold to over 40 countries and is now produced in 35 countries, while Fremantle's … Got Talent is produced in 52, with new additions including Canada and Belgium. As one rival admits admiringly: "There are very few companies that have Fremantle's international scale."
