Music, theatre, film and
TV companies are still investing. Claire Hack
reports.
Go deeper with GlobalData
The UK entertainment industry
is facing as tough a time as any, but the mood among the specialist
funders serving the sector remains surprisingly upbeat.
Azule Finance and Medialease,
both with strong networks in outdoor events, and film and theatre
production, say audiences value entertainment as a tonic during the
bad times.
Medialease MD Paul Robson
says: “We have not seen any downturn in the UK or Europe. It has
been very buoyant in the theatre. If consumers are tightening the
purse strings, it is the expensive meals they are knocking on the
head. They still want to go to concerts, to see bands and go to the
theatre. It is a treat.”
This contrasts to the US
market, where big event organisers and promoters have cut down on
the amount of money they will spend on a tour.
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By GlobalData
The biggest
tour
Medialease typically funds
festivals, large concerts and West End theatre productions, where
shows are continuing to sell out. Its main markets are Benelux,
France, Romania and Spain.
The company also provides
financing for international band tours, for example funding video
equipment for a series of U2 performances set to continue until the
end of 2011.
“That was €4.5m on video
equipment alone. It is probably the biggest tour going at the
moment. It is a typical arena tour, and it’s making money,” Robson
says.
The leasing specialist also
expects to help fund Take That’s upcoming shows, underwriting
business worth up to £500,000 (€567,552) on loudspeakers, another
£150,000 on audio mixers, and up to £100,000 on equipment such as
wireless microphones.
“We are financing the rental
company which provides kit to production companies on a short- to
medium-term basis.”
The sector represents
profitable business because such rental companies are performing
strongly and have a “good business ethic”, Robson says.
Broker-cum-lessor Azule
operates in much the same arena as Medialease, also counting film
and television companies among its clients, and writing 90% of its
business in the UK.
Managing director Peter
Savage says: “Next year, we hope to have opened a market area in
Europe – there are no specialist broadcast lessors
there.”
In broadcast, links to the US
have helped to bring in money.
“The UK is very, very buoyant
in the broadcast market because of its connections with the US,”
Savage says.
“A lot of US companies invest
in the UK. In the rest of Europe, broadcasters don’t have the same
hive centres, like London and Manchester, and so they don’t have
the same concentration of expertise.
“The UK is a particular
leader in broadcast technology. A lot of manufacturers base
themselves here.”
Azule funds all elements of
broadcast technology, from cameras to post production studios.
Typically this means SMEs, as several small companies often come
together temporarily to work on a project.
Post production was hit hard
by the downturn, and traditional studios also face stiff
competition from new digital post production suites.
“The post-production sector
follows advertising revenue. People aren’t paying as much for ads
and there is a direct correlation,” Savage says.
Azule can offer finance on
each separate element of a production project. For example it has
funded post production houses such as Editworks, well known for
light entertainment shows Eggheads and Who Dares,
Wins.
An average camera deal is
worth about £50,000, and post production facilities are pegged at
about £100,000 to £150,000.
Azule writes about £6m a year
on its own book, while having broker turnovers approaching
£70m.
“Some of that relates to
very, very big, consortium deals,” Savage says.
The company’s foray into export finance has paid off:
After opening a new division in May 2009, turnover topped £50m in
May this year.
