These debt positions are often still within the applicable limits.
The great attack by the super-rich Silicon Valley companies on traditional media organizations is taking epic proportions. Apple + is the latest addition to all the initiatives from the famous San Francisco valley: for the Cupertino company, this investment is of some strategic nature, but on the balance sheet of the company a piece of cake.
The answer of the traditional media industry (to which I also originally assign distribution companies such as Comcast) is scaling up. The deals in recent months have been unprecedented: Disney acquired Fox, AT&T bought Time Warner, Comcast acquired Universal a few years ago and most recently Sky.
Multiple deals are still in the works, Mediaset, for example, is building a significant stake in ProSiebenSat1. The result of all this? The debt of the acquiring companies is growing to alarming levels. The SEC in the US published the debts of these companies in the middle of this year. Sony and Viacom are still refraining from large transactions and have debt positions to be used (USD 5.2 and 9 billion respectively). But others are building massive debt positions: Disney $ 57 billion, Comcast $ 101 billion, and AT&T, $ 170 billion!
Now money is unimaginably cheap right now, so now is the time for these types of transactions. These debt positions are often still within the applicable limits. These are usually calculated as the ratio of the debt position (minus cash) to the profitability of the organization (usually expressed as the EBITDA figure). In almost all cases, this figure remains below 4 for these companies. But when times change, interest rates rise and profits shrink during a recession, Leiden is immediately in trouble. In short, Hollywood takes a fair amount of risk.
A good example of what debt can do to a company is Endemol. Before and after the merger with Shine, the company was crammed with debt by its owners. The debt position was approximately $ 1.8 billion, giving a ratio of approximately 10. A company can simply no longer pay the interest on this type of debt. The result of such a situation is that in these circumstances companies cannot invest enough to grow and expand the position. Banijay is now taking over the debts of EndemolShine and, if not careful, will also take (too) great a risk.
Those risks can only be accounted for if the acquirer has a clear strategy and rigorously implements this strategy. Disney seems to have done that: the company will immediately serve the consumer (with which it already has experience via the theme parks) with its range of VOD brands. The launch of Disney + was successful despite the necessary flaws and ESPN (Disney's sports brand) also seems to be doing well. The company is managed very tightly and will survive despite the great risks.
But in many other cases, the focus is only on the transaction and the top of the organization forgets the execution. The lesson of practice is that many takeovers are not that successful at all and end in failure. Usually this is simply due to the execution: management is a craft and that is sometimes lacking in the media. Formulating a clear plan of action and then executing it is not at all sexy and is often forgotten. In those cases, a mountain of debt really becomes a problem!
Two years ago, I predicted that the MIP fairs in Cannes were doomed. After the COVID crisis, particularly the Americans and Asians struggled to find their way back to Cannes, the bunker-like Palais was half-empty, and the fair had become a depressing affair. The recent MIPCOM couldn’t have been more different: the sun was shining, exchanges with industry peers were intense, and the spirit was fully restored. Half of my earlier prediction proved accurate: the spring MIP has indeed perished. However, MIPCOM is back in full swing and is here to last.
The reason? MIPCOM is increasingly becoming a meeting place for the international media world. It’s no longer a marketplace; instead it is primarily a place to exchange ideas and uncover the latest trends. It was heartwarming to see young producers from the Benelux excelling: Rutger Beckers from Sputnik in Belgium, Jeroen Koopman from Newbe and Wouter van der Pauw from Signal.Stream. Wouter and his partner, Giel de Winter, are succeeding in reaching generations that have turned away from broadcast television. Their rapidly growing company mainly produces for streamers and recently delivered the series Het Jachtseizoen for Videoland. John de Mol often has a nose for this type of talent and was quick to acquire a stake in Signal.
Nevertheless, there was still a bit of complaining from the many producers present, regardless of where they came from. The days of "peak TV" are over: streamers have stopped making heavy marketing investments in content, and the American industry is back on track after the big strikes. This last factor mainly affects British and Australian producers, who had cleverly filled the gap in the U.S. The market has returned to square one and production volumes are back to normal levels. This brings a major advantage: consumers are no longer overwhelmed with excessive content offerings.
Naturally, much was said about the mega-changes taking place in our market. Evan Shapiro, who has made a name as a "media cartographer," offered insight into something we all knew: young people in the 16-34 age group hardly watch broadcast television anymore. This percentage has dropped further, from nearly 20% in the UK in 2022 to 14% in 2024. Social video and streaming continue to grow, and advertisers are naturally following suit. Broadcasters will have to develop their streaming activities as quickly as possible to maximize digital reach.
In this perfect storm, it’s also crucial for producers to embrace new opportunities. Young entrepreneurs like Wouter van der Pauw, Rutger Beckers, and Jeroen Koopman are eager to take advantage of these opportunities. It will be interesting to see if the large, consolidated production companies will also be able to crack the code of young viewers. That’s the challenge facing many of the MIPCOM attendees.
Taco began his career on the content-production side, at SBS, before transitioning to public broadcasting in 2009, where he led KRO. After overseeing the merger with NCRV in 2014, Taco became CEO of IDTV (part of All3media) in 2017. At IDTV, he formed a creative team that developed the hit show De Verraders. From 2021 to 2024, he led All3media’s companies in the Netherlands, Belgium, and Germany. Taco also earned his PhD in 2014, showcasing his dedication to learning and expertise.
Oege Boonstra, partner at 3Rivers, says: “We are thrilled to welcome Taco to our team. His deep expertise in both the creative and operational aspects of the media industry, combined with his strategic insight, will be invaluable to our clients. His experience in media management and talent development aligns perfectly with our mission to drive success for media companies.”
Taco Rijssemus on his new role: “I’m excited to join 3Rivers and collaborate with such a skilled team. The media landscape is constantly evolving, and I look forward to applying my experience to help our clients navigate these changes and achieve meaningful results.”
The streaming market is gradually becoming mature. There will still be significant growth, but the tumultuous numbers from the early phase are now behind us. The number of new entrants of any significant size is also drying up, so we can gradually begin to take stock: which companies will survive, which will fail, and what new developments can we still expect?
Let's start with the latter. A few years ago, it seemed that local players could only compete with the big American Tech competitors by working together intensively. In hindsight, this has not materialized at all. Initiatives like the French Salto went under, Britbox eventually became a ‘BBC only’ endeavor (ITV sold its share), we hear little about the Flemish Streamz, and NLZiet in the Netherlands is now cleverly positioned as an alternative to cable, while NPO and RTL are building their own streaming platforms.
Most broadcasters have now realized the critical importance of their brand and are eager to add a +, Play, or MAX behind their names to establish their presence in the digital world. By using the content budget both analog and digital and coming up with smart combinations, they are able to create a new future. With good technology now widely available and no longer a significant barrier, there is no doubt that local broadcasters take charge of their own digital future to survive. The latest in that lineup is Channel 5 in the United Kingdom, which is going to exploit all digital activities under one brand name, 5.
Moreover, the major international media players face significant challenges in keeping their traditional businesses afloat. The write-offs that Paramount and Warner Discovery (WBD) have taken in recent months (each amounting to nearly ten billion dollars!) speak volumes. The traditional business is increasingly under pressure, and investors see that too. For instance, WBD’s stock received a downgrade from Standard & Poor's (to negative). That must cause a lot of pain in the boardrooms.
What does all this mean for the streaming market? First of all, it means that many more local brands will survive than previously thought. All traditional broadcasters are rapidly transforming into digital media companies because they know that otherwise their days are numbered. While the number of local players increases, the number of international players will, however, shrink. The large American media companies are under immense pressure and can no longer afford the investments needed to build international streaming services.
Who will be left standing? Netflix, of course, which systematically expands its first-mover advantage. Prime Video, backed by Amazon's commercial engine. Disney, naturally, with its broad portfolio, will survive despite the painful managerial road it has traveled. And the aforementioned WBD, which continues to invest heavily in (HBO)MAX. Finally, DAZN, though it is still burning through cash. With Apple, you never know. But the other international players are not going to make it. That is certainly something few could have predicted three years ago...