Published on December 3, 2015 – Playback Magazine


From Playback magazine: From mergers and acquisitions to the rise of Canadian feature animation, a look at key trends driving the industry forward.

By Katie Bailey, Julianna Cummins and Jordan Pinto


Canada’s broadcast industry may have been reshaped this year by the CRTC, and some provincial governments took a scalpel to local tax credit regimes, but while both garnered headlines, behind the scenes the Canadian screen industry was already undergoing a metamorphosis, buffeted by global shifts in media consumption, an increasingly international marketplace and volatile commodities markets. Here’s a look at five industry trends illuminated in 2015 that will have a ripple effect in Canada in 2016 and beyond.

1. Mergers and acquisitions

Arthur Evrensel, partner with business and entertainment law firm Michael, Evrensel and Pawar, is almost in awe of the volume of M&A activity in the Canadian production sector in the last two years. “It’s incredible to me,” he says. “I’ve never seen anything like it.”



Arthur Evrensel, partner at Michael, Evrensel & Pawar LLP dba MEP Business Counsel

Evrensel’s firm has been at the centre of the action, handling a number of the 2014/2015 deals including four for Thunderbird (Atomic Cartoons, Reunion Pictures, Great Pacific Television and Soda Pictures); NBC’s minority stake in Lark Productions; Rainmaker’s proposed acquisition of Shaftesbury and DHX’s $57 million pickup of Nerd Corps. Outside of that, you have CPP’s 17.8% stake in eOne (itself having been a major domestic M&A player since 2012); Fairfax Financial Holdings’ majority stake in Temple Street; Image Engine and Cinesite on the VFX side; SIM Group and Tattersall in the post sector and more.

He sees three main trends driving the volume of activity and the size of the investments.

Canadian companies achieving global reach, both in terms of audiences and potential customers. “When the Canada Pension Plan investment board puts that kind of money into eOne and when Fairfax puts money into Temple Street, you know something else is happening beyond ordinary investors making related media investment. They’re looking at the media space and saying ‘this is a mature industry that we can work with.’”

Relative value.

A low Canadian dollar in an industry bolstered by tax credits and funding programs combined with an under-performing resource sector that is less attractive to investors (creating the opportunity for their money to move elsewhere) has created a perfect storm of relative value, he says. With operating costs low in Canada and the currency gap in Europe, the U.K. and the U.S. between 30% and 50%, Canadian-made content is an attractive proposition.

Quality of work.

“The expertise here is as good as anywhere. That holds true and people forget about that sometimes.”

Evrensel’s summary is reflected in RBC Capital Markets recent overview of Entertainment One, which it ranks as an “outperform.” “In our view, eOne is a high quality company with meaningful global scale in a large and growing addressable market,” its report said. “We believe it is well positioned to deliver attractive risk-adjusted returns by leveraging a solid position in the filmed entertainment value chain, strong relationships with creative talent, world-class sales and distribution infrastructure, and financial resources (including regulatory mechanisms) to support major annual investments in content.”

These newly well-capitalized companies are likely to now start looking for acquisitions of their own, a strategy Temple Street discussed with Playback (see pg. 22) and one which is reflected in Thunderbird’s 2014 acquisition of U.K. distributor Soda Pictures or 9 Story Media Group’s August acquisition of Ireland’s Brown Bag Films.

“They’re doing exactly what they should be doing,” Evrensel notes. “Going global not only with their product but asset purchases and expanding that base.”

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