Crevan O'Grady, Partner (video)

I mean it's a complex value chain that we're dealing with here, so just because you have a view that content in the round is on the way up, it doesn't necessarily mean that production and broadcasting are on the way down.  I think there are variants in that, there's areas of grey.  If I pick 2 examples, if you look at the investment we have in Nimbus in India, production in India is very much an outsourced cost plus model.  If I look at production in some European countries, the producer continues to own the rights, although they're producing it, they still own that content.  So I think production is somewhere where you can make it work if you own the rights, number 1, if you're producing compelling content and for private equity for us as investors, we would want to see a third element to it which is that the content you're producing has some longevity, has some stability and again avoiding the hits driven part of the value chain.  So I don't want to be invested in a production business which relies on getting one huge hit every year but I would invest in the right production business in the right geography, which has a track record of producing a consistent flow of probably quite similar content.  I think the broadcasting side is more tough, I think it is difficult in many markets to see why private equity should be invested in broadcast businesses.  Certainly in free to air businesses in Western Europe, the private equity experience is mixed at best, some of it is not very good and the rest of it's much worse.  I think we've seen in Germany, private equity in Nordic countries, in Benelux really struggling with free to air.  I think for selective geographies, there's still growth and that's just a time arbiter, Central Eastern Europe and Asia we're still seeing growth.  I think Pay TV is probably better, you know we've had positive experience in Pay TV but on an international scale where you have a clear niche product and you're rolling it out, but in the round, if I was looking at all the places we could invest, I think broadcasting generally is quite near the difficult end, that feels to be an area we ought to be avoiding and I think private equity as a whole ought to be avoiding.

Harish Thawani, CEO Nimbus (audio)

We've de-emphasised our management attention on TV production in the entertainment area, for two reasons.  One, it's become a highly-fragmented segment.  We have between two to two and a half thousand television producers in India, it's a bit of a nightmare.  The second is that despite the significant proliferation of satellite and cable TV in India, largely because you had two thousand or three thousand television producers, willing to kill each other to secure the business from the broadcaster, they have generally been willing to accept any terms from the broadcaster, as long as they can keep their head above water. 

And one of the most onerous terms was that the broadcaster in India took away the entire set of rights.  In other words, you were actually acting as a production contractor, not as a producer who was selling them a one year or two year or three year licence to broadcast the programming, after which you can go and put it out on syndication market.  Consequently - and the typical margin being offered is 10% gross, so, you don't have a business that is scaleable, you have a business that pays you, at best, 10%, sometimes less, and you don't have any recurring income from that.  So, you are, effectively, as the joke goes, like the plumber.  You have a day job, you get paid depending on how many house calls you make.  You don't own any brand equity, you don't own any franchise, you don't own any content that you can exploit in the future.

Jonathan Pfitzner, Co-founder and director Argent (audio)

I think for Internet content, you've got subscription, pay-for-view, which is unlikely to have much traction outside of significant sporting events.  We sold a business called Viking Television, which was a niche channel for petrolheads, basically, that wanted to watch that kind of programming, and they needed to watch it live, and they couldn't necessarily be served by schedule, and they were going to pay for it, and they did pay for it, on a subscription basis but I think that those instances are going to be very, very limited.  So, you're then going to fall back on standard advertising, sponsorship, product placement, as a separate rung to sponsorship there, and also, interestingly, I think, lead generation is going to become quite interesting.  So, this would be where somebody creates programming specific to, for example, say, creates some programming around some kind of financial services product, like an ISA, for example, but they do it in quite a quirky, interesting way, such that it's not very kind of bland or dull.

And if they can attract people to watch that, and it is informative and educational and interesting, they can then potentially push that audience on to providers of financial products and make significant money through lead generation.  So, there are going to be more ways of creating value from the content rather than just interruptive or pre-roll advertising which, I think, to be honest, is going to have some value, but it's probably not going to be the principal determinant of value in content, necessarily, in five years' time.

Crevan (video)

I think the primary reason you would steer clear of broadcast is that it is a very high fixed cost business with ultimately a declining audience, so free to air still may have larger but it is declining, it is in long term decline and the only way to fix it is to fragment your own audience, so you are adding more cost for the same revenue, so in the long run it is a diminishing margin business and you still have that audience, so there's still good things you can do but you're going to struggle to generate a private equity return out of that business model.  You know there is an argument to say that that free to air business model as a source of strong return of capital is in terminal decline.  If you already own one well fair enough you run it into the future, I don't think you should be buying one.

Yes, I think this is particularly obvious in the UK with the case of ITV, which fundamentally I think produces some very high quality stuff and it is both a content producer, a content owner and a broadcaster, but if you start with 100% market share of the commercial market, you're not going to ever go up, so it is in a decline and as pay TV eats into it, as the other terrestrial broadcasters eat into it, as the digital terrestrial market grows, as the online product put into the UK grows, you know all of these things are eating into audience share and this is a very large business set up on a monopolistic basis originally where its revenue is frankly in long term decline, so I think it's marginal revenue.

Waheed Alli, Chairman Chorion (audio)

I think it's a combination of rights ownership, or controlling rights, combined with creativity to make those rights work in a multi-platform world, and it is the relationship between the content and the distributor that's important.  And I think the value comes in the combination of both.  I mean, you can see that in Disney or Nick Junior, where content is created and distributed by the same people.  And there you have both platform and content in perfect harmony.  And so I think it's not - it's not one or the other, it'll be the combination.  And whilst I think content is king, platform is queen.

And I think it used to be the other way around, that platform was king and content was queen.  And I think it is a marriage of platform and content, with the magic dust of creativity, that makes the whole thing work. But you do need those three components.  You need content, you need access to the platforms, all platforms, and you need that creative genius to make the content work across each of those platforms.  Because, for each of those platforms, you cannot just take - if what you try and do is take your content and slap it like a badge onto the latest bit of product or the latest type of DVD or the latest bit of publishing, and say, "well, now, I can work across all those platforms, because I'm badging other people's products."  You'll fail.

And so you have to take that content and creatively make it work for each of those platforms.  If you're going to ask the consumer to pay to watch or to consume that content, or if you're going to ask the consumer to watch, and ask advertisers to pay for those consumers watching.  So, it is three things, I think.