Kerry McCluggage and Jeff Sagansky have added to their growing portfolio of showbiz investments by acquiring a stake in Trifecta Entertainment, the fast-growing indie syndie company headed by former MGM Television prexy Hank Cohen.
Deal is understood to be a modest investment in the seven-figure range for a minority stake in Trifecta, but it comes with options to acquire a larger share of the company, which Cohen founded in late 2005 together with three other MGM TV alums, Michael Daraio, Scott Spungin and Shelley Brown.
Trifecta pact is part of a broader strategy pursued during the past three years by McCluggage, former Paramount Television Group chairman, and Sagansky, former head of TriStar and CBS Entertainment, under which they have been buying into promising indie production and distribution outfits that need capital and the operating expertise that the network and studio vets can offer.
Down the road, McCluggage said he envisions bringing those companies together under one roof to create an indie big enough to be competitive with Hollywood’s majors. The McCluggage-Sagansky investments include stakes in Toronto-based Peace Arch Entertainment as well as London-based ContentFilm and its L.A.-based homevid distrib arm, Allumination Filmworks.
The duo have been selective and opportunistic, using their own coin to fund carefully targeted investments. (Last month, Sagansky was named interim CEO of Peace Arch after previous chief exec Gary Howsam was arrested in connection with bank loans he received in 2000, prior to joining Peace Arch.)
“We’re trying to pull together a collection of very specific assets,” McCluggage said. “Eventually, it will make the most sense for all those assets to come together at some point. What we’re trying to do is create a full-service independent distributor of scale, one that can handle international and domestic production and distribution. The emphasis now is on building the distribution assets and then exploiting them to augment the production side.”
Peace Arch in recent years has produced a number of pics and Canadian and teamed with Showtime on costume drama series “The Tudors.” ContentFilm has an active and internationally driven pic production and distribution slate.
For now, however, McCluggage and Sagansky’s focus remains on beefing up the distrib capabilities of its firms because “for an independent to survive, you have to have put distribution ahead of production and grow those assets first,” McCluggage said. “With a broader base of revenues, that broader base can support the highs and lows of what will always be a hit-driven business.”
To that end, McCluggage and Sagansky were impressed by Trifecta’s growth in its short run to date. Company has built a solid distribution infrastructure and handles the barter advertising sales for its shows. Trifecta handles off-network sales of MTV’s “Punk’d” to broadcast stations; its slate also includes a weekly series featuring the Ultimate Fighting Championship bouts, “UFC Wired,” and a new series from longtime TV animal wrangler Jack Hanna, “Into the Wild.”
“As firstrun syndication has changed a bit over time, it’s a very good time for independent companies that can move quickly and offer a full-service operation to talent,” said McCluggage, who oversaw Paramount’s sizable firstrun operation during his 10 years with the studio. “The notion behind our investment is to help give (Trifecta) the kind of financial wherewithal to grow quicker and faster. They have the personnel in place, but it takes capital to really ramp up an operation.”
Beyond the capital influx, McCluggage and Sagansky can offer operating advice and counsel and open doors thanks to their industry relationships.
“We started this company to become a multiplatform boutique entertainment company. We don’t want to be strictly a syndication company,” Cohen said. “Aligning ourselves with industry veterans of (McCluggage’s and Sagansky’s) caliber will help us achieve that.”