In a deal valued at upward of $200 million, Endemol USA has acquired Cris Abrego and Mark Cronin’s 51 Minds Entertainment, the reality factory that perfected the celebreality genre with nonscripted comedies such as “Flavor of Love,” “I Love New York” and “The Surreal Life.”
Blockbuster pact, which had been rumored for months, comes in the wake of Elisabeth Murdoch’s multimillion acquisition of Reveille. Both moves represent attempts by international congloms to expand their Stateside presence by gobbling up successful American producers.
What made 51 Minds particularly attractive to Endemol is the fact that Abrego and Cronin had ownership of both their formats and produced episodes of past series. That’s highly unusual in the nonscripted genre, where networks and studios typically control the rights to programs, paying producers fees for their services.
“It’s very hard to find companies in the nonscripted space that are prolific creators and owners of content and whose last names don’t begin with ‘S’ or ‘B’,” said Endemol USA prexy David Goldberg, referring to Reveille founder Ben Silverman and Mark Burnett, respectively. “That was the key to this deal.”
In addition, Goldberg noted that 51 Minds programming, which is almost entirely in the comedy reality arena, has proved to repeat well and sell in the syndication marketplace — another reality rarity. Comedy fare also plays well in Internet-sized snippets, making 51 Minds content a good fit with Endemol’s growing digital division.
Overall, Goldberg said that snapping up 51 Minds immediately “infuses the Endemol Group with fresh content, expands the library and significantly increases our U.S. market share.” He also noted that both companies have a rep for developing “pioneering content.”
Endemol is taking a 51% interest in 51 minds, with options to acquire a greater stake in the company at a later date. The $200 million figure doesn’t represent the actual purchase price but rather the potential value of the deal if a host of financial targets are met over the next few years.
None of the parties involved would discuss specific dollar amounts, making it difficult to ascertain just how much cash is involved in the deal.
Endemol has been mulling a purchase of 51 Minds for more than a year, with Endemol senior VP of corporate development Ron Milkes leading the pursuit.
“They were on my radar from the moment I got here,” Milkes said. “They immediately jumped out because of the ratings for their shows and the fact that they own their properties and formats.”
Abrego and Cronin said Endemol will help 51 Minds expand in numerous areas, from product licensing and the Internet to the international marketplace.
“It’s about exploiting our content and taking what we own and doing more with it,” Cronin said. “We haven’t done nearly enough with our shows.”
Producers said they had long conversations with the Endemol team about creative independence and came away convinced a purchase wouldn’t dramatically alter how they run their business.
“They were very clear and upfront that we could still be independent,” Abrego said. “Our intention is to stay on course and continue to provide more hit programming for VH1 while simultaneously expanding to network television and new-media outlets.”
Goldberg said he believes the 51 Minds crew will evolve beyond the celebreality genre into other formats –a goal Cronin and Abrego said they share.
“When you buy a company, you have to have a gut belief that the creative auspices still have a lot of ability left in the tank,” he said. “And with Cris and Mark, you get two companies in one. Cris comes from a docusoap background, and Mark has a game and comedy background. That gives us the potential to get even more out of them.”
Company has roughly 200 staffers, and no layoffs are anticipated. HQ for 51 Minds will remain in Los Angeles.
Cronin and Abrego formed 51 Minds in 2004 by melding Abrego’s 51 Pictures and Cronin’s Mindless Entertainment banner. The two producers began working together on the WB’s “Surreal Life,” which was dropped by the net after two seasons, only to explode in popularity after shifting to VH1.
The have since created 11 different franchises for VH1, most spun off of “Surreal Life.” Other skeins produced by 51 Minds include “My Fair Brady” and “Rock of Love,” along with numerous spinoffs.
Endemol USA — which produces tentpole skeins such as “Extreme Makeover: Home Edition,” “Deal or No Deal” and “Big Brother” — has bought two other companies in the past few years: True Entertainment and Original Media, both Gotham-based. Latter sale closed in the fall.
Goldberg seemed to indicate that Endemol may take a breath before gobbling up another asset.
“We’re definitely still in purchase mode,” he said. “But history has showed us there aren’t that many companies that fit the bill of our acquisition model.”