Tinopolis sees profit in American programmers
LONDON — At a time when many so-called U.K. super indies have sold out to U.S. studios — Time Warner’s acquisition of Shed is perhaps the most famous — Wales-based media producer/distributor Tinopolis’ business strategy is headed in the opposite direction.
Tinopolis owns more than 10 production companies, including U.S. shingles A. Smith & Co. and Base, and is reputed to be one of the world’s biggest suppliers of reality programming. The group produces approximately 2,000 hours of TV annually for some 200 broadcasters around the world. Half its revenues are generated in the U.S., a market in which executive chairman Ron Jones has the company poised for further expansion.
“What is interesting about the U.S. market is that there are many, many more entrepreneurial owner-managers than I think the U.K. realizes,” Jones says. “There is a perception still that it is about people in stretch limos driving around Los Angeles. It is not.”
Zigging when others are zagging is familiar to 63-year-old Jones, son of a Welsh coal miner, and a global partner at accounting firm Arthur Andersen before setting up Tinopolis in 1990, principally to make high-volume, cost-effective shows for S4C, the Welsh pubcaster.
Jones has seen his company grow exponentially on both sides of the Atlantic since its 2005 hostile takeover of U.K. indie Television Corp., which owned Mentorn and U.K. sports distrib Sunset + Vine.
The Tinopolis mini-empire, worth around $285 million, is run from a once-derelict former supermarket in Llanelli, a post-industrial town in West Wales better known for making tin than television.
In Blighty, Mentorn produces signature BBC public affairs show “Question Time”; it is one of the producers, via subsidiary Daybreak Pictures, on the Bill Murray pic “Hyde Park on Hudson.” Wholly owned Sunset + Vine recently nabbed the lucrative contract, reputed to be worth more than $150 million, to produce British Telecom’s new sports channel featuring Premier League soccer.
The June 2011 purchase of A. Smith & Co., producer of the U.S. versions of “Kitchen Nightmares” and “Hell’s Kitchen,” and the largest supplier of unscripted shows to the Fox network, represents Jones’ biggest deal to date. He followed it up two months later by acquiring Base Prods. for a more modest $40 million. That shingle’s credits include “Known Universe” and “Fight Science” for National Geographic, and the SportScience interstitials that run in ESPN’s “SportsCenter.”
The same eye for detail for traditional business practices Jones acquired decades ago at Arthur Andersen informs how Tinopolis and its shingles operate. While other would-be British TV moguls were running their nascent businesses as lifestyle ventures, Jones and his colleagues — several recruited from Arthur Andersen — were focused on the bottom line from the outset.
“We were much earlier in identifying the business characteristics of TV production because, frankly, that was what we were comfortable with,” Jones says. “TV production in the U.K. grew up from creative people realizing there were business opportunities. In our case, we realized fairly early on that here was an industrial sector that business could make sense of. There’s a subtle difference there that gets us to where we are today.”
Jones had no illusions about how hard breaking into the U.S. would be. Television Corp., he says, had twice attempted to launch production entities in the U.S. by throwing money around.
“(They) staffed up with very expensive people. Both times they had to leave the States. Each time it cost them over $10 million,” he says.
Jones, who had worked in the U.S. for Anderson, was determined not to make the same mistakes. He proceeded cautiously, avoiding British hubris.
“In business terms, the U.S. reacts very badly to companies that come in to teach the natives how to run their own firms,” he notes.
Rather than opening a U.S. branch of say, Mentorn or Sunset + Vine, Tinopolis took its time identifying companies Jones thought would make a strong cultural, creative and, crucially, business fit.
“We want to find good entrepreneurial types who have built up their own business who have worked hard to make it work — just like the guys over here,” he says.
A. Smith’s relationship with Fox recently led to the network greenlighting the pilot for “Divorce Hotel,” a show in which battling couples can get split more quickly. All concerned, not least Jones, are convinced the skein is a world beater, despite some arguing it sets a new nadir for reality TV.
One of the reasons Tinopolis is looking for further U.S. purchases is the rise of cable-commissioned shows in the market, which means sellers, rather than the broadcaster, can exploit key rights. A key motive for Tinopolis’ December purchase of U.K. companies Passion and Firecracker, the latter best known for “Gypsy Wedding,” was that each one came with a significant U.S. base.
While TV indies remain the flavor of the month on both sides of the Pond, Jones sees less advantage to U.S. companies buying up U.K. super-indies.
“They are buying good companies, but they might be disappointed, he says. “I doubt they are going to get the huge increase in value that appears to be the reasoning behind the acquisitions.”
For Tinopolis, the next moves involve not only expansion in the U.S., but perhaps also in the Asia Pacific and/or Latin America.
“I sometimes threaten the staff by reminding them that my grandfather retired at 83,” he quips.