Peter Chernin is going all-in on building an independent content studio with global reach backed with up to $800 million in financing from private equity giants Providence Equity Partners and Apollo.
The media investor and former Fox chief has formed The North Road Company after quietly acquiring the U.S. production assets of Red Arrow Studios in a deal with Germany’s ProSiebenSat.1 said to be worth about $200 million.
The Red Arrow units will combine with the existing Chernin Entertainment banner as the backbone of the new venture that will focus on producing movies, scripted and unscripted TV programs and documentaries, among other content. As part of the North Road transaction, Chernin has also acquired the remaining 50% of Words + Pictures, the documentary production company that Chernin launched last year with ESPN alum Connor Schell and Chernin Entertainment’s Jesse Jacobs.
Chernin will serve as chairman and CEO of North Road. Chernin Entertainment veteran Jenno Topping will continue in her role as president of Chernin Entertainment overseeing scripted TV and film activity. Schell will continue to run Words + Pictures and take on responsibility for steering unscripted TV and documentary efforts for North Road.
Jan Frouman, the executive who led Red Arrow Studios for ProSieben, one of Germany’s largest broadcasters, from 2010 to 2019, will serve as president of North Road. AMC Networks alum Kristin Jones signs on as president of international TV. Chernin’s acquisition of Red Arrow was signaled in April when the company hired Frouman in an unspecified role.
The creation of North Road reflects Chernin’s confidence that there is still plenty of growth ahead for the global content business – especially for a well-financed company with the ability to produce a range of content at significant volume. Providence has pledged to provide up to $500 million in equity financing to help the company grow. Apollo, through its managed affiliates, will provide $300 million of debt financing.
“The timing is really good,” Chernin told Variety. “Certainly Apollo and Providence agree that despite a little bit of noise, production spending is increasing and will continue to increase. There’s a huge growth opportunity and we have so much experience producing internationally. There’s a need for a trusted, well-positioned, well-capitalized company that has real experience producing at scale.”
Red Arrow has a strong roster of reality and nonfiction TV producers under its tent after ProSiebenSat.1 joined other U.K. and European media conglomerates in buying up mid-sized U.S. production companies over the past decade. Red Arrow’s producer imprints include Chris Coelen’s Kinetic Content, Ken Druckerman and Banks Tarver’s Left/Right, Stephanie & Rasha Drachkovitch’s 44 Blue Productions, Dirk Hoogstra of Half Yard Productions and Chris Dorsey’s Dorsey Pictures. Those companies will continue to run with autonomy under the North Road umbrella.
Frouman and Jones, meanwhile, will work out of North Road’s London office to focus on international markets. Jones was previously executive VP of international programming at AMC Networks, helping to assemble such series as AMC’s “The Night Manager” and BBC America’s “Killing Eve.”
North Road comes to fruition with more than 45 series in active production among the combined banners. Red Arrow companies are home to such series as Netflix’s “Love is Blind” and “Ultimatum,” Showtime’s “The Circus,” Lifetime’s “Married at First Sight” and TLC’s “Say Yes to the Dress,” among others. Chernin Entertainment, was home to Fox’s long-running comedy “New Girl” and such features as “Hidden Figures” (2016), Ford v. Ferrari (2019) and “The Greatest Showman” (2017).
Negotiations on the Red Arrow purchase began about six months ago after ProSieben.Sat 1 started a formal sale process for the U.S. assets. Chernin made it clear that North Road has an appetite for more acquisitions.
“All these things really started with us sharing the philosophical view that this was a big opportunity,” he said. “We didn’t need capital to run our business. It’s more important to have a war chest to buy other things.”
Chernin has had a long and prosperous relationship with the Providence team, now led by Davis Noell, senior managing director and co-head of North America for the private equity firm. He helped recruit Providence more than 15 years ago when NBCUniversal and what was then 20th Century Fox teamed to launch Hulu. Providence was also an investor in The Chernin Group fund that the former CEO assembled after leaving Fox in 2009.
“The growing demand for premium content represents a tremendous opportunity, and we believe there is no one better suited to capture it than the outstanding team at North Road,” said Noell. “We are excited to build upon the decade-long partnership between Providence and Chernin and embark on this journey to create a global independent leader in premium scripted and non-scripted content.”
Chernin is banking on that high demand and the enlarged company's clout and long relationships in the creative community. Chernin acknowledges that marketplace changes have made it a tough environment for independent producers to cut deals that give them meaningful rights or long-term ownership in their own shows. But Chernin sees an opening for a portfolio approach that could also help move the industry to new content financing models as the streaming marketplace goes through major growing pains in the coming years.
“I think the ideal (production) company will have a mix of things – sometimes you want to sell it outright to a streamer and you'll say 'I’ll take that upfront premium.' There are other things where you say I’d like to finance this and there are other things you’ll say, 'I want to sell this territory by territory or set it up internationally and hold on to the format rights. The smart (buyers) in the future are the ones that give real flexibility and will look for the best model for each show and each movie.”
North Road was advised in the transaction by Centerview Partners and Moelis & Co. Gibson Dunn & Crutcher provided legal advice. Red Arrow was advised by Morgan Stanley. Words + Pictures was advised by Sidley Austin. Providence was repped by the law firm Debevoise and Plimpton.
(Pictured: Peter Chernin)