F&P client 3DD Entertainment have had the spotlight turned on themselves in a special news feature in Credit Management Magazine. The title, published by the Chartered Institute of Credit Management (CICM), is delivered to 8,000 of its members. The article examines the way 3DD used peer-to-peer funding to make more programmes, more quickly.
BARCLAYS announced last month that it has launched a £100 million fund to provide UK TV production companies improved access to finance and enhance their ability to compete internationally.
The fund, the bank claims, is the first of its kind from a major UK bank and has been established with new, innovative financing products that are designed to meet the evolving needs of the TV sector. The rise in popularity of streaming video on demand (SVoD) services led the Barclays Media team to consider how it could improve the types of funding provided to better support its TV clients. Conventional TV production loans are repaid as the content is delivered, with the broadcaster paying the production company and funder simultaneously. With SVoD, revenues are often spread over a much longer term, which can present funding challenges.
As part of the new £100 million fund, Barclays has developed Barclays SVoD Financing to more closely match the funding requirements of companies working with SVoD distributors. The product allows these companies to borrow money over a longer period, enabling them to use the funds to develop more ideas and programmes, which in turn supports more sustained employment and helps them to grow more quickly. It also means that broadcasters and SVoD distributors can manage their cashflow more efficiently.
Lorraine Ruckstuhl, Head of Media at Barclays Corporate Banking, is particularly excited by the launch: “The creative industries in the UK are world famous due to the range and quality of content they produce. The TV industry specifically is in a really exciting place and is evolving at pace, with more than 250,000 people in the UK employed in the sector. “We’ve been supporting TV production with a dedicated media team for over 30 years, and know that to meet the needs of our clients we have to adapt with them and with the viewing habits of the public. That’s why we created this fund and developed Barclays SVoD Financing, to help UK SMEs continue to compete both in the UK and internationally, support increased employment, and create even more great programmes.”
One of the first companies to benefit from the new fund is Roughcut Television, the UK’s leading independent comedy production company responsible for bringing shows such as Trollied, Cuckoo and People Just do Nothing to our screens. The new funding through Barclays SVoD Financing involved the bank purchasing Roughcut’s Netflix receivable, giving the company the upfront cash benefit of the multi-year contract for the streaming of their BAFTA-nominated comedy Cuckoo. Roughcut’s Commercial Director, Tim Sealey, says Netflix is notorious for paying over a long period: “Our arrangement with Barclays enabled us to get access to the cash much earlier which meant that we could put it to work by investing in further development. Another side benefit is that it improves our relationship with the writers and artists as they get their royalties quicker too.” Barclays, however, is by no means the first to spy an opportunity in Broadcast. Some have been supporting the sector for several years already.
When successful documentary maker 3DD Productions needed funds to make more programmes more quickly, it decided to look beyond the ‘traditional’ high street lenders.
It opted instead for the ‘alternative’ market, and Peer-to-peer (P2P) funding specialists F&P. Now, three years on, 3DD has halved film editing time by bringing the process in-house, increased gross profit margins by ten percent (from 38 percent to 48 percent), and almost doubled its annual programme output to more than 70 hours. And its success continues.
The initial challenge was to identify an asset against which funds could be secured. F&P recognised there was significant value in 3DD’s back catalogue, which it owned outright. This proved ample security for lenders, and the first round of funding was over-subscribed. Since then, 3DD has secured a further 11 rounds of funding, helping it to introduce greater capacity and often running as many as three series’ production in parallel. It is one of many success stories within the F&P portfolio of more than 250 businesses who have secured £100 million in funding to help them prosper and grow.
Camden-based 3DD Productions produces historical and biographical non-fiction programmes, including Murder Maps which is currently airing on Yesterday and Netflix. For many years, it relied on a rolling credit facility to finance its programmes, but with the credit squeeze post-2008, Dominic Saville, Group CEO, was obliged to look elsewhere:
“Whether you’re a large Hollywood studio or a smaller niche production company like ourselves, acquiring funding can be difficult,” he explains. “Our customers (ie: the channels that buy our programmes) often have extended payment terms, and more than three quarters are overseas. So although these are billion dollar companies, our contracts require extensive due diligence and our bank was not comfortable with the risk.”
Dominic turned to F&P for support: “Not only has F&P helped in replacing our former banking facility, it has also become a strategic partner for growth. By independently assessing the value of our archive, F&P has secured several rounds of funding through their preferred P2P platforms, and continue to provide support and advice along the way.”
Despite the general perception that P2P is more expensive than other ‘traditional’ routes including private equity, Dominic says that he maintains control of the business and its future: “F&P has a superb understanding of our business and our customers,” he concludes. “It is a relatively straight forward process, and we have built up a good relationship based on trust. We’ve established a well oiled creative machine made possible by F&P’s sponsorship.”