Red Arrow Entertainment group MD Jan Frouman tells Anita Awbi his ambitious strategies for global expansion, revealing the successes and pitfalls he has encountered along the way. I t seems that hardly a month goes by without Germany’s Red Arrow Entertainment announcing its latest venture into uncharted territory. It is clearly an ambitious young company intent on cultivating a global production reach, and group MD Jan Frouman is revelling in a growth strategy that might make more austere players wince in the current economic climate.
In the nine months since its launch, Red Arrow has snapped up majority stakes in Sultan Sushi Belgium and LA-based production company Kinetic Content, and launched Sultan Sushi Netherlands from scratch. It is building a portfolio of international prodcos to sit alongside its German stalwarts Producers At Work, Magic Flight Film and Redseven Entertainment, and has talent agency Redseven Artists and distribution arm SevenOne International under its wing.
Red Arrow also has an overall deal with Deal or No Deal creator Dick de Rijk, and Redseven has a coproduction deal with LA-based Phil Gurin, creator of Singing Bee. Now it is casting an eager eye over the UK and Scandinavia as it moves to position itself as a key independent producer and distributor of formats.
German broadcaster Pro-SiebenSat.1 set up Red Arrow in January as a vehicle for international expansion. Frouman says that he is focusing on driving the firm into “strategic markets with significant world stature,” using any means to hand. Red Arrow will bring its parent company’s production businesses and distribution arm “under one roof in order to build out,” says Frouman. The aim is to offer scale and infrastructure economies to its smaller prodcos through legal and financial support, while the company figures out how to foster creative partnerships between them to create multi-territory formats.
Frouman says he is “seriously looking around the UK” for an opening but is still uncertain whether this will take the form of a start-up venture or acquisition, insisting that the move will depend on the industry players Red Arrow can attach itself to.
While working out a UK plan, Frouman is restless for more growth, and reveals that an acquisition or new venture is on the cards in Scandinavia. Sweden looks like the most obvious entry point, having the largest TV market in the region, though Frouman will not rule out the smaller markets of Norway and Denmark. The number of TV households in Scandinavia is relatively small compared with Europe’s larger markets, such as the UK, which has around 26 million. In Sweden, Denmark, Norway and Finland combined there are only about 10 million, but Frouman believes the volume of creative output coming from the region is surprisingly high. “We have channels [in Scandinavia] and we know it’s an extremely interesting creative market,” he says. “I would assume that within the next six months we are going to have a plan in place, either an acquisition or a new company. It’s a pretty crowded market so maybe starting something new might be more viable.”
Indeed, when Red Arrow gets going in Scandinavia it will be operating alongside Zodiak, Metronome, Strix, Nordisk and Northern Alliance, a joint venture from regional indies including Moskito in Finland, Monster in Norway and Baluba in Sweden, and with a regional turnover of €54m (US$66m).
If Red Arrow’s expansion plans appear a trifle over-ambitious for a holding company still in its infancy, it has already shown itself to be a nimble mover, both in the creation of start-ups and as a controlling partner. In March, it acquired a 51% stake in Belgium’s Sultan Sushi, producer of shows including Huizenjacht (House Hunt) and Fata Morgana, only to launch Sultan Sushi Netherlands just three months later to make Huizenjacht for ProSiebenSat.1’s Dutch channel SBS6.
Frouman explains the Dutch move was “totally opportunistic” and happened much quicker than he had originally planned due to demand for the show. “There are two aspects to our expansion strategy: we use our channel footprint, because being a broadcaster is an advantage, and also start from scratch in markets we think are vital,” explains Frouman. “Building out companies within our footprint makes a lot of sense. On the back of an order for a daily show [in the Netherlands] we did House Hunt. We had two flags in the ground in two key territories [Belgium and the Netherlands]. We are now looking at how to go about this in Scandinavia and elsewhere.“
Last month, in its determination to build a presence in the US, Red Arrow forked out a reported US$10m for its 51% share in Kinetic, the indie launched by former RDF USA boss Chris Coelen earlier this year. Kinetic is yet to bring any content to market, but observers have suggested that Red Arrow’s valuation of the start-up may have been based on the worth of its team. Apart from Coelen, this includes CEO Kathleen Burns Rohr, formally of LA indie Pilgrim; former BBC producer Matilda Zoltowski; and senior VP Billy Taylor, previously with Bravo.
Frouman sees Kinetic as a way into the US market for his European formats, but also as a way of cracking the domestic market stateside and exporting US formats to Europe. “We are looking at production as a whole in all our markets – for third-party channels and our own,” he adds.
Any further US expansion plans are on hold for now, though. Frouman says the Kinetic deal represents “step one” in its US strategy and Red Arrow will now take time to digest and build up the prodco before looking elsewhere. “We would fill in other parts of the company first, in other territories such as the UK and other parts of Europe,” he says. “The US is not what we are focused on at the moment.”
Furthermore, Red Arrow’s distribution company SevenOne International signed an agreement with Granada Australia in August, granting it rights to all of the German company’s formats in Australia and New Zealand.
Although Red Arrow is already building a reputation for being tenacious and bold in its approach, Frouman insists that his acquisition policy is supported by limited resources. “As a group, we are focusing on being financially disciplined,” he says. “If the acquisition of a more established company came along we wouldn’t rule it out, but the more expensive ones don’t necessarily make sense for us. So this prevents us going ahead on the bigger acquisitions – they’re beyond what we are focused on.”
The markets in which parent company ProSiebenSat.1 does not operate channels are riper for prodco acquisitions because “you need get the ball rolling,” Frouman explains. But he adds that such acquisitions are more expensive and competitive because “you are buying into an established name and existing team with market credibility. There is a danger you are paying for past successes rather than what’s coming in the future.”
These are significant words from a company still very much in its start-up phase and yet to enjoy the fruits of its US expansion, or even name any production projects – although Frouman confirms there are plenty of formats in the pipeline.
Redseven’s weekly gameshow My Man Can, made for Germany‘s Sat.1, was sold to Chinese satcaster Jiang Su TV in July through SevenOne, and Frouman is confident it will do well around the world, having already racked up sales in a further 18 countries, including France and Sweden. “We also have stuff coming out of Kinetic,” he says. “The US is such a prominent market when it comes to new shows that I’m sure a lot of growth will come from there. Scandinavia is a terrific market creatively and I expect a lot of future growth there too.”
But for Red Arrow, the secret to achieving creative synergy across all its production ventures, and crucially, creating internationally viable formats, remains elusive. Frouman freely admits the company is working hard to solve this, weighing up the pros and cons of encouraging a portfolio of locally minded prodcos or cultivating a network focused on shared goals.
For Frouman, compromise and flexibility are vital. In his view, it will take a lot to bring together all the different development teams and build a “group theory” to produce content that travels well. And given that Red Arrow’s geographical reach is still fairly limited, he believes the prodcos do need a strong local capability and connection. “But that said, we do want our companies to focus on formats that can travel too – we’re still figuring that bit out,” he says.