Peter Chernin Forms Global Content Studio North Road, Pays $200M For Red Arrow Studios’ U.S. Assets & Plots More Major Acquisitions With Multimillion-Dollar Funds
Peter Chernin has launched The North Road Company, a global content studio that will bring together Chernin Entertainment, the U.S. assets of Red Arrow Studios, which includes Love Is Blind producer Kinetic Content, and Connor Schell’s non-scripted business Words + Pictures.
The move comes as the former Fox chief paid $200M for Red Arrow’s U.S. companies including Kinetic Content, The Circus producer Left/Right, 44 Blue Productions, the company behind Netflix’s Life After Death with Tyler Henry, Say Yes To The Dress producer Half Yard and Building Alaska producer Dorsey Pictures.
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The new company will have access to hundreds of millions of dollars in financing for further acquisitions from Providence Equity Partners and Apollo and will open a London office with former Red Arrow Studios Chairman and CEO Jan Frouman, who Deadline revealed joined the company earlier this year, and former AMC Networks exec Kristin Jones.
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Chernin, who has named the new holding company after the street that he lives on in Martha’s Vineyard, told Deadline that he believes there is a “big opportunity to build a meaningful company”. “Sadly, I’m not purely an artist. I’m a commercial animal and my decision is based on how I think I can maximize results.” He will serve as Chairman and CEO of North Road.
In addition to acquiring the Red Arrow assets, Chernin has also acquired the 50% in Words + Pictures that it did not previously own. The company was launched by former ESPN content chief Connor Schell, who exec produced series such as O.J: Made In America and The Last Dance, last year.
Schell, who will continue to run Words + Pictures, will also now oversee North Road’s new non-scripted businesses.
He will be part of the North Road leadership team, which includes longtime Chernin lieutenant Jenno Topping, who will oversee the scripted TV and film business as President of Chernin Entertainment.
The bosses of the former Red Arrow companies including Chris Coelen, who runs Kinetic Content and is understood to have signed a new deal, Ken Druckerman and Banks Tarver, who run Left/Right, Stephanie & Rasha Drachkovitch, who run 44 Blue, Dirk Hoogstra, who leads Half Yard and Dorsey Pictures founder Chris Dorsey will also continue to lead their production businesses.
Jesse Jacobs, one of the founders of Chernin Entertainment, serves as a North Road board member.
Frouman becomes President, North Road, and will be involved in the company’s international expansion plans along with Jones, who is named President, International TV.
Red Arrow, the production arm of German media giant ProSiebenSat.1, was only selling its U.S. assets rather than its European production group, which includes Endor Productions, which is behind Amazon’s Neil Gaiman series Anansi Boys, and A League Of Their Own producer CPL.
But Chernin and his team will be looking for more purchases worldwide. “A big chunk of this is a belief on our part that there are big opportunities internationally. It’s why we’re on the hunt for additional international acquisitions,” he said.
North Road is searching for a combination of scripted and unscripted companies with a “slight bias” on scripted outside of the States and has started early conversations with a number of potential purchases. “We think international production will grow,” he added. “That creates opportunities. We know how to manage production at scale, which a lot of people who are making noises about what they’re doing [have not].”
The new company’s expansion – North Road is believed to be valued north of a billion dollars with around 70 shows in production – will be aided by two separate funding pots.
Longtime Chernin partner Providence Equity Partners is investing up to $500M of equity to support North Road’s expansion and Apollo Advisors, through its managed affiliates, has provided $300M of debt financing.
“The reason we raised money – we don’t need any money, we’ve got more than enough money to run the business, and, frankly, even to grow the business – is we believe there’s a big opportunity to grow it much more aggressively, which is why we partnered with Providence and Apollo to raise additional capital. That capital is all going into growing the business. It’s not because I’m altruistic, it’s because I knew that there was such a big opportunity to create economic value right now. We’ve got a very profitable company and we think we can make it much more profitable as we continue to grow it.”
Chernin, who was President and COO of Rupert Murdoch’s News Corp and Chairman and CEO of the Fox Group between 1996 and 2009, is not concerned that the prevalence of the cost-plus business model in streaming or vertical integration will make it harder for producers to make money.
“I assume everybody will admit that nobody is capable of supplying 100% of their own programming and that the thing that’s most important to them is that they have the highest quality and the most commercial programming – much more important than where it comes from. We think we will offer that to them,” he said. “On top of that… is that the three biggest historical suppliers of programming, which were Warners, Disney and Fox, are no longer supplying to third parties. They certainly like to buy a lot of stuff from themselves. But clearly, they can’t buy everything from themselves. Then when they look for other stuff to buy, and they look for other high quality, there’s a real dearth in the supplier marketplace. We think we can share some of that.”
North Road was advised in the deal by Centerview Partners and Moelis & Company and legal representation was provided by Gibson Dunn & Crutcher. Red Arrow was advised by Morgan Stanley. Words + Pictures was advised by Sidley Austin.
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