EXCLUSIVE: Rumors have swirled that Federation Studios is on the block for more than a year now and today we can exclusively reveal that a hefty chunk of the French powerhouse producer-distributor is up for grabs.
Bosses at the Around the World in 80 Days and The Bureau studio told us that they are seeking hundreds of millions of pounds in investment via the sale of a minimum 40% stake of the company, while valuing Federation at around the €500M to €600M ($513M to $616M) mark. Montefiore Investments, which in 2021 invested €50M in Federation for one third of the studio, is exiting, while BNP Paribas and Bpifrance remain minority investors. Founders Pascal Breton and Lionel Uzan, along with Group Co-MD Marco Chimenz, are heading to America to kickstart what they are calling their next growth phase, having appointed Morgan Stanley as advisor.
“The potential for growth is extremely strong, especially in Europe,” said Breton, who launched Federation just over a decade ago after selling his company Marathon. “We have 55 producers [within the company] and feel we can double that in the next two to three years, so we want to replace Montefiore and find a stronger partner for the future.”
Montefiore had a 33% stake but Federation is looking for an investor to take at least 40%. Bosses declined comment as to whether they would be happy selling a majority stake of more than 50%. At its current approximate valuation, a 40% stake in Federation would be worth around €220M. The firm has 250 employees with operations across Paris, Berlin, Cologne, L.A., London, Madrid, Rome and Tel-Aviv.
Although things have stepped up as they head to the U.S., Breton said the company has been having these conversations for years. He rejected the notion that he and Uzan are selling Federation in the traditional sense of the term or that they will step back in any way.
“We are not ‘for sale’,” he said. “A lot of people are talking to us but it has been like that for the past four years. This is not adding €10M there or €20M here – which is something we have done every six months or so because we are growing – it is bigger and more significant, but we are not for sale and we are considering every option.”
Uzan added: “If a sale means we are looking for additional capital then yes we are but in a bigger way. This is interesting for us because it is the first time we are talking about this in a precise and specific way.”
Big TV slate needs capital
Around The World In 80 Days
BBC / Slim Films
What is Federation – a studio that Breton believes is “probably the only company in Europe that can deliver 37 series in a year and 25 movies,” as it did last year – going to do with a big ol’ capital injection?
The answer is multi-pronged yet English language is at the forefront of the owners’ minds. They are coming off the back of the launch of The Agency, Showtime’s adaptation of French hit The Bureau that has already been recommissioned and is EP’d by Breton and George Clooney, amongst others.
“English-speaking shows are not easy to finance and this is the big topic of the moment,” said Breton. “For that we need to raise capital.”
Uzan added that the money will be used for a mix of “creation, investment in companies and investment in specific projects, especially big English-speaking shows.” He flagged Around the World in 80 Days, the David Tennant-starring 2021 adaptation picked up by major European pubcasters.
Intriguingly, Uzan revealed that Federation does not have just one more of these hefty international co-pros in the works but another eight to 10, all of which are in English and plan to start shooting in the next two years. A TV adaptation of Gulliver’s Travels, made with Nautilus producer Moonriver, was unveiled last week.
“From one, four years ago we now have close to 10,” said Uzan. “The blueprint was Around the World. From that we started to build projects but that takes time and we are coming to that moment where these projects have matured and found an anchor broadcaster.”
Watch this space, was Uzan’s signal over these projects, which will represent a huge amount of work for the studio.
This work could be picked up by adding more labels to the group, which Breton said is pivotal for growth. We can reveal that Federation has opened a JV with storied French director-producer Jérôme Salle, whose credits include Anthony Zimmer (which spawned U.S. remake The Tourist starring Angelina Jolie and Johnny Depp), Orlando Bloom-starrer Zulu and last year’s Becoming Karl Lagerfeld series. Baxked with a majority Federation stake, his new company Syzygy will make international films and series and Breton said it is “now in a position to produce three big-budget series of international scope.” Another Italian JV will be unveiled soon, according to Breton. The team forged a production banner with The Bureau creator Eric Rochant in late 2023.
There are also “new frontiers” of revenue to be sought, Breton added, pointing to animation (Federation recently acquired France’s GO-N Productions), licensing, sport and digital exploitation of a growing catalog. He praised the way in which the team behind Golden Globe-sweeper Emilia Pérez partnered with Yves Saint Laurent and posited such deals could be a “new avenue” for Federation.
“We are only 10 [years old] and used to have no catalog but now after 10 years we have a catalog that can be exploited in those areas, that long tail,” added Uzan. “Envisioning how we could monetize or create multiple streams of revenue was theoretical, but it is becoming real.”
Who’s investing?
As Federation’s chats with investors and buyers ratchet up over the coming months, noise will of course grow louder over the identity of these outfits. Last year’s biggest international M&A deal, the £1.15B sale of The Traitors maker All3Media, ended with a takeover by American-UAE private equity firm RedBird IMI. Meanwhile, Federation rivals ITV Studios and Fremantle are both rumored to be on the block, while Banijay remains acquisitive and newer players like North Road are part of this evolving conversation.
Breton is holding his cards close to his chest but said the company has been “speaking to the usual suspects in the last three to four years at least three to four times per year.” “You know the guys, we know the guys, they are the same people in the market,” he added.
He floated whether a “hybrid company that is strategic” or a “big private equity fund” would work as investors in the current climate, stressing that “we don’t want someone who never did anything in movies or series because they need to understand [the business].” The investor needs to be “complementary” and an “interesting fit strategy wise,” Uzan added.
If or when a suitor jumps aboard, they will become part of a company that is “really profitable” and has “fantastic” projections for next year based on shows and movies in production, according to Chimenz, who was speaking to the press for the first time since joining from Gomorrah studio Cattleya a year ago. Federation’s 2023 turnover was reported to be €260M and profits have grown 28% per year over the last three years, the company says, with the studio projecting similar for 2025 and 2026.
Chimenz, who mainly oversees strategy for Federation’s labels outside France, said it is “testament to the success of our first generation” that Montefiore is exiting after less than four years, as this demonstrates Federation “has grown and can monetize” in Europe.
“Federation is a strong European company and we sense this vibrancy in the old continent,” he added. “There are possibilities for companies like ours who have found ways to put together ambitious series even in an apparent moment of scarcity of financing.”
The start ups that Federation bought three or four years ago are now producing and delivering big series on their own, Chimenz added, while he believes the company powerfully integrates its distribution arm with its “galaxy of production entities around Europe.”
Chimenz has been focusing on the States, where The Agency has given Federation a serious dose of momentum. Federation’s JV with storied producer Patrick Wachsberger has meanwhile birthed four movie projects that are seeking studio and streamer funding including Emilia Jones-starring romance Charlie Harper, Sian Heder’s Impossible and high-profile Jeneva Rose adaptation The Perfect Marriage. Storied movie producer Wachsberger will, however, now be simultaneously focusing efforts on a new film production and sales banner opened with Legendary Entertainment, news that broke after Federation’s interview with Deadline.
According to Uzan, IP is key to continuing to crack the American market. He pointed again to Federation’s “long tail” and noted that the streamers’ more flexible rights position has allowed shows and remakes to “live together” concurrently in the landscape, citing the example of Israel’s Your Honor, which has been remade in a number of key territories including on Showtime in the U.S.
The “philosophy”
To that end, “sales companies are back,” according to Chimenz. He spotlights Federation’s launch of international theatrical sales division Ginger & Fed in late 2023 – seller of movies like apocalyptic thriller Survive – as evidence Federation is leaning in to movie sales.
“We have a sales company [in Ginger & Fed] that really completes and combines the work of co-pro execs to help make projects happen,” said Chimenz. “This is very hard to accomplish but it is easier if you have indies that work as part of the group and producers at the top [of Federation] who lead this system. The people in the middle obviously then understand the philosophy of both and work in the same direction.”
That Federation “philosophy” is raised multiple times during our hour-long interview and is reflected in chats we have with those who work for the studios’ labels. Insiders tell us the Federation bosses take a genuinely collaborative approach and are heavily immersed in content strategy yet simultaneously happy to pass over responsibility for big individual projects. One says they are sometimes pleasantly surprised by how transparent Breton chooses to be with information-sharing about the wider company.
“They run it as a collective in a way that I’ve never experienced,” this insider told us.
A “collective” approach will be needed more than ever in these times of market contraction but the Federation bosses believe there is plenty room for optimism as Europe has a strong foundation for international co-pros and a solid regulatory system.
“In the U.S. there has clearly been contraction over the last two years but Europe has not really diminished in terms of investment,” explained Uzan. “I think it is not contracting but it is more difficult, which in a way we believe is good news in the sense that only the most skilful and focused will thrive and survive. The package has to be stronger, IP has to be stronger, creativity has to be at the top and every single broadcaster and streamer requires profitability.”
He added: “With all the skills we have and great people, we believe we can solve that Rubik’s Cube.”
In a year’s time, Federation could be solving that Rubik’s Cube with a fair bit more money at its disposal.