Ian Ousey learned much of what he knows about business from Björn Borg. In the late 1980s, shortly after qualifying as a chartered accountant in the U.K., Ousey moved to Monaco to run the finances of the Swedish tennis star’s fledgling fashion and design group. Leveraging its owner’s personal brand, the company produced clothing, fragrances, accessories and much else. But when Borg ran into personal troubles, including a rumored suicide attempt, the company lost its luster and went bankrupt in 1989.
Today, Ousey’s work is similar to what he did for Borg, but on a much grander — and more profitable — scale. In 2002, he was appointed finance director of FremantleMedia, a €1 billion unit of Luxembourg-based media group RTL. The London-based firm is a leader in television “formats” the biggest thing in broadcasting today. It produces, distributes, and licenses reality shows such as the music talent show “Idols” now running in 35 countries. It also buys the rights to regional hits and adapts them for other audiences, as in “Verliebt in Berlin” a German version of a Colombian telenovela. In the first half of 2006, FremantleMedia grew its profits three times as fast as RTL as a whole, posting Ebita of €84m, a 75 percent annual rise.
Broadcasters turn to FremantleMedia — and its main competitor, “Big Brother” creator Endemol of the Netherlands — for proven show ideas that are relatively cheap to produce. In addition to license fees, format owners get a cut of merchandise, live events and other spin-offs.
Few companies have a business model and assets similar to those of FremantleMedia. Is your role different from a traditional finance chief?
There are generic responsibilities common to all CFOs, in any sector, from Australia to the Arctic. When it comes to governance, risk management, accounting, reporting and controlling, I’m no different.
The group has a unique structure. Unlike the broadcasters in the rest of RTL, we’re a content producer. We sell shows to sister companies within RTL as well as some of RTL’s competitors. That makes my life interesting.
Also, as a business unit, my finance team’s involvement is focused on the top end of the P&L — the financing and tax duties are managed in liaison with our parent. This allows us to get more involved in operations, supporting producers and other sales executives to roll out their business plans while reminding them that there are costs to control. We’re not a company that’s full of clerical staff.
Is it difficult to find the right people to work in such an operations-minded finance function?
By its nature, television attracts a lot of people, so we always have plenty of applications. This allows us to think deeply about a candidate’s cultural fit.
Creative people have a natural suspicion of accountants. I tell new finance staff to expect a cold shoulder at first, because this is how the creatives test them. If the fit is right, the creative side will eventually adopt them and barely leave them alone. If you enjoy working in a people-heavy business, this is a wonderful place to be.
In that context, how does finance add value to a production?
We generally strike fixed-price deals with broadcasters, so the focus is on staying within budget while making a show.
I’m also looking for finance to identify new opportunities. Every year, the proportion of our revenue that comes from off-screen activities grows. When we come up with new ideas, finance works to focus the development to allow for more avenues of off-screen exploitation.
When we sell a program to a broadcaster, it is crucial for us to hang on to the ancillary rights. When we believe strongly in the value of these rights, we may even sell the program at a discount in order to keep them.
What role does finance play in identifying the next big program idea?
In this business, you can’t plan for a hit show, and you can’t budget what you can’t plan. There was neither a plan nor a budget that said that “Pop Idol” in the U.K. would spawn the world’s most successful reality casting franchise.
Still, that is the enduring goal of all of our development activities. We devote budgets for developing new ideas and tailoring existing ideas for new markets both to a central group and to individual production companies. We have the production infrastructure to shoot five-minute “teaser tapes” for new show ideas at virtually no extra cost.
Nobody is ever criticized for developing shows that go nowhere. We learn from failures. The key is to take lots and lots of tries. With ten tries, we have ten chances at producing the next “Pop Idol.” With 100, there are 100 chances. In this respect, finance sometimes has to defend people spending time and money on new projects.
What’s to stop others from copying your ideas and launching their own shows?
We don’t rely on litigation, but on our size, expertise and speed-to-market. Broadcasters need assurance that a show is right for their audience, and that the production team can deliver what they promise in terms of quality.
Our selling point is that we’re a one-stop shop for broadcasters, with outlets in more than 20 countries and a stable of renowned producers. We have the skills in adapting shows to work in different places, drawing upon “format bibles” to ensure that every version of a production has the same look and feel.
So what are some of the new ideas that you have in the works?
We’re starting to move away from our traditional broadcast business into new media. This way, we can sidestep the broadcasters and form our own relationships with advertisers and consumers. In addition to making programs to order, we will produce content on a much more speculative basis. Doing business this way is riskier, but we’re approaching it in a careful, experimental way. We’re learning as we go.