In the words of Voss Capital, Thunderbird Entertainment Group was a “perfectly positioned company,” ultimately driving the decision of the hedge fund to invest a minority stake in the Vancouver prodco.
And with that infusion of cash, Thunderbird CEO Jennifer Twiner McCarron says the company is already on the move to expand its animated, factual and scripted content portfolio and proprietary IPs, and planning to grow into Europe and Asia through expansion, co-production and M&A.
“We have zero corporate debt, our free cash flow and EBITA revenue has continued to increase, and we’re looking to make strategic moves,” says Twiner McCarron. “We’re not interested in buying for the sake of getting bigger. We’re really looking to go where viewers’ eyes are going, how people are consuming content, and where our buyers need to expand—those are driving our expansion and M&A plans.”
Voss’s acquisition was made public last week, but the fund had been steadily acquiring stock in the prodco over the past year, based on Thunderbird’s reputation and quality, says Twiner McCarron.
“They’ve done a ton of due diligence, talked to a lot of our partners and buyers, and realized what great work the teams are doing at Thunderbird,” says Twiner McCarron of Voss, which manages nearly US$200 million in discretionary assets.
Thunderbird—which employs 1,000 people and has offices in Vancouver, Ottawa and LA with factual (Great Pacific Media) and animated (Atomic Cartoons) branches—was already on a hot streak before COVID-19. But it exploded once the pandemic hit and audiences were locked down and tuning into shows in far greater numbers than ever before.
“In a day and age when there’s so much content, and people have so much to choose from, only the strongest will stand out,” says Twiner McCarron. “And the teams at Thunderbird are winning Emmys and Peabodys. That gets a lot of notice.”
In a newsletter to shareholders in March, Voss predicted it could net more than a 200% return on its investment in Thunderbird over the next two years, flagging that the while animation industry grew at a rate of 43% over the past five years, Thunderbird has seen net income growth of 74% over the same period.
Both Voss and Twiner McCarron reference the stickiness of kids and family programming as a key factor behind the spike. Netflix revealed last year that 60% of subscribers viewing this type of content, most of which is animated, cancel subscriptions at half the rate of average subscribers.
“The analytics show that families watching content [together] are less likely to unsubscribe,” says Twiner McCarron. “And the type of content that they watch is generally factual (documentary) or animation. So the combination [in house] of those two key drivers has been a real boon for us.”
Voss’s investment will allow Thunderbird to continue to scale both factual and animation, as well as drama.
In its Q3 filing, Thunderbird reported it had 21 programs at various stages of production and development, 10 of which were proprietary or partner-managed IPs.
The company set up a consumer products and distribution division headed by Richard Goldsmith in January to manage its business in ancillary categories such as toys and video games. “Having our own division has allowed us to further leverage and monetize that type of content,” says Twiner McCarron.
International expansion to Europe and Southeast Asia are key to the streamers—and to Thunderbird, too. “[Streamers' investment] merit is based on increasing subscribers, and they will eventually tap out North America,” Twiner McCarron says. “So they have to get to Europe and Southeast Asia. We can lift and monetize IP native to those regions and then run it through our new consumer products and distribution division.”
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