01 / 2018

Domestic TV production companies more profitable than foreign ones

The share of foreign subsidiaries is high. Finnish companies had better profits.

A woman’s mysterious laugh, blue spotlights, a puff of smoke – many Finns still remember seeing the Broadcasters logo at the end of the popular panel show Uutisvuoto (Have I Got News For You) on Saturday nights. It was like a symbol of the new, bolder approach that the independent production companies of the 1990s brought to Finnish television productions.

Today, Uutisvuoto ends with the grey Banijay logo, as anonymous and dreary as the international group’s office building in one of the smartest Paris districts. In addition to TV productions, Banijay’s largest owner has also invested in online gambling and luxury hotel businesses.

Indie production companies that were separate from television broadcasters brought refreshing new ideas to Finnish television in the 90s. They were small, agile and bold. These companies were founded by passionate young people, such as Liisa Akimof (Production House), Roope Lehtinen (Moskito), and Saku Tuominen and Juha Tynkkynen  (Broadcasters).

In the intervening twenty years, the situation has changed. Many of the indie companies founded by these young idealists have been sold to international media giants based in Stockholm, Paris and London.

The media industry is international, and Finland is no exception. According to Statistics Finland, over 40 per cent of the revenue in the information and communications industry is made by international companies’ Finnish subsidiaries. In television productions, the portion of foreign subsidiaries is even greater: they produce 60 per cent of the revenue made by companies belonging to SATU ry, the association of producers in the industry.

“It has been a dramatic change. International corporations bought the Finnish companies and came into pitch meetings with huge format catalogues. Small Finnish companies are still hanging on in there,” says Elise Pietarila, CEO of Gimmeyawallet, the company known for Madventures and Docventures.

About forty of SATU ry members are involved in television productions. Ten of those are foreign subsidiary companies. The majority of them are medium-sized to large companies with a revenue of over a million or 10 million.

Foreign production companies control the market

By Timo-Erkki Heino. Source: SATU ry and the companies’ financial statements

Television productions are all about people. The key assets are the creative talents who develop and make the programmes, and the relationships with the people who buy the programmes, the commissioners working for TV broadcasters. And international companies are willing to pay a lot of money, even millions, for these people and networks.

As generous offers started coming in, independent pioneers began to sell their companies to foreign buyers. Saku Tuominen and Juha Tynkkynen actually sold Broadcasters to Sweden twice: in 1995 to Modern Times Group MTG and in 2005 to the Zodiak group.

“They became millionaires,” reported MTV News. And they were not the only owners made millionaires by business sales.

In the early 2000s, the biggest company in the business was Varesvuo Partners, which included Moskito Television, among others. They were at the core when private equity firm CapMan combined several Nordic production companies to form Nice Entertainment Group. In 2013, CapMan sold Nice to the Swedish Modern Times Group MTG for 84 million euros. The sale also included Roope Lehtinen’s Moskito and Liisa Akimof’s Production House.

Foreign companies also found their way to the Finnish market through MTV. In 1999, MTV sold its entertainment production to Pearson, the British company now known as Fremantle. Then in 2000, MTV outsourced its drama production to a company majority-owned by the Swedish firm Jarowskij, which was later merged into Zodiak.

On an international level, there has been a trend towards even greater centralisation and “super indie” companies that dominate the industry. One example of this is when Zodiak was sold to the Italian De Agostini group in 2008. In 2016, Zodiak and the French-based Banijay were merged. More mergers and acquisitions followed in 2017: Aito Media changed hands twice, and Endemol Shine was bought in December.

“In all international production companies the reality is that tomorrow you could be owned by just about anyone. The country manager is informed of the deal a day before the information is made public,” according to Teea Hyytiä, CEO of Zodiak Finland Oy.

The industry’s twenty biggest companies, foreign and Finnish, all have similar Finnish management teams and also similar Finnish staff. But there is one rather striking difference. The average profitability of the Finnish companies has been clearly better than that of the international companies on a regular basis. In 2016, it was over twice as much: Finnish companies had a profit margin of 8.4 while the international companies’ margin was 3.3.

Nobody in the industry seems to think that Finnish companies would clearly and consistently have more business know-how than the international companies.

What could cause this difference in profitability?

“Intra-group transfers that foreign subsidiaries can easily make to their parent companies” is how Communications Manager Saija Viitala sums up the view of the biggest Finnish production company Yellow Film & TV.

Transfer pricing concerns intra-group transactions of goods and services between the parent company and its subsidiaries, such as management fees and compensation paid for format rights. Tax authorities require that transfer prices are market-based and that they should not be used to shift profits to countries with lower tax rates.

“When a company has a big, international owner, it is completely wrong and shocking to claim that Finnish money is then just shovelled into the mouth of an international monster,” says Antti Väisänen, CEO of Warner Bros. Finland.

Väisänen has a long career in Finnish and international companies, and based on his own experiences he is strongly against the idea that companies would transfer profits.

“I have never had these types of discussions in meetings with international companies.”

Compensation paid for format rights tends to be about 5–8 per cent of the entire production budget, according to Väisänen. When formats are sold within the group, this compensation is usually even smaller.

Compensation paid for format rights tends to be about 5–8 per cent of the entire production budget, according to Väisänen. When formats are sold within the group, this compensation is usually even smaller.

Väisänen thinks the difference in profitability between the Finnish and the international companies could derive from their different business strategies.

“I’d imagine that the strategy in Finnish companies is less rigid and they offer a wider range of services. International companies have a more clearly defined strategy. Our strategy here is to produce material that can be made international, and to bring in global formats that we could use here,” Väisänen says.

Today, television formats are an essential part of Finnish television. As docent  Heidi Keinonen points out in her television formats research, due to be published in the spring, the growing number of formats is not only a result of following international TV trends but also due to Finnish companies being acquired by international buyers. All international production companies have their own format catalogues, and the programmes they sell mainly come from them.

When a network buys a programme based on a format, it also buys information about its ratings in other countries. The decision to buy a programme idea is less risky for networks when they have research on the programme’s success in other television markets.

Here is how Henrik Lindberg from Parad Media describes the situation:

“It’s been the same for the last ten years: if you don’t have a plethora of tried and tested formats, it’s very difficult to sell programme ideas to commercial companies.”

The first part of this article was published on journalisti.fi on 8 January 2018. 

Biggest TV production companies in 2016

By Timo-Erkki Heino
Sources of key figures: SATU ry and the companies’ 2016 financial statements
Business revenue consists of revenue and other operating income, such as grants from the Finnish Film Foundation.

* Finnish Company

1. Yellow Film & TV *

Business revenue: €13,574,000; profit: €989,000; profit margin: 7.3

Founded in 1994, this company, previously called Filmiteollisuus Fine, was part of the old industry powerhouse Varesvuo Partners. When private equity firm CapMan bought Varesvuo in 2008, Filmiteollisuus moved on. And so did Riina Hyytiä, who left Filmiteollisuus to found Dionysos Films with Johanna Vuoksenmaa.

Over the last few years, Yellow has made its organisation more manageable by merging and selling its subsidiary companies. One of the biggest deals was selling Helsinki-filmi to its management team Aleksi Bardy and Annika Sucksdorff in 2012.

In 2015, Yellow Film & TV’s entire share capital was sold within the group to Yellow Film Management Oy. As a result, CEO Olli Haikka and CFO Jorma Reinilä gained 1.5 million euros in capital income.

The third biggest owner after Haikka (23.25%) and Reinilä (22.75%), who have been with the company since it was founded, is Niklas Herlin’s investment company Mariatorp (20%). Members of the staff are also small owners in the company.

There has been a lot of talk in the industry about Yle buying a big portion of its drama and entertainment programmes from Yellow. It’s been estimated that in some years as much as half of Yellow’s revenue came from Yle’s commissions. Yellow denies that Yle has purchased an unusually large share of their productions and says that between 2013 and 2016, Yle was never its biggest client.

Image magazine brought this issue to the public in March 2017, also stating that six months after retiring as Yle’s Finnish fiction commissioning editor, Olli Tola became Yellow’s Chief Creative Officer in 2016. Tola denied that he had favoured any company while working at Yle and that his connections to Yle could be considered anything akin to an old boy network.

2. FremantleMedia Finland Oy

Business revenue: €12,366,000; profit: €1,200,000; profit margin: 9.7

Became a foreign subsidiary company in 1999 after MTV sold its outsourced entertainment company MTV-Viihde Oy to Pearson Television. This centralisation process continued on an international level the following year, when Pearson Television became part of RTL Group. Its content production division was named Fremantle.

RTL Group is a Luxembourg-based European media giant. The group also includes RTL, Europe’s largest commercial television broadcaster. The biggest owner is the global media conglomerate Bertelsmann, which in turn is largely owned by the Mohn family, one of the richest families in Germany.

Fremantle, and its predecessor Pearson Television, noticed early on how much commercial potential could lie in television formats. The company’s programmes and international formats include Salatut elämät (Neighbours), Maajussille morsian (Farmer Wants A Wife), X  Factor and Idols.

3. Aito Media

Business revenue: €10,699,000; profit: €690,000; profit margin: 6.4

Ilkka Hynninen and Eero Hietala, who founded Aito Media Oy in 2004, sold the majority of their company – 50.1% – to Content Media Corporation, based in the UK and the US, in 2013. Helsingin Sanomat reported that the deal provided them both with over half a million euros of capital income.

Content Media was bought by Canadian investment company Kew Media in spring 2017, who then quickly sold Aito Media to the French company Lagardère Studios that autumn. The studios belong to the Lagardère SCA group, whose biggest owners are Arnaud Lagardère and Qatar’s state-owned investment company. Besides television production, Lagardère’s businesses include book and magazine publishing companies and duty-free shops.

Aito Media group’s company Aito Tehdas Oy (co-owned by Eppu Normaali Oy) produces Yle’s Uusi päivä drama series at Tampere’s Tohloppi studios, among others. As of 2015, the group also includes Aito & Haapasalo Entertainment Oy, with Ville Haapasalo as a minority shareholder.

4. Moskito Television Oy

Business revenue: €10,294,000; profit: €450,000; profit margin: 4.4

The company started out as a revolutionary guerrilla TV company, at least in founder Roope Lehtinen’s mind: he initially suggested the name Guerilla Television in 1999. He also founded an affiliate company by the name of Revolution Films. The Finnish Trade Register ended up rejecting the guerrilla name, and so the company became Moskito.

Over the years, Moskito has been sold numerous times: Varesvuo Partners bought it in 2002, then in 2008 it was sold to private equity firm CapMan, who combined it with other Nordic companies to form Nice Entertainment Group, and in 2013 the company became a part of the Swedish Modern Times Group MTG.

Roope Lehtinen was involved in all these deals: “… He made good and bad programmes, and ended up doing very well for himself. In Finland, the only way you can become a millionaire is by selling your company,” MTV’s former Vice President of Programming Jorma Sairanen describes Lehtinen’s entrepreneurial career in his memoirs.

Modern Times Group is created by the successful – and controversial – Swedish businessman Jan Stenbeck. Now the biggest owners are his heirs Cristina, Hugo and Sophie Stenbeck through an investment company based in Luxembourg. MTG also includes pay TV provider Viasat, which operates in the Nordics and Baltics.

MTG’s company structure

Source: Timo-Erkki Heino

5. Banijay Finland Oy

Business revenue: €8,955,000; loss: €995,000; profit margin: -11.1

This television production company was originally called Solar Television and it was owned by the Danish company Egmont and Markus Selin’s Solar Films. The French firm Banijay Entertainment bought Egmont’s Nordic television productions in 2009, including Solar Television.

On an international level, Banijay Group and Zodiak Media merged in 2016. The biggest owners are the French Stéphane Courbit’s LOV Group and De Agostini Group, owned by the Italian Drago and Boroli families. LOV Group’s other lines of business include online gambling and luxury hotels.

Banijay’s Nordic subsidiary companies in Finland, Norway and Sweden reported losses in 2016.

In Finland, Banijay and Zodiak will continue as separate entities. As Banijay produces entertainment and Zodiak drama, Banijay took over Zodiak’s entertainment productions, such as Vain elämää (The Best Singers), Uutisvuoto and Tanssii tähtien kanssa (Strictly Come Dancing).

6. Oy Rabbit Films Ltd*

Business revenue: €7,291,000; profit: €259,000; profit margin: 3.6

Still considered to be “the Dudesons company”, even though only a couple of their roughly 20 productions are Dudesons projects, bringing in under 10 per cent of their revenue. Prime time entertainment shows like Bumtsibum and Haluatko miljonääriksi? (Who Wants to Be a Millionaire?) are a far cry from Dudesons anarchy.

Their CEO is former Nelonen Head of Programming Olli Suominen, along with Creative Director Tuomas Summanen and Head of Scripted Entertainment Jani Volanen. Dudesons Jarno Laasala and Jukka Hildén are still the biggest owners.

7. Warner Bros. International Television Production Finland Oy

Business revenue: €6,372,000; profit: €329,000; profit margin: 5.2

Started from Denmark’s Egmont’s television production company Nordisk Film TV, which merged with Matila Röhr Productions in 2008. In 2013, MRP’s television productions were bought by the Dutch-based Eyeworks, whose international catalogue of companies was still missing a Finnish representative.

The following year, Eyeworks was ready to be sold to Time Warner for 273 million US dollars. Now an offer has been made to purchase Time Warner for 85 billion dollars. The United States Department of Justice is against this deal, as it would give too much power to the buyer, telecommunications giant AT&T.

Antti Väisänen is still involved as a minority shareholder and Managing Director of Warner Finland.

8. Endemol Shine Finland Oy

Business revenue: €5,300,000; loss: €47,000; profit margin: -0.9

Founded by Joop van den Ende and John de Mol, Endemol became famous after introducing us to Big Brother, and has perhaps had more eventful owner changes than any other production company. Despite or possibly as a direct result of that, the company found itself in billions of debt and in the hands of private equity investor Leon Black’s Apollo.

In autumn 2014, Endemol Group and Shine Group, owned by Rupert Murdoch’s 21st Century Fox, were merged, but the owners still kept changing: in December 2017, Walt Disney Company bought Fox’s shares. Meanwhile, the equity investor eagerly awaits a lucrative deal…

The Finnish company started out as Metronome Film & Television Oy, which belonged to the Norwegian Schibstedt media group. in 2009, Metronome’s parent company was sold to Shine Group, founded by Elisabeth Murdoch (Rupert’s daughter).

9. Zodiak Finland Oy

Business revenue: €4,715,000; profit: €792,000; profit margin: 16.8

Started out as MTV’s drama production, outsourced to the Swedish Jarowkij in 2000 and Broadcasters, the most legendary indie company in Finland. In 2005, they were both sold to Zodiak Television, a Swedish company, which in turn was bought by the Italian De Agostini Group in 2008. Now part of Banijay Group.

When ranked by profit margin, it is the most profitable foreign subsidiary.

10. Nouhau Productions Oy*

Business revenue: €3,554,000; profit: €624,000; profit margin: 17.6

Production company founded in 1998 by Tapio and Virvatuulia Nurminen under the original name Storytime Oy. Its subsidiary company, the temporary work agency Nouhau Professionals Oy, is in charge of MTV’s outsourced news production.

11. Moskito Sport Oy

Business revenue: €3,060,000; loss: €1,000; profit margin: -0

Merged with Moskito Television in autumn 2017.

12. Intervisio Oy*

Business revenue: €2,549,000; profit: €546,000; profit margin: 21.4

Antti Seppänen is the CEO and majority owner of this company, known for its series Suomi on ruotsalainen, Suomi on venäläinen and Suomi on suomalainen. Tuominen & Tynkkynen are the company’s minority owners through their investment company T&T Enterprises.

When ranked by profit margin, it is the most profitable Finnish production company.

13. Parad Media Oy*

Business revenue: €1,653,000; profit: €74,000; profit margin: 4.5

Owned by Axel Högström and Henrik Lindberg, this company produces programmes such as Efter Nio for Yle Fem. Michael Franck, whose company Franck Media filed for bankruptcy, moved to Parad’s sister company Parad Fakta.

14. Långfilm Productions Finland Oy*

Business revenue: €1,489,000; profit: €34,000; profit margin: 2.3

This company, founded by actor/producer Mats Långbacka and cinematographer Jan Nyman , produces programmes mainly for Yle Fem. As Chairman of the Board, Ralf Långbacka adds gravitas and dignity to the company.

15. ITV Studios Finland Oy

Business revenue: €1,264,000; loss: €354,000; profit margin: -28

Tarinatalo, founded in 1997 by Kari Tervo and co., was sold to the British media company ITV plc in 2012. Its biggest owner (9.9%) is Liberty Global, owned by American media mogul John C. Malone.

Well-known British commercial television companies Granada and Carlton are part of the international ITV Studios’ history. The Finnish company’s chain of ownership starts with the Swedish company ITV Studios Nordic Ab, and continues through Granada Television Overseas Limited to ITV.

In 2016, the company made a loss of 28 per cent of its revenue.

16. Gimmeyawallet Productions Oy*

Business revenue: €1,189,000; profit: €134,000; profit margin: 11.3

Production company known for Madventures and Docventures, founded by Riku Rantala and Tuomas Milonoff in 2001.

17. Mogulmedia Oy*

Business revenue: €1,060,233; loss €63,335; profit margin: -5.9

The reality TV production company founded by Markos Annala and Ville Panhelainen filed for bankruptcy in summer 2017. Annala’s current company Mogul Movies Oy is focused on scripted productions.


18. Filmaattiset Oy*

Business revenue: €747,000; profit: €128,000; profit margin: 17.1

Founded by Juha-Pekka Ristmeri and Tuomo Kaminen in 1991, this production company is now owned by Ristmeri. In autumn 2017, the Tampere-based company moved into the Sadan Vuoden Talo building in Pori.

19. Century Films Oy*

Business revenue: €709,968; profit €115,819; profit margin: 16.3

Founded in 2004, this reality TV production company is owned by Producer Miska Berg.

20. Production House Oy Finland

Business revenue: €611,000; profit: €33,000; profit margin: 5.4

Founded by Liisa Akimof and Harri Saukkomaa in 1996. Part of the Swedish MTG Nice Entertainment Group. This development began in 2002 when Varesvuo Partners became a minority shareholder.

Liisa Akimof is still the CEO of the company.

More information:

Competitors under the same roof, Journalisti 21/2003 delved into Varesvuo Partners’ ownership

This article has originally been published in Finnish in Journalisti magazine and also in Lehtiset 1-2018.

Timo-Erkki Heino is a freelance journalist with a long career working for Yle TV1 as an investigative journalist. He is a film school graduate from the Helsinki School of Arts and Design.

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