New York investment firm KKR began its remarkable German buying spree in 2019. When it was done, one of the world’s biggest film and TV markets looked dramatically different. The ambitious studio it created, Leonine, is an accumulation of companies, including film and TV powerhouse TMG, film distributor Universum, Dark producers Wiedemann & Berg—one of Germany’s leading TV production labels—and multiple factual indies.
Last year, the company got further investment from pan-European media entity Mediawan Alliance (which is backed by KKR and French investment firm MACSF), then they moved into a new Munich HQ and launched a TV sales business with the 10-part international action series Professionals, starring Brendan Fraser. This week, Mediawan and Leonine announced their acquisition of a controlling stake in UK TV company Drama Republic.
One of the most talked-about new companies in Europe, Leonine has a library of thousands, and impressive pulling power. The firm’s clout has already been brought to bear in film markets, where it’s acquired major titles, including Knives Out, John Wick: Chapter 3—Parabellum and Roland Emmerich’s upcoming Moonfall.
Consolidation on higher ground makes sense in a market where the streamers are growing apace. Leonine’s CEO Fred Kogel (pictured)–formerly of ZDF, ProSieben and Constantin—discusses the firm’s rapid rise, and how COVID-19 has impacted business and growth plans.
DEADLINE: Let’s go back to the beginning. Why did it make sense to launch Leonine and what were the main obstacles?
FRED KOGEL: When we talk about beginnings, that would be early 2018: two years before Covid, but a few years into the massive digital disruption we’ve seen in the entertainment industry. My idea was very clear. I knew there would be more and more streamers. That’s the irreversible megatrend, and how that content is consumed. It was always important for me to build the company for the digital world.
There was going to be a need for local content for the streamers entering Germany, as well as volume for the broadcasters who would be competing. In my previous 25-year career virtually everything had always ended at the German, Austrian, or Swiss borders, but for the first time, there was a chance that German content could travel internationally, because we have the quality of people and projects in Germany, and the streamers give us a global platform.
DEADLINE: To what extent did you feel trepidation about the undertaking, or that there would be a target on your back?
KOGEL: In terms of the psychology of it, to be honest, it was a relief. I had founded Kogel & Schmidt and Constantin Entertainment previously, but I’d never worked with a private equity investor before. That made it a pretty unemotional, clear path. It was a great experience.
DEADLINE: How did you first meet the KKR team?
KOGEL: I first met the KKR guys in 2006 or 2007. They asked me if I was interested in doing a different job, but I had to pass because I was with Constantin at that time and was not ready to get out of my contract. We had meetings from the mid-2000s onwards, but there was never the right project to collaborate on.
At the end of 2017, [KKR co-head of European private equity] Philipp Freise and I got together again. We discussed the landscape, and we agreed that there could be something we could do. Then I sat down for three, four months working on a concept, which required a certain size and quality, and adhering to certain characteristics of the German market.
DEADLINE: The company’s M&A has been well-documented. But where is Leonine today? What are the main priorities for the company?
KOGEL: The first three years was about bringing the companies together and doing a full integration. Now we are full-steam on growth again. This comes in two forms. Firstly, through organic growth in production, in our fiction and non-fiction companies, and also growth in our distribution units, especially digital distribution. The second part is inorganic growth. We want to M&A again and we are preparing for that. We want to grow bigger. As you know, last year we came together with our sister company Mediawan to give us a broader European perspective.
Our key target is to become the number one independent production and distribution company in Germany. I don’t think we are far away from that. But we are working very hard and very humble every day in that target.
DEADLINE: What type of M&A might we see?
KOGEL: It will be important to grow in fictional production via companies that make premium TV series. This is something we are looking for. We are looking not only in Germany but also at other European targets. This will be our main focus.
DEADLINE: To what extent has Covid knocked the company off its stride and dented the bottom line?
KOGEL: In the end, thank God, not very much. Of course, Covid hit us in theatrical revenues, but we had a very good year last year in terms of production, and especially in nonfiction production. There was a big need for content. Our home entertainment and licensing divisions also did well. Our integrated model really helps.
DEADLINE: You had said you wanted to release 20 films a year theatrically, so lockdown must have hurt a little.
KOGEL: Yes, we had wanted to do 20 films. We will release 10 films in the second half of this year. We think we will have a blockbuster year in 2022.
DEADLINE: There is expectation that private equity firms will sell on their investment at some point, often after a five to seven-year span of growth. Is it possible that Leonine is almost 50% through its life cycle of being a KKR-backed company?
KOGEL: It’s true that that is a common life span for private equity firms, but as a management team we’ve never thought in terms of when KKR’s exit will be. We’re very much focused on the next stage of growth.
DEADLINE: In terms of the company’s revenue, roughly what percentage comes from TV and what percentage comes from film?
KOGEL: We differentiate in terms of production, distribution and licensing. To date the segments are very balanced, however the production segment is gaining significant weight. Within the production segment fiction production accounts for the largest slice.
DEADLINE: Which projects on the slate are you most excited about?
KOGEL: We have a big TV project called The Gryphon that we are doing for Amazon, and we have the Bayern Munich documentary series also for Amazon. In terms of theatrical movies, it’s Borderlands, the franchise that we bought from Lionsgate. That’s one of our major movies. Of course, there’s also Moonfall, which is due for release early next year. We also have some local German series, including Krass Klassenfahrt, which is based on a successful German YouTube series, and features a cast of influencers. We’re also lining up some non-fiction projects for the streamers.
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