While Britain’s politicians are hoping London 2012
will bring a much-needed economic boost to the UK, not to mention
lifting dampened consumer sentiment, one industry already feeling
the Olympic effect is the broadcast equipment leasing business.
Grant Collinson looks at the curiously small pool of specialists
set to benefit from the year’s big broadcast events.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
“This year is the Olympic bubble,”
says Peter Savage over the phone from the German office of media
leasing specialist Azule Finance. “If there is one industry, other
than tourism, that will benefit from the Olympics, it’s television
– because that’s the medium the hundreds of millions who watch the
event will use.”
Savage, managing director of Azule, says the
broker-come-lender has already seen a significant rise in orders
ahead of the Games.
“We are now seeing the 2012
fore-orders coming in. We’ve probably got £4m-£5m [€4.8m-€6m]-worth
of orders in for April and May time where we usually have about
£1m-£2m in at this time of year. We’ve got a lot more people
expressing a need for kit.”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataAzule is not the only firm
preparing for a surge in business; rival UK-based lessor Fineline
Media Finance is expecting a heavy boost in leasing deals on
equipment for use across the broadcast process.
“The Olympics has already had a
significant effect on our business,” Fineline’s sales and marketing
director Gareth Wilding tells Leasing Life. “Most of the
equipment hire companies have been gearing up for it for the past
two years. There is bound to be a great deal of investment going in
the run up to the event; it is the biggest televised event in the
world.
“I read recently that at the Sydney
Olympics in 2000, the BBC broadcast 300 hours of action. This year
they are forecasting 2,500 hours of footage. That is the kind of
growth in televisual demand – all of that has to be filmed and
post-produced and aired for transmission either in a traditional
broadcast, via the red button, or over the internet.”
All that broadcast production and
transmission requires kit which Azule, Fineline and a few others
will be involved in financing.
Wilding explains that there will be indirect effects
on the leasing businesses involved too, as hire companies supplying
the cameras, lenses, sound recording and myriad other equipment –
which make up a portion of the customer base of both Azule and
Fineline – will still need to supply their roster of end-users not
involved in Games coverage.
Wilding says: “Hire companies will
probably find they need to supply kit they’ve never supplied before
and they might also have empty shelves, but the rest of the world
doesn’t stop turning because the Olympics is on for a
fortnight.”
The two weeks of the Games are not
the only busy period to bring a boost to the niche media leasing
market. 2012 also sees the major televised events of the UEFA
European Football Championship in Poland and Ukraine and the
Queen’s Diamond Jubilee in the UK.
The impact of major events is
nothing new either. As Savage explains, Azule is still feeling the
positive effects of Royal wedding mania which helped the firm to
increase turnover by 20% in 2011.
“The Royal wedding – it was not
just one programme, it was completely different. It is why the
Olympics this year will be good for us. It was probably the first
time since Princess Diana died when the Americans came over and
wanted a slice of the action,” says Savage.
“They all came over and set up
their own broadcast centres on the Mall or wherever. That enabled
loads of UK companies to do short-term rental and hire contracts as
opposed to taking a feed from BBC.”
The increase in turnover has also
been helped by Azule’s recent expansion to Germany from where it
hopes to take advantage of greater proximity to the Euro 2012 host
nations.
In September 2011, the
five-year-old company set up an office in Düsseldorf, expanding a
vendor agreement it has with Sony Financial Services, the UK
finance arm of the Japanese technology manufacturer.
Sony has an existing agreement with
De Lage Landen to provide leasing for its products to the German
broadcast market. After five months of trading from the business’s
new premises, Savage is satisfied with how things are
progressing.
“We have a lively business in
Germany,” he says. “We are very pleased with our business here –
we’ve brought new ideas to the German market and the European
football will have a good effect on our Germany business because of
geography.”
Azule has also done deals outside Europe, a £26m
deal for outside broadcast equipment in Nigeria and a few contracts
in the Middle East, and, says Savage, has been approached to expand
further within Europe.
“We’ve been asked to set up in
France and Italy, but we have to take it one step at the time at
the moment,” he says. “We are not averse to geographical expansion
with the right people at the right time and we do ad-hoc European
deals at the moment.”
Nevertheless, the UK remains
Azule’s main market, as it does with Fineline.
As Wilding explains, Fineline, a
division of Rothschilds-owned leasing group Five Arrows Leasing, is
cautious about Europe and happy with what the UK market can offer
the growing business.
“We are predominantly a UK
business,” he says. “We have relationships with banks and finance
companies on a brokerage basis in Europe, and with a lender in
North America as well, but the European market is in such a state
at the moment it is difficult to see that expanding in the coming
year – it’s not an area we are looking to expand into
generally.
“There are plans afoot with
specific manufacturers and specific lenders, but nothing on a
general basis.”
At the time of Azule’s deal with
Sony in Germany, Michelle Simpson, programme manager for Sony
Financial Services, said Sony wanted to enhance its existing lease
offering with De Lage Landen by introducing a dedicated media and
broadcast broker model alongside it.
When Azule announced the move in
September 2011, Savage said: “We’ve been warmly received
by the German market; they recognise the fact the UK has
got something they’ve been wanting for a long time – a specialist
in broadcast and media.
“In the broadcast market, the UK is
probably ahead of the rest of Europe in terms of the maturity of
the leasing market, so a lot of manufacturers are doing things in
the UK they are unable to do elsewhere in Europe.”
Despite the maturity of the
broadcast equipment leasing market in the UK and the money to be
made from big media spectacles, the sector is dominated by just a
few niche lessors of which Fineline and Azule are the largest.
Wilding says Fineline has a good
slice of the market in the UK, including the Sony Financial
Services broker deal it shares with Azule, and sees plenty of
growth potential.
“The UK media market is strong
enough to support growth. It’s a very specialist marketplace and a
niche marketplace and, although it is not huge, it is certainly
more than adequate to support our growth potential,” he says.
Wilding says Fineline does around
65% of the business through the Sony Financial Services
partnership, which he suggests is a fair indicator of the company’s
share of the UK market as a whole.
Savage, however, suggests Azule has
a more even market share with Fineline – with smaller scale broker
Medialease, and other niche firms such as photography equipment
specialist Photolease, adding to the UK’s roster of dedicated media
finance businesses.
Beyond the specialists, most
lenders have dabbled in the media equipment market, says Wilding,
but he suggests sector knowledge is what makes the expert lessors
successful.
“Anyone can write a deal in any
sector if it all comes down to being the cheapest,” says Wilding,
“but the trouble comes when you have to get out of the deal because
it has gone wrong. We’ve had no write-offs in the past two or three
years because we know what we are doing.”
Wilding says Fineline doesn’t get
into bad deals because of advanced product knowledge, good resell
channels and close ties with industry.
“The point of working on a
specialist basis in a niche market is that you know who the people
are – the personalities you deal with, both customers and suppliers
– and you know about reputations, rumours and gossip. These things
can give you a steer in the right direction at the right time.
“We have close ties to
manufacturers, to resellers and to secondary markets, which is
vital; it is all about knowing where your exit routes, your
disposal routes are,” adds Wilding.
Azule’s Savage agrees about the
importance of asset and industry knowledge, especially a resell
network, in helping the niche lessors to success, and says the
industry requires specialists.
“We go and we talk to funders about
types of kit, the exposures and risks and how we can resell the
equipment; we have a good second-hand network and you wouldn’t get
that with an ordinary bank.
“The challenge in this industry is
[dealing with businesses with] a small balance sheet or no balance
sheet. You are never going to get these deals through on a standard
finance-credit-scoring situation.
“These are expensive bits of kit for people with small or no
balance sheet, so we have to structure the deals; there are a lot
of personal guarantees. For instance, we work with sole-trading
cameramen with an average deal size of £50,000-£60,000, and, in
over 20-25 years, these guys have never, ever defaulted. If you
went to a bank and offered the customer they’d say no. That is the
difference and the whole art of the game.”
