For a company that pretty much controls the Canadian film and television industry, Entertainment One Group is little known. Same goes for Darren Throop, the 49-year-old Alberta native who built the company from single record store in Halifax into the world's leading independent distributor of movies and TV shows. That status was cemented in January, when Toronto-based eOne completed the acquisition of its biggest (and better known) rival, Alliance Films.
PROFIT's Joanna Pachner caught up with Throop to get the skinny on the deal—possibly the longest mating dance in Canada's film business.
Q What does the Alliance acquisition mean for your company?
A It's completely transformative. Our market share in Canada now eclipses that of any of the major Hollywood studios. And in the U.K., the deal gives us, by far, the biggest share of all the independent distributors. By buying Alliance, we took out our main competitor in our two primary markets. And as the entertainment distribution world continues to consolidate and new media platforms continue to emerge, it gives us a real voice at the table in setting the terms. Size matters a lot.
Q Rumours about this merger started last January, you confirmed negotiations in May, then nothing happened until September. Many people doubted you'd get it done.
A It was a very complex transaction. We thought we had the deal as early as June of last year. Then, we discovered through due diligence some things that gave us a different view, and that delayed it three months. There were a couple of moments when we thought we were there, and then more problems would crop up. But, quite frankly, Alliance was something we identified as a target as many as six years ago, so we had been preparing for this.
When you go four months between the announcement and the deal, it takes the euphoria out of it. By the time it's done, it's almost anticlimactic
Entertainment One Group
Q Wait, that would mean you were thinking of buying Canada's top movie distributor—mere months after eOne got into the movie distribution business itself.
A Yeah. We knew that it was something we had to do. In this ever-changing and consolidating entertainment business, these two companies had to be brought together. Either we'd be the ones doing the consolidating or we'd be the ones getting consolidated.
Q With all the delays, did you think the whole thing might fall apart?
A I never woke up in the morning and thought it wouldn't happen. I was convinced the owner, Goldman Sachs, wanted to sell and that we were the logical buyer. But there was a bad moment when news of the negotiations leaked to the press and, as a public company, that was hard to deal with. Our stock got hammered [because investors expected a share issuance that would dilute existing stock], and we needed that equity for the acquisition. The stock went down by about 20%, which was really bad for us—to the point that I had to announce we would not buy anything if it didn't recover.
Q How did you feel when it was all done?
A When you go four months between the announcement and the deal, it takes the euphoria out of it. By the time it gets completed, it's almost anticlimactic.
Q What did you learn from this experience?
A Be very patient. Nothing happens in the time frame it's supposed to happen in. If you hurry, you'll pay a price for that haste. And you have to be prepared to walk away. There were a few times when we discovered new information and we had to be ready to walk if the seller didn't address it. You need to create a value model and stick to it.
Q Patrice Theroux, who runs your film division, has called you "the ultimate entrepreneur." Is entrepreneur how you define yourself?
A Yes. I don't think the business matters. I'd bring the same things to a different kind of company: being focused on moving it forward, having solid corporate culture, being very consistent on messaging.
Q For the CEO of a global company in the entertainment industry, you have a low profile. Is that intentional?
A I'm continually told that I should be more visible in the public eye. But I prefer to just focus on the business. My profile is something, if it's being built, it should be only at the service of the business.