Patrice Theroux, eOne’s chairman of global film group, has spent his working life in the industry. He guides Jeremy Kay through mentors, mergers and the emergence of a Canadian powerhouse.
It may not have come as a surprise when Canadian regulators approved the eOne-Alliance merger in January 2013. After all, consolidation had been the talk of the industry ever since it emerged in January 2012 that Alliance Films owners Goldman Sachs Capital Partners and the Quebec government’s investment arm Investissement Quebec were looking to offload.
However, eOne’s rapid ascent in the entertainment industry remains a source of wonder.
The speed with which eOne chairman of global film group Patrice Theroux and president and CEO Darren Throop have built up the company to become the major independent film and TV player in Canada has drawn universal recognition, regardless of what observers might think about the consequences of such domination.
Publicly owned eOne put itself on the block in 2011 but withdrew due to insufficient offers. The hierarchy reviewed operations and in the wake of the Alliance acquisition and the success of the powerhouse TV operation and family business, whose jewel in the crown is the Peppa Pig franchise, it is clear the leadership wants to grow the company to run it, not to sell it.
‘Our business plan was not laid out the way it unfolded. We made a bunch of great decisions but you need luck and we had some good fortune’
Revenues have climbed steadily over the past six years in which results were available and surged 25% from $803m in 2012 to $994.2 in 2013. Profits before tax climbed 25% from $67.9m in 2012 to $83.4m in 2013.
As far as film is concerned, the $216m Alliance acquisition has created a well-capitalised entity with output deals and premier distribution channels in Canada, the UK, Australia, Spain, Benelux and the US, as well as a world-class international sales operation and an ambitious production base.
This is where eOne finds itself today. The future of film operations, Theroux tells Screen in the run-up to Toronto International Film Festival (TIFF), involves strategic territorial expansion, commitment to English and French-language Canadian cinema, enhanced global production and sales activities and aggressive content acquisition.
“I can tell you our business plan was not laid out the way it unfolded,” says Theroux. “We made a bunch of great decisions but you need luck and we had some good fortune. When we acquired Peppa Pig it was in its infancy and you can never predict how big it will become.”
Indeed Theroux himself could not have visualised his route to the top, arriving at eOne’s Toronto offices via a combination of opportunism, hard work, talent and a mentorship that he cherishes to this day.
Dropout success story
“It’s a simple story and at the same time it’s a dropout story,” he says. “My family is based in Quebec and they are all in the book or publishing business. I had been working at a bookstore [throughout university] and after I finished my business marketing course I was thinking of staying in the business.”
A former store manager gave Theroux his entry into the business, selling VHS and Betamax tapes at wholesaler Video Globe in Montreal. He moved over to CFP, the video company run by eventual Lionsgate trio Andre Link, John Dunning and Christian Larouche, where the aspiring executive encountered the man who would exert arguably the greatest influence on his career.
“While I was there we were also distributing home-entertainment films for Viva Film run by Victor Loewy. I got to know him.” Within a year Loewy invited Theroux to join him at Viva, which had just merged with Alliance as Loewy got back in business with his longtime collaborator and friend Robert Lantos.
It was 1988. “Sometimes it’s about being at the right place at the right time,” says Theroux. The new arrival built Viva’s home-entertainment division, benefiting from the tutelage of Loewy and Lantos, who had bought out Alliance and harboured ambitions to create a film and TV powerhouse.
“I was in the midst of all that and it was very exciting. We started to accumulate output deals. One of the first was New Line; then we got Miramax. We created this real powerhouse for distribution in Canada. In 1998 Alliance merged with Atlantis. Victor and I were really the film guys there and they let us run it and relied on our expertise and judgment.”
In 2002 the film distribution business that operated in Canada, Spain and the UK was spun out into Movie Distribution Income Fund. Alliance retained 51% and the rest was sold to the public. Theroux was named president and would go on to succeed Loewy as CEO, while the senior executive moved up to chairman.
Then in 2006 everything changed. Theroux got fired from Alliance after he was accused of engaging in unauthorised conversations with investors at a time when he knew Alliance wanted to sell the film business. It was routine for investors to approach the company and for the executive to talk to them. On this occasion, the board took exception.
Screen has learned the potential investors were Goldman Sachs ― who would eventually become part-owners of Alliance Atlantis Group ― UK-based asset manager Marwyn, destined to become the major investor in eOne, and the Dubai government’s investment arm.
Loewy resigned in protest only to be enticed back into the fold a short while later. Theroux was not one for sulking. “I have worked in big corporations for a long time and they will do what they think is right for them and are managed by a board of directors. I never look back. I had been at Alliance for 18 years and it was time to do something else.”
A week after he left Alliance, Theroux had dinner with Throop, who had become CEO of eOne in 2003 after a career in the music business and was keen to broaden the company’s investment in film and TV. Throop wooed Theroux to join in 2007 as president of film and TV. If Theroux still desired to reunite with Loewy at Alliance, that company’s new owners, Goldman Sachs, had other ideas. “That possibility was never offered to me,” he says.
‘I am convinced in Canada we will see a new operator. We encourage it because it’s not an industry where there’s a monopoly’
So the new arrival set about his brief to build eOne’s film business with relish. In July they acquired Contender in the UK, followed in August by Canada’s Seville Entertainment led by David Reckziegel, who now runs eOne Films North America.
September 2007 brought a game changer in the form of an output deal with Summit Entertainment. Patrick Wachsberger, the co-chairman of Summit at the time who now serves as co-chairman of Lionsgate Motion Picture Group, recalls being impressed by his new partners.
“They were very aggressive and we decided to go with them to become the big fish in the pond,” says Wachsberger. “eOne has been an amazing partner. I was very impressed by the speed with which they geared up. Patrice is very smart, very practical and I like the way he operates his company. He supervises everything but doesn’t micromanage.”
eOne was growing fast. They snapped up Benelux-based RCV Entertainment in January 2008 and six months later acquired TV assets Barna-Alper, Blueprint and Oasis as well as Maximum, run by Lantos, which brought eOne Films International sales co-head Charlotte Mickie into the frame.
“I’ve known Patrice from the first day he got his job at Alliance in the video division,” says Lantos. “He helped turn eOne from a DVD wholesaler into a major global player. It’s an extraordinary transition and a testament to the fact he is an amazing talent.”
The financial crisis enforced a three-year acquisition hiatus but eOne kept moving. “Darren was pushing the corporate agenda very well,” says Theroux, “and [in 2010] we raised a lot of money on the London Stock Exchange.”
The Alliance acquisition earlier this year created a powerhouse that dominates the Canadian and UK distribution sectors (in the UK it meant the merger of eOne with The King’s Speech distributor, Momentum Pictures). It owns a 35,000-title library and lords over a distribution empire that has seen pre-existing output deals with the likes of Summit, Lava Bear and Morgan Creek augmented by arrangements with Lionsgate in Canada, Summit and Lionsgate in Spain and Relativity in Canada and the UK. eOne also has distribution partnerships in South Korea, South Africa and Scandinavia.
The size of the company remains a major topic of conversation in the industry and Theroux is keen to weigh in. “I am convinced in Canada we will see a new operator. We encourage it because it’s not an industry when there’s a monopoly. We function very well in all our territories. We have more of a dominant position in Canada, but there will be another player. These things shift.”
A viable rival could arise if an existing distributor steps up or a new player emerges. The usual suspects in this parlour game are Lantos and, non-compete clauses notwithstanding, two talented executives looking for work amid the aftermath of consolidation: former Maple Pictures co-president Laurie May and Loewy, the Alliance CEO who departed in January along with former president Charles Layton.
Expanding global footprint
All eOne can do is focus on itself. Some time within the next 12 months, Theroux says, the global film distribution footprint will expand. “That’s top of our agenda. I’m not saying we want to be in every country in the world, but we do believe adding one or two territories will be beneficial to what we’re doing.”
Production will increase under UK-based Xavier Marchand, the former Alliance Films president of worldwide distribution and Momentum managing director, and the goal is to embrace more commercial fare and enable more substantial investment earlier in projects.
“We get involved with production to serve a specific purpose, which is to fill the pipeline of our companies in our territories and our international sales activity.” That area, led by Mickie in Canada and Charlotte Van Weede in London, will begin to handle bigger fare as the pipeline expands.
There remains an ongoing allegiance to home turf ― eOne is involved in David Cronenberg’s Maps To The Stars and Atom Egoyan’s Queen Of The Night, for example ― but now the vision is more global. “We have a choice to be a bit more distinctive in terms of what we can do in Europe,” says Theroux. “That might involve UK productions or co-productions [and there could be] some Australian movies, perhaps.”
In the US the hunt is on for more US partnerships such as those with Automatik, Jason Blum and 1984. The US distribution arm will remain specialised. “You are not going to see us releasing a movie on 2,000 screens ― we’re not in that game,” says Theroux, although he concedes there will be support when warranted for potential crossover hits. The hope is that forthcoming release Diana starring Naomi Watts may be such a case.
The digital arena also presents opportunities. “Revenues are growing tremendously. People are embracing Netflix and Amazon and LoveFilm and it’s great for the catalogue. How do you keep a title that’s five years old in the limelight? These platforms offer that opportunity. It’s a matter of consumer response.”
When it comes to explaining the formula behind eOne’s success, Theroux is quick to credit his team. “This adventure at eOne really happens because of a group of extraordinary business managers coming together. We spent a lot of time making sure we had the right people within the eOne vision.”
eOne ― key milestones
- Aug 2007 Buys Les Films Seville (now eOne Films Canada)
- Sept 2007 Signs multi-year output deal with Summit
- Jan 2008 Acquires RVC in Benelux (now eOne Benelux)
- Sept 2008 Signs four-year $150m credit facility led by JP Morgan
- July 2010 Moved from London’s AIM list to main list of London Stock Exchange
- Apr-Oct 2010 Expands distribution operations into France, Germany, Scandinavia, South Africa
- May 2011 Renews multi-year output deal with Summit for Canada, UK. Acquires Hopscotch for Australia, New Zealand distribution
- Sept 2011 Opens theatrical distribution arm in US
- Oct 2011 Signs exclusive five-year licensing deal with LoveFilm for UK
- Nov 2011 Signs multi-year output deals with Summit and Lakeshore for Australia, New Zealand
- Sept 2012 Signs output deal with DreamWorks for UK, Benelux
- Jan 2013 Acquires Alliance Films, extends footprint into Spain