From Special Report: Film and Entertainment Investing - May 2012
A growing and dynamic investment opportunity
The creative economy is proving to be profitable and resilient to the general economic climate
The creative economy is currently being driven by ongoing changes in consumer media consumption, regulation and technology, all of which have created a growing and dynamic investment environment.
New platforms such as Kindle, iPad and Connected TV are stimulating growth in the sector, as consumers are enabled to purchase content quickly and conveniently.
At the same time, more traditional areas, such as theatre, live events and film admissions are showing themselves to be resilient to the general economic climate.
David Glick, manager of the Edge Performance venture capital trusts (VCTs), says: “Entertainment and media really is a growth sector with internet and mobile creating major new opportunities. When you’re dealing with a growth sector like this, depth of sector knowledge, your network and experience really count.”
As VCTs have evolved over the past decade the industry has consolidated. There are now fewer management groups, but they are larger and better resourced.
Last year’s ‘Enterprise’ budget paved the way for increased investment in the UK’s smaller unlisted companies. The higher bank lending targets agreed under Project Merlin along with a relaxation of the rules governing VCTs promised greater flexibility for funding.
VCT managers surveyed by the Association of Investment Companies (AIC) have seen a surge in demand for funding from companies in the past year and they are currently seeing good investment opportunities in a range of sectors, including media.
There is no vehicle specifically for broadcasting but products like the Media Opportunities fund and the Shelley Media fund invest in film, television, video game content, e-commerce, marketing services, mobile, gaming, music, live entertainment, digital publishing and fashion & design.
In January 2010, Edge Group also launched two entertainment-based investment products and broadened its interests in the sports business.
“There’s a long history of City investors dabbling in entertainment,” says Mr Glick. “And they have invariably come unstuck.
“[Last year] sport was a new sector for us to invest in, but we are doing the same as we have done in the music industry, coupling insider industry knowledge with tax-efficient investment vehicles to bring new working capital to the industry.
“In the lead-up to London hosting the 2012 Olympics we believe there are numerous opportunities for sport and sport’s entrepreneurs to benefit from our investment and industry expertise.”
Similarly, in January this year, Jazz FM, Neapolitan Music and The Ingenious Entertainment VCTs announced the completion of a £2m investment into the UK’s first three day, outdoor camping jazz festival, Love Supreme Jazz Festival, to take place in Brighton in the summer of 2013. The festival aims to champion the eclectic music scene found in the neighbourhood, and is expected to attract thousands of music lovers in its first year.