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The entertainment industry, as much or more than any other industry, has a number of characteristics that call for Ironwood's transitional management capacities.
First, the entertainment business, including movies, television and music, is characterized by substantial volatility. In the movie business, for instance, a substantial proportion of films are not profitable and often those that are profitable take years to break even.
One of Ironwood's Senior Consultants works daily with statistics developed to provide predictive power regarding which movie projects have a quantifiably higher probability of success and which may not. Although this is by no means an exact science, the data he uses has been developed from years of experience. He travels nationally and internationally to help clients determine the combination of script, actors, genre, distribution and other factors that may be combined to optimize the probabilities for the highest return on an investment for a particular movie project.
However, beyond basic genre, style, and certain actors - it is ultimately a highly imprecise process to foretell what specific movies will be successful and which ones will not. This is a form of the venture capital business: executives can hope for only a certain percentage of the movie projects to produce a profit and hopefully one in ten will produce enough profit to pay for all the losers and leave the studio with some money left over and an asset base of titles.
Second, the industry is growing and the mix of its components is constantly changing. The entertainment industry itself is made up of a rapidly changing mix not only of aspiring entrants but of existing and aspiring businesses. Some are low-tech, some are high-tech and all are interweaving with each other in ever new combinations to enable one project after another. Each project in movie production is a "virtual company"; when the project is done the various components re-form with other components to work on (or produce) still another movie project.
Therefore, in much of the business there is no long-term, just a series of short-terms. Traditional business planning is often pushed by the wayside. Too many producers consider success a matter of simply having a film produced and distributed without a thought for the cash flow consequences.
Thousands of businesses are part of or are affected by the entertainment business. A large number of these businesses are in Southern California where many of Ironwood's personnel reside. Ironwood also has personnel in New York to service companies going through transitions. The firm has an office in Tampa-St. Petersburg whose personnel are available to provide transition management services for theme parks, Latin American entertainment enterprises, and broadcasting businesses.
In all but the largest companies in the industry, management has not been exposed to traditional planning methods, either strategic or financial. The rapid rise and fall in the executive ranks of many such companies discourages the long term outlook necessary for planning success. However, it is just this characteristic, among others, which makes flexible, creative, knowledgeable and practical planning methods necessary in this industry. It leads to greater stability. It makes the company more attractive as a strategic and financial partner to traditional consumer, technology and financial firms. Most importantly, it provides the company with a competitive edge.
Businesses periodically fail and new ones replace them in this industry. The speed with which companies break up and new ones re-form is rapid as companies depend of the one big hit to mask their lack of resources in this capital intensive industry. Solid business planning and business management often falls by the wayside in efforts to pursue trends, to pursue the latest project, and to pursue the shifting trends in the marketplace(s).
The issues facing the entertainment industry include but are not limited to disconnect between an (often fickle) audience and perceptions of what will sell, undercapitalization, over-leverage or inadequate financial reserves, changing technology, and the intersection of art and business in ways that are often unpredictable.
A review of thriving entertainment organizations reveals certain common characteristics:
Companies in the entertainment business are looking for credible professional assistance. Ironwood can provide assistance in achieving these objectives and much more.
Ironwood provides turnaround, workout, crisis management and general management services for businesses in difficulty or experiencing flat-line performance. Ironwood has assembled a team to specifically service entertainment companies experiencing difficulty.
To this task Ironwood brings experienced business executives and recognized entertainment industry experts and operators.
Most if not all of the basic business concerns are common across a spectrum of industries in which Ironwood professionals have deep experience. For those elements unique to the entertainment industry, Ironwood has assembled a cadre with deep experience in:
Ironwood Advisory helps entertainment industry clients reach their full performance potential by implementing positive changes in their operations, marketing, finance and strategy. Please examine our Business Performance Review and other services to see how we can help your organization.
Ironwood Advisory is a transition management consulting firm that advises stakeholders and managements on issues of operations, finance, marketing + sales and strategy in a number of specific industries including entertainment.
Ironwood's entertainment business team includes expert operating executives and industry specialists and project operators, product and retailing experts, consumer products marketing and film distribution experts, turnaround personnel familiar with both domestic and foreign film production, and movie production auditing services. Ironwood's corporate finance capacities enable the restructuring of debt and equity on company balance sheets.
Some of the members of this team are:
Lisa Crane Greer
Sean Costello
Phillip Fier
Robin Taylor
Gene Siciliano
Bill Sharp
Edward Story
If you operate an entertainment business with a challenge or a business dependent upon or contributing to the entertainment industry and would like to have some help, we urge you to call us at 1-866-692-1600. Ask for Edward Story, Managing Partner, or for other Senior Consultants mentioned on our website.
Or write us at or .
Waiting for problems to become more acute before calling in professional assistance simply makes the problems harder and more costly to solve. The available options to correct the root causes of deterioration in a company's operating drivers are more easily acted upon earlier rather than later. Give us a call. There is no charge - and no risk to you - for talking about the issues your company may have or for estimating what would be involved in dealing with them
Some but not all of these successes are related to entertainment. All are related to issues likely to be encountered with distressed companies in the entertainment business. This list is only partially representative of the experience in transition management, turnaround and in the entertainment industry accumulated by Ironwood professionals.
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Client: An Audio/Video Post Production Company was running at a loss due to several bad investments causing a severe cash shortage which affected operations causing vendor dissatifaction resulting in higher prices. Shipments were late and quality was poor. The sales department was fragmented receivables and accounts payable were extended. Major Initiatives:
Outcome: The Company increased sales by 25%. Operations were profitable in four months for the first time in three years. Costs of materials were reduced by 20%. The financial records were updated and brought current. The current line of credit was updated and increased by $1 million. Client: A private multi-media design company was losing money and had no proven profitability in its business plan. The company had highly creative executives, but no tangible assets other than some service contracts and some receivables. Major Initiatives:
Created a program to 'sell' the talent of company management in new media industries; sell the future - ground floor in a new industry Conducted a search for a buyer willing to take a risk - not a bet-your-business decision Outcome: Sold the company to a media conglomerate for $5+ Million Client: A fragmented distribution industry rollup required experienced management to raise capital and integrate acquisitions. Major Initiatives:
Outcome: Grew the startup from three employees to over 250 with $70M in revenue. Client: A $30M software provider to the grocery industry was challenged with needing better penetration into more strategic clients. Major Initiatives:
Outcome: Sales growth and the pursuit of a more consultative selling approach with larger customers. Client: A Speaker Manufacturer for stereo systems was experiencing declining sale performance. Major Initiatives:
Outcome: The decline was stopped and turned positive using the guidelines and principles set up. Client: The developer of a Web-based purchasing system had exhausted its initial funding and incurred massive debt before the product was completed. Major Initiative:
Outcome: Investors funded the project through completion resulting in a $25 million capital infusion. Client: A provider of digital music technology needed essential assistance with marketing strategy and tactics, partner development, and first round funding. Major initiatives:
Outcome: Generated significant publicity in key publications for the product, resulting in a significant and fast-growing subscriber base. Located lead investor and oversaw entire transaction. Client: An early stage Internet business with proprietary "relationship marketing" product needed clarification of priorities, development of strategies for growth and initial sales contracts. Major Initiatives:
Outcome: The Company's first client responded with a multi-year $200,000 development contract and commitment to roll out the marketing concept across their entire family of services to build loyalty and generate demand across services Client: An owner-operator of microwave licenses in the 38Ghz spectrum needed to be positioned for a high value sale. Major Initiatives:
Outcome: Carried on the books at less than $200,000 at the beginning of the Ironwood Advisor's tenure, the company's assets were sold at a value exceeding $30 million. Client: A former radio network CEO desired a station to own and operate. Major initiatives:
Outcome: Client acquired station for 30% of its prior (three years earlier) acquisition price, with seller carrying back a significant portion of price. Client: A producer of television commercials and motion pictures shut down by earthquake. Major initiatives:
Outcome: Company grew by 800% in next four years and became reliably profitable. Advisor became company CFO. Client: A provider of national television commercials desired meaningful entry into internet advertising industry through creation of new division. Major initiatives:
Outcome: Company was selected by Intel as prime industry partner in Hollywood. Division developed two patented web navigation tools to leapfrog competition. Client: A computer-graphics-oriented television commercial production company owned and operated by a creative genius who had earned a record number of cleos for the company's work. This had occurred while the company was insolvent and was often unable to make payroll due to continued losses on overdone projects. The company had no access to bank credit in any form. Major Initiatives:
Outcome: Company achieved 100% increase in revenues and record profits within 2 years. New bank borrowings helped finance the transition, including unsecured loans for working capital purposes. Client: A bank that had lent over $1 billion to several major independent film production and distribution companies Major Initiatives:
Outcome: After collecting over $100mm in receivables, audit claims and lawsuits, the bank's clients' assets were sold for $225 million. |