Meeting of minds: There’s a right way to merge in the entertainment business, believes Cordell Jigsaw Zapruder

For a TV producer tuned to the tastes of everyday Australians, Nick Murray is surprisingly quantitative when it comes to M&A.

From left, Michael Cordell, Nick Murray and Matt Campbell. Picture: Hollie Adams.

For a veteran television producer attuned to the entertainment tastes of everyday Australians, Nick Murray has a surprisingly quantitative rule of thumb when it comes to mergers and acquisitions.

“From my experience, and from watching others in the entertainment industry ... if the personnel are too similar it won’t work,” he tells The Deal. “The equation needs to look

like one plus one equals three. If you try to combine creative people who are too similar, you get one plus one equals one-and-a-half.”

Murray is the managing director and co-owner with Michael Cordell of Cordell Jigsaw Zapruder, the biggest independent film and TV production company in Australia. Murray launched Jigsaw Productions with his wife Lizzie in 1999, and in 2005 merged with Cordell’s production company. In 2012 Cordell Jigsaw acquired Andrew Denton’s Zapruder’s Other Films. Today CJZ has more than 20 shows in production across multiple genres, from Gruen and Go Back to Where You Came From Live to Bondi Rescue.

It’s a tough industry: a June report from Deloitte Access Economics revealed that two-thirds of the companies in the Australian independent film and TV production sector make a loss or barely break even, while 10 per cent fear insolvency. According to Murray, one benefit of the increased scale of his business is that cash flow is more regular. But the real upside is the cross pollination of ideas in the tea room.

“We had always been trying to poach Andrew Denton’s staff, without success,” he says. “And we had been using the producer tax offset to retain funds in our business in case we saw something we wanted to buy. Andrew said he was interested in retiring from the business, and we thought the acquisition would give us the critical mass we needed.”

Murray says the deal was structured “a little bit differently” from a conventional transaction, but at its core a valuation was arrived at using a model of projected earnings.

“It was a little bit more organic than that, which we felt was the key to making a fair deal,” he says. Denton left the business but retained ownership of CJZ’s offices in Chippendale. Says Murray: “I’d like him to come around and clean our windows more often; recently I got a bottle of red wine from him for fixing a toilet door.”

Unlike other acquirers interested in a target company’s human assets, Murray declined to lock in key Zapruder personnel with onerous contracts.

“I worry about that notion because you want them to want to work with you; the last person you want in a creative industry is someone who doesn’t want to be there,” he says, pointing out that head count has increased from around 40 to 150 (including freelancers), with about 10 Zapruder staff still on the team.

In 2013, CJZ acquired New Zealand factual television producer Greenstone, which brought a valuable back catalogue of programming, but a few cultural differences too. “Our CEO Matt Campbell spent a lot of time there in the first year,” says Murray. “New Zealand is similar but different; there weren’t cultural clashes, but I would describe them as ‘idiosyncrasies’. That business is run locally ... Local management is very important, and we don’t impose on them.”

Recently, Greenstone opened an office in Dubai to exploit a lack of observational documentaries being shot in the UAE. Their first production, Dubai 999, features camera teams embedded with the local ambulance service. Campbell says Dubai turned out to

be a hot, risky environment to make television.

“If you were scared of taking risks ... you would be far better putting your money in real estate,” he says – even while sitting in landlord Denton’s property.