Barclays PLC (ADR) (NYSE:BCS) has created a new $125 million hedge fund to provide UK TV production companies develop more streaming content. The fund will offer new financing products to support streaming video-on-demand (SVoD) projects.
In a statement, Barclays said it changed the nature of its loan structure to better support its TV clients. Under the Barclays SVoD Financing program, SVoD companies will be able to borrow money over a longer period. This will help them to develop more ideas and program, the bank said, adding that broadcasters and SVoD distributors will also be able to manage their cash flow more efficiently.
Conventional TV production loans are repaid as the content is delivered with the broadcaster paying the production company and funder simultaneously. In the SVoD case, revenues are often spread over a much longer term, which can present funding challenges.
“TV industry specifically is in a really exciting place and is evolving at pace, with more than 250,000 people in the UK employed in the sector,” Lorraine Ruckstuhl, Head of Media at Barclays Corporate Banking said.
Barclays “created this fund and developed Barclays SVoD Financing, to help UK SMEs continue to compete both in the UK and internationally, support increased employment, and create even more great programs,” Ruckstuhl added.
Roughcut Television, an independent comedy production company in the UK, is one of the first companies to benefit from the new fund.
Barclays will purchase Roughcut’s Netflix receivable to give the company the upfront cash benefit of the multi-year contract for the streaming of their BAFTA nominated comedy Cuckoo.
“Netflix is notorious for paying over a long period, our arrangement with Barclays enabled us to get access to the cash much earlier which meant that we could put it to work by investing in further development. Another side benefit is that it improves our relationship with the writers and artists as they get their royalties quicker too,” Roughcut’s Commercial Director Tim Sealey said.
In addition to Barclays SVoD Financing, Barclays Media team also developed a range of lending options for TV companies of all sizes.
Streaming companies are heavily investing money in producing original content. Online streaming giant Netflix plans to spend $6 billion this year to produce more than 1,000 hours of original content. Amazon, which offers a video streaming service to Prime subscribers, is expected to spend over $6 billion on video content.
Shares of Barclays PLC (ADR) (NYSE:BCS) were trading up 0.44% in the after-hours session. The stock is up 3.36% year-to-date. During the last 12 months, shares have gained nearly 30%.