Business

The media boss who swapped winning Oscars for kids TV

Michael Donovan Image copyright DHX

Most people who own a media empire talk loud and long, and make a big fuss of themselves, but not Michael Donovan.

He is soft-spoken, thoughtful, and analytical. But he is very successful.

Michael, a veteran of the film and TV industry, is the founder and boss of DHX Media.

Outside of the big Hollywood studies, the Canadian company is the world's next largest owner and distributor of children's TV programmes.

Titles in DHX's vast portfolio include Teletubbies, In the Night Garden, Bob the Builder, and Inspector Gadget. In total, it has a library of more than 11,800 - and growing - episodes across all its shows. And its revenues last year totalled $260m (£212m).

I interviewed Michael - who, prior to forming DHX, produced movies including the Oscar-winning Michael Moore documentary Bowling for Columbine - back in the summer in Monaco.

The 63-year-old was there for the World Entrepreneur of the Year awards ceremony, run by accountancy group Ernst & Young, after winning the Canadian title.

'Professional lying'

Born and raised in the Canadian province of Nova Scotia, Michael trained as a lawyer, and worked as one for 10 years after leaving university. Not a happy experience.

Image copyright Getty Images
Image caption Michael Donovan (right) produced Bowling for Columbine, which won the 2003 best documentary Oscar

Explaining why he swapped the legal profession for the movie business, he says: "I formed the opinion that I was unemployable, therefore I had to work for myself."

He continues: "I decided that a much better place than the law for me was the professional telling of lies. That's what filmmaking is."

This slightly poetic phrasing right at the start of our conversation is (I suggest) unusual to encounter in a successful entrepreneur. "Yes," he says, "that's probably what I should have been, a poet. But there is no job in the wants ads for a poet."

A curious approach to building a media empire, perhaps, but it seems to have worked. Michael Donovan - with an interesting, questioning mind, but no media experience - had some help.

Image copyright DHX
Image caption DHX bought Ragdoll Worldwide, the UK firm behind Teletubbies, in 2013

He went into partnership with his brother Paul who had trained at the the London Film School, and had then worked in filmmaking in the UK.

"He directed the films," says Michael, "and I did everything else."

Taking advantage of grants and tax breaks available to filmmakers in Canada, the brothers formally set up their business, Salter Street Films, in Halifax, Nova Scotia in 1990.

They saw themselves as participants in the cultural revival of Canada, but how to identify what sort of films and TV shows to make?

Image copyright DHX
Image caption DHX makes popular Canadian cartoon series Caillou

Michael says they chose comedy, and in particular, satire, because they "could make shows that had a particular voice".

And Salter Street discovered that it could make comedy that worked. One show - the weekly political satire This Hour has 22 Minutes - has now been on air in Canada for 24 years.

The company also made satirical shows and films in the US. But in 2001 Salter Street changed hands after it accepted an $84m (£68m) approach from a larger Canadian media company, Alliance Atlantis.

Michael could have retired on the proceeds, but he didn't. Instead he looked around for another niche, in a similar way to how he identified comedy as a rewarding field of endeavour the first rime round.

Image copyright DHX
Image caption DHX also owns In the Night Garden, which replicated the massive success of Teletubbies

He settled on animation, and thus became what is known as a serial entrepreneur.

His strategic thinking went like this: "Animation is the medium of the future." And so DHX Media was born in 2006.

Michael adds: "I decided I didn't want to be retired and happy. I wanted to be miserable and work for the rest of my life, even though I probably didn't have to. My name is Michael and I'm a workaholic."

'Profoundly wrong'

With DHX also based in Halifax, Michael had no problem finding Canadian animators thanks to generous funding of the sector over past decades by the National Film Board of Canada.

"The modern way of making animation, doing it on the computer, was completely invented at the Film Board in Montreal," he says.

Image copyright DHX Media
Image caption DHX, which is said to own 10% of all animated TV shows, employs 1,100 people

But in addition to making new programmes, Michael also wanted to build up a back catalogue by buying the rights to existing cartoons. And here luck and good timing were on his side.

He stumbled on the fact that there were many libraries of animated film and TV series going cheap because - in the new internet-dominated marketplace - it was wrongly assumed that there was no value in them.

Michael says: "That was the view of everyone I talked to, and it was fun to hear because it was profoundly wrong."

Using his own and other people's money, Michael was able to start acquiring what now totals about 10% of all the existing animated TV material for some very low prices.

And instead of being unwanted, DHX soon found that the shows in its library were in demand by the new streaming services such as Netflix.

"In the world of Netflix, 34% of all the minutes viewed are family and children's programming," says Michael.

In the old broadcast world it used to be just 3%, as this was all the time that broadcasters would give to kids' shows. But with streaming services, viewers can choose exactly what they want to watch, and it is often children who are holding the remote controls.

Image caption Michael describes himself as a workaholic

Media analyst Joseph MacKay of Toronto-based Clarus Securities says: "The key to Michael's success, I believe, has been to have the foresight to recognise the longevity of children's content.

"Whether it's Teletubbies or Inspector Gadget... the updated content resonates with children over many cultures creating multiple revenue streams including merchandising and licensing."

Michael adds that the internet and streaming services also allow the content creators to make more money, because they can bypass the traditional broadcasting companies.

"[Some] 95% of the income would go to the lucky middle people - the cable companies, the broadcasters - who basically did no work," he says.

"The internet has got rid of the 95% of the people in offices. It's direct from creator to consumer.

"And the result is a much better experience for the consumers, and much more capital available for the creators… who make much more interesting programming. And it's just beginning."

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