Analysis Of The Week: Tales of the Unexpected?​

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By Alison Catchpole​


The Story

Netflix is having an expensive September. Just a few weeks ago, the streaming giant announced the acquisition of a long-term lease on Longcross Studios, owned by the investment branch of insurers Aviva. Now, in a deal reportedly worth around £500 million (Sky News), Netflix is buying the streaming and adaptation rights for Roald Dahl’s estate from the Roald Dahl Story Company (RDSC).

“As we bring these timeless tales to more audiences in new formats, we’re committed to maintaining their unique spirit and their universal themes of surprise and kindness, while also sprinkling some fresh magic into the mix” announced the company in its acquisition statement. The ambitious plans are set to include “immersive experiences, live theatre, consumer products and more” (Netflix).

In the first half of 2021, Netflix spent over $8 billion on content (Financial Times) for its hungry subscribers. According to Ofcom, more than half of UK households own a Netflix subscription. Netflix streams in over 190 countries, though new subscriptions have slowed (Reuters), so diversification makes sense. In July it announced development of mobile video games, particularly linked to its popular series, such as Stranger Things - as competition for subscription streaming revenue growth shrinks.

The Background

Rated this year in a YouGov survey as the 27th most popular person of all time (YouGov), Roald Dahl first wrote about his experiences as a World War II fighter pilot in 1942. He went on to create children’s and adult literature, from the autobiographical ‘Boy’ through ‘Charlie and the Chocolate Factory’ to the screenplay for Bond epic ‘You Only Live Twice’. 300 million of his books have been sold, in 63 different languages - with one book selling every 1.6 seconds (RDSC).

In its fight for prominence in the lucrative streaming market, Netflix has been forced to innovate and tap into new markets. Some of the investment is paying off: at the recent Emmy awards, Netflix took home major honours for the first time thanks to dramas ‘The Crown’ and ‘The Queen’s Gambit’, and their long-term lease on Longcross Studios will likely enable the creation of further original content. Used for productions such as the ‘James Bond’ franchise, the ‘Star Wars’ series and TV drama ‘Broadchurch’, the studio plot in Surrey includes a Victorian manor house, 200 acres of backlot, four main stages, and a test track.

Overseas markets, especially in Africa, are seen as ripe too. On 20 September 2021, Netflix began offering a free mobile plan accessing around a quarter of its TV programmes on Android devices in Kenya (Reuters), hoping that this will persuade subscribers to pay for more content.

What It Means For Businesses And Law Firms

The Netflix-RDSC agreement represents quite a windfall for the Dahl family, who have been advised on the sale by New York-based merchant bank Raine Group (This is Money). The multijurisdictional deal will likely draw on legal teams including IP, tech, corporate, banking, tax, data protection and cyber security.

In 2019, Netflix’s first production hub at Pinewood Studios went ahead with Latham & Watkins, Jones Day and Forsters advising (Law.com). The Longcross film studio deal sees Addleshaw Goddard advising Aviva investors on the property, planning, construction, tax and corporate structuring elements of the transactions (Global Legal Chronicle).

As Dahl put it, “those who don’t believe in magic will never find it”. With the world emerging from the pandemic, entertainment mongers may need to take people beyond their flat screen TVs to retain their business.

Law firms Involved: Skadden Arps Slate Meagher & Flom is advising Netflix, with Taylor Wessing advising the Roald Dahl Story Company.