Darren Throop: Who is this unassuming man?

Hype about his rapid rise in filmed entertainment has made Entertainment One CEO Darren Throop a star in national business pages. But it was music that quietly built his career over nearly two decades.

Hype about his rapid rise in filmed entertainment has made Entertainment One CEO Darren Throop a star in national business pages. But it was music that quietly built his career over nearly two decades.

Playback’s Person of the Year has a habit of acquiring specialty boutique operations to grow empires.

In the early ’90s, Throop left the family farm in his native Alberta and moved to Nova Scotia, where he opened a record shop, the Urban Sound Exchange, in Halifax. It was a decade where he also tried his hand at running tanning salons, a restaurant and selling cars.

Yet it was figuring out where the world of music was – and then delivering it to consumers – that raised Throop’s game, after Urban Sound Exchange was acquired in 1999 by CD Plus, a music retail chain that sold prerecorded music and video at around 100 stores nationwide. He soon rose through the ranks at CD Plus, as it acquired a number of businesses to broaden its product line to include DVDs and video games.

Throop served as vice-president of operations for Records on Wheels and CD Plus. Then, in July 2003, he became president and CEO of ROW Entertainment, the predecessor of E1. At the time, ROW was structured as a publicly traded income trust.

The acquisition of companies including Video One and Zing Distribution followed, as did partnerships with companies including Moontaxi Media to launch Puretracks, a music download service. Taken together, the corporate moves soon made ROW Canada’s largest wholesaler of CDs, DVDs and video games.

Nonetheless, as a market intermediary that essentially stocked store shelves with entertainment product or delivered it to web customers, Throop could see retail shelf space was increasingly under threat from online distribution via the Internet. The answer was to own content or acquire long-term rights.

‘We had wholesale strength, but we needed to attach content ownership,’ Throop recalls.

So in 2005, ROW acquired U.S.-based Koch Entertainment, North America’s largest indie music label, for $80 million. That deal gave ROW a U.S. presence, a multi-channel distribution network, control of a varied product catalogue, and a senior management team led by Koch founder Michael Koch, who remains with E1 today (see story, p. 19).

The year 2006 was also a turning point for ROW. First, the North American home entertainment market suffered its first-ever sales slippage. Next, Ottawa undermined the appeal of income trusts by unveiling plans to tax the investment vehicles. ‘Our capital structure wasn’t working for us,’ Throop recalls.

That same year another event unfolded in Toronto that would dramatically impact on ROW; veteran movie distributor Patrice Théroux was ousted as CEO of Motion Picture Distribution, the Canadian indie distributor spun off from Alliance Atlantis Communications three years earlier.

Théroux, MPD chairman Victor Loewy and EVP Paul Laberge had been negotiating with British hedge fund Marwyn Investment Management to launch a management buyout after senior AAC executives had put MDP on the sales block. Nonetheless, those same senior execs jettisoned the trio when they got wind of the deal, leaving Théroux unemployed.

Before long, Throop met with Théroux to discuss filmed entertainment, although Théroux was restricted from joining E1 for a year after he left MDP because of a non-compete clause in the final departure package. But that didn’t stop Throop from thinking ahead.

‘We were on a path that wasn’t focused on theatrical releasing,’ Throop recalls. ‘We didn’t have the management team to focus on it.’

In Théroux, Throop saw a movie distributor with extensive relationships and industry knowledge, and an executive with an aura of power, born of 18 years at Alliance. But he would have to wait.

In the meantime, Théroux recommended that Throop approach James Corsellis, managing partner of Marwyn Investment Management in the U.K., for backing. He did, and on March 29, 2007, Marwyn took ROW private and relaunched it as E1 on AIM at the London Stock Exchange.

‘[Marwyn] liked the Alliance platform. But they also liked E1 as a stable company,’ Throop explains.

With new backers, E1 immediately hit the acquisitions path and picked up indie music label Navarre Entertainment and British home entertainment distributor Contender Entertainment Group.

Next came a string of acquisitions – orchestrated by Théroux – who at long last joined E1 in August 2007. First there was Montreal-based Seville Pictures to provide Théroux with a Canadian foundation on which to build, followed by Benelux distributor RCV Entertainment. Then Théroux brokered output deals with Summit Entertainment, Yari Film Group and ThinkFilm. But that wasn’t enough.

In July, E1 swallowed veteran TV prodcos Blueprint Entertainment and Barna-Alper Productions and distributor Oasis International as TV content suppliers and foreign TV sales closers. On the feature film side, E1 also acquired Maximum Films and Maximum Films International, garnering a national theatrical releasing division as well as a crackerjack foreign sales team, headed by veteran Charlotte Mickie.

And finally, E1 orchestrated a reverse takeover deal with kids and family content producer DHX Media – including the profitable Decode Entertainment and its monster evergreen library – which also conveniently secures a listing on the Toronto Stock Exchange, when the deal is approved by shareholders (expected in January 2009).

In terms of almighty content, E1 has amassed a film library that exceeds 3,700 titles, and over 4,500 hours of TV programming. That’s combined with a music library of around 5,000 songs from 200 artists.

Meanwhile, on the distribution front, Throop has seized a 40% share of the Canadian home entertainment market, 85% of domestic DVD sales, and established distribution ties to U.S. studios (including Universal Home Video) and content owners to complement E1′s status as the largest indie music distributor in the U.S., via Koch Entertainment.

All these acquisitions happened prior to the October Wall Street crash, which has led some market analysts to question whether or not E1 has expanded too fast in a global entertainment market suddenly fallen on hard times. However, Throop’s response to the skeptics reminds that he steered ROW through the death rattle of the local record shop to selling music online.

‘When you look at the aggregate, it has never declined, it has always grown,’ says Throop of the global entertainment market. He also foresees opportunity in the filmed entertainment sector as the global film and TV business goes through its latest remix for the digital age.

Throop maintains that in any climate, the key to success is rights ownership and management, so E1 has been on a mission to secure movie, music and entertainment rights, either via ownership or third-party distribution.

The company’s sales team now aims to monetize the content offerings in multiple territories, both to amortize costs and reduce risk. Meanwhile, Throop says E1 will continue to grow and prosper, if the company consolidates all its content channels at hand.

‘As the model evolves and changes – as long as you share in each and every revenue stream – your business should prosper,’ he says.

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