Variety: Showbiz Payroll Systems Reach for the Cloud
September 2, 2015
By Peter Caranicas
On July 29, private equity firm Silver Lake Partners, which counts WME/IMG within its $26 billion portfolio, announced the acquisition of Hollywood payroll company Cast & Crew Entertainment Services from ZM Capital.
Just 15 days later, on Aug. 13, the other most prominent showbiz payroll company, Entertainment Partners, said it was buying smaller competitor Ease Entertainment Services, and would merge the companies’ operations.
Is the close timing of these two transactions a mere coincidence? Probably not. They both reflect the urgency many industryites feel to move production management and payroll operations from the horse-and-buggy era of voluminous paperwork into the digital age of cloud-based systems.
“When you’re starting a big production, you may be onboarding 750 to 1,000 people over the course of a few weeks,” says Cast & Crew CEO Eric Belcher. “It’s now a manual process. Each individual has to fill out paperwork, copies are sent to the payroll company and kept by the production office.”
Newly armed with Silver Lake capital, C&C is not only introducing software designed to digitize the hiring and timesheets of everyone working on a production, it also has a plan to tech-enable the entire production process, beginning to end, says a Silver Lake exec. “Under our ownership, we’re going to turbocharge the product portfolio and accelerate the digitalization process.”
Technology also is the impetus behind EP’s purchase of Ease. Earlier, Ease had bought the cloud-based Scenechronize production management software, which EP will integrate into its existing budgeting and scheduling systems.
“We want to create a paperless production environment, adding automation efficiency to the workforce management processes,” says Myfa Cirinna, Entertainment Partners’ exec VP of marketing and sales.
Cast & Crew and EP are the largest of many outfits providing payroll services and production accounting to studios, networks and production companies for features, TV and commercials — projects that can employ from a handful to more than 1,000 individuals from periods ranging from a few days to, in the case of TV, many seasons. Headquartered in Burbank, they have offices in production centers such as New York, Louisiana, Georgia and Canada.
As part of the package, they also offer residuals processing, health and benefits management, consultation on production incentives and even cash advances against transferable tax credits, unlocking their value to clients early in the production cycle rather than after the project has wrapped.
To take one example, EP used Louisiana tax credits to finance about 20% of the budget of Paco Cabezas’ “Mr. Right,” the action comedy that will close the Toronto Film Festival. “The producers had raised a good portion of equity for the film,” says EP film finance head John Hadity. “We did the tax credit loan, and the balance came from the bank.”
The amount of money changing hands in the Silver Lake-Cast & Crew and EP-Ease deals wasn’t disclosed; street talk pegged the sums at roughly $700 million and $100 million, respectively.
Most customers welcome the industry’s belated tech update. “Going digital is to everyone’s benefit,” says David Buchan, finance VP for FremantleMedia North America, an exclusive EP customer. “The holy grail is to automate as many processes as possible. All the payroll companies are making efforts in that regard. The one that does the best job will be the most successful.”