CHF Media Fund

CHF Media EIS and SEIS focuses on animated children’s TV.  This sector has, in the eyes of the manager, high growth potential, without the high cost of a full-on Hollywood blockbuster. 

Highlights

  • Blend of EIS and SEIS investments
  • Highly experienced team with a proven track record of creative and commercial success - six BAFTAs and two international Emmys
  • Target return of 3x investment after a five-year period (not guaranteed)
  • Exciting children’s animation projects
  • Previous investments include the third series of Pip Ahoy! – as well as new show concepts
  • Minimum investment £20,000 (min £5000 into SEIS).

The manager

CHF Media Group has its origin in the 1970s with a firm called Cosgrove Hall (hence the initials) which made many of ITV’s big animated hits of the 1970s and 1980s, including classics such as Danger Mouse and the BAFTA-winning Wind in the Willows. During this period, Cosgrove Hall made the programmes and ITV owned the rights and generated revenue through advertising. Following OFCOM’s ban of fast food advertising during television programmes aimed at children in 2008, ITV sold off the rights and virtually closed down its children’s TV division. In 2011, the original founders of Cosgrove Hall decided to reform under the CHF Media Group banner. CHF Media currently has £11.3 million assets under management.

The offer

CHF Media fund is a media EIS and SEIS offer, focused on children’s animated programmes.  

Pip Ahoy!, narrated by Sir David Jason and Stacey Solomon and aired on Channel Five, was the first show and launched as an EIS.

It originally raised £4.5 million and subsequently a further £1 million. According to CHF’s management it is one of the most popular children’s shows on Channel 5. It has been sold around the world including China. The TV programme is supported by the sale of toys, apps, and educational books. Licensed toys are a huge market with annual sales of around £3 billion in the UK and $230 billion globally (data as at 2014). CHF Media Group aims to get a slice of that market. 

Within the offer, investors receive shares in a range of companies in a mix of SEIS and EIS. Each company is what is known as a special purpose vehicle (SPV) and has been set up to own all the intellectual property rights of an individual project such as Pip Ahoy!.

Investors receive approximately 50% of the shares in the company and CHF Media Group the balance. The SPV will come up with an idea for an animated kid’s programme and make a 3-minute pilot (at the SEIS stage). If a broadcaster is interested, a whole series of typically 52 11-minute programmes is commissioned.  At this point EIS money will be raised. It takes about 18 months to finish 52 episodes, with most of the content, storyline and music created in house. The storytelling is key in children’s TV; this sits at the heart of CHF’s previous success. The SPVs pay CHF Media Group to do all of these functions. 

CHF has a “Creative Commercial Committee”, which is responsible for identifying prospective shows or concepts that have the potential to offer family entertainment and the ability to generate significant commercial returns to investors.

CHF typically lets Channel 5 air the series free of charge as the SPV will aim to make its money from merchandising and selling the broadcast rights globally. A well-received show could be sold on to over 80 countries to broadcast at approximately £50,000 a time. The real value is in the merchandising deals, which are expected to produce the bulk of profit. Merchandising deals are arranged typically on the basis of an upfront licence fee plus a royalty on every item sold. Each show or concept also benefits from its own music score that may generate license income when used within toys and games and also in its own right.

The programmes are expected to qualify for tax credits under the Creative Sector Tax Credits introduced in 2013. The relief is in effect a 20% rebate on certain qualifying expenditure incurred by each SPV in producing a show. 

Target return

The CHF Media Fund targets a return equivalent to three times net investment after a five-year period. This is of course not guaranteed.

Exit strategy

CHF’s management may make an offer for the 50% of the underlying SPV it doesn’t own after three to five years.  However, if investors don’t take up the offer, the management could switch to paying dividends out of any profits (these would be taxable). An alternative exit route could be via a trade sale to a company that buys intellectual and media rights. 

Risks

The SEIS companies are very early stage and there is no guarantee any broadcaster will commission the show for a longer run. The typical model in the UK is to give the broadcast rights away here and rely on merchandising and overseas sales – if these don’t come through then profits could be inhibited. The intellectual property owned by the SPV should however still have a value in the open market. 

Despite the team’s past experience and expertise, success is not guaranteed. New show concepts may not get produced. For those already in development, there is no guarantee the show will generate profit. There’s no guarantee your investment will grow in value or indeed that you will get your capital back. 

EIS and SEIS investments are not for everyone. Before you invest you should carefully read the documents and ensure you’re comfortable with the risks.  Tax rules can change and depend on individual circumstances.

Fees

There are no direct charges to Wealth Club investors, who should receive tax relief on the full amount they invest. Within the portfolio, charges are taken from the underlying investee company. CHF’s initial fee is 2.5% and the annual management fee is 1.75%. There is an annual secretarial fee of 0.3%. CHF Media Group may be entitled to further monitoring, deal arrangement and other success fees. There is no explicit performance fee. CHF benefits from any profits through its 50% ownership in the individual SPVs.

Summary

This offer could be of interest to those considering a media EIS, a popular sector amongst investors. The SEIS element adds appeal too. The CHF Media fund focusses on family and childrens’ TV. The team are seasoned professionals who have a good understanding of what works in this market. Remember, however, the big money is made from merchandising, not the TV production itself.

This review is not intended to be advice or a personal recommendation to buy the investment mentioned, nor is it a research recommendation. Wealth Club aims to highlight investments we believe have merit, but investors should form their own view on any proposed investment.  July 2017

Having been involved with Cosgrove Hall Films for many years, I was delighted to join forces with Brian Cosgrove, Simon Hall and Adrian Wilkins when they set up the new Cosgrove Hall, CHF Media Group. I knew the production company, CHF Entertainment, would be vibrant and imaginative with wonderful, exciting new characters to emerge. I was absolutely delighted to have helped to launch Pip Ahoy! and to have been invited to voice some of the characters. I am now enjoying seeing these new characters come to life on our television screens, capturing the hearts of families across the UK and beyond.

Sir David Jason, OBE

The details

Min. Investment
£20,000
Amount Raising
uncapped
Type
Media
Deadline
discretionary

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