'Oscar nod is like winning the Lotto with no cash' - Brown Bag Films co-founder on success and the animation boom
Cathal Gaffney doesn't spend much time celebrating his business successes. Although there is a glass cabinet bursting with awards in the reception of Brown Bag Films, and the first flight of stairs is lined with eight Bafta nominations, from last year alone, he describes his approach to work as "a kind of whack-a-mole". "It's a constant focus on the things I have to sort out next," he says. Little wonder, given that the company is currently working on 21 lines of production.
However, there was an exception to this in April, when the company he founded with Darragh O'Connell marked its 25-year anniversary with a big party. "We went to the Mansion House. There were over 400 people at it, and Jerry Fish played the night away for us. It was great, it was a proper celebration. We had young and old, people who had done freelance work for us years ago. It was a great night. All the management teams were in from Bali, New York, Toronto, Manchester, so everyone flew over. It was a very special night."
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The international flavour of the guest list reflects the fact that Brown Bag was acquired by Canadian media group 9 Story in August 2015.
Gaffney, who describes himself as an accidental entrepreneur, says that sale came about through a desire to "bring the business to the next level".
At the time of the deal, the company was profitable and had already created and was producing the massive hit series Doc McStuffins for Disney.
"We had grown the business organically so we had no debt in the business, no investors, and we had two primary shareholders. And we had brought it to a significant scale. We would say that every three years we've been in business, we've changed our strategy, changed our business model. We've evolved; we've become something else.
"At that 21-year mark, we were thinking, 'OK, what next, what's the next area of growth?'. Because I never want the business to plateau, I want the business to continue to grow," he says in a boardroom of the very busy company offices in Smithfield, Dublin.
"The next iteration for the business was to consider working with some private equity partners to really take us to the next level, and the one part of the business which we didn't have was distribution, which is absolutely critical."
The company was close to doing a deal with private equity when Neil Court, executive chairman of 9 Story Media Group, introduced Brown Bag to the Canadian business. The Toronto-based company has a distribution wing, as well as an animation/production operation. "They had very similar cultures, very similar ambitions, and it made a lot of sense for us to join forces, so we were quite happy to do that transaction," says Gaffney.
"That basically fast-forwarded our business; bolted distribution into our business. What has happened since then is that our business has been growing at over 20pc a year.
"Mergers and acquisitions are often known as murders and assassinations, but truly it integrated really well. It has been a very successful example of two companies coming together."
In April, the company re-registered from an unlimited company to a limited company, with accounts just filed giving the first glimpse into the performance of the Irish business for several years.
Revenues for Niagara Films Ireland were €50.7m for the year to August 2018, up 24pc, while pre-tax profits were €6.8m.
At the time of the deal, Brown Bag had more than 200 people working for it. The group now has grown to 330 in Ireland, with 1,100 people employed across the world in total, while Gaffney has taken up the role of chief operating officer of the parent group.
For the general public, Brown Bag Films came to national attention when Give Up Yer Aul Sins received an Oscar nomination in 2002. It may have made headlines, but the nomination didn't bring with it any overnight success.
"We're not in the feature film business, we're in the TV business, so it's a nice story. It gives you credentials," Gaffney says. "It's like winning the Lotto with no cash."
But he adds: "Nobody rang. I think later we did some Fig Roll commercials, but that was two years afterwards. What I am probably most proud of is in 2009, when we set out to get a second Oscar nomination."
Securing that nomination in 2010, for Granny O'Grimm's Sleeping Beauty, meant a lot to Gaffney, as the business had proven the first nomination was not a one-off. "It's about the environment you've created, it's not about the individual," he says.
Gaffney, who is from a family of gardaí, originally wanted to study fine art at NCAD. However, he failed maths in his Leaving Cert, so opted instead for animation at Ballyfermot College. He did not complete the course, however. Instead he set up an animation business with O'Connell.
"I always wanted to make a job of it. I always wanted something stable and secure," he says. "I come from a long line of police officers, so there was the whole thing about how do I get something that is secure? So I was always determined to run it like a company as best I could and as naively as I knew how."
He was driven by a desire to make great animation. "We actually own the trademark 'we love animation'," he notes. Right enough, 'we love animation ™' is emblazoned on a wall in the meeting room. "I love the medium of animation and I love that you're working on something that makes kids happy; that's something that resonates."
When starting the business, it was a hand-to-mouth existence, he says. Now Brown Bag is in the enviable position of being in huge demand.
The boom in streaming services such as Netflix and Amazon has meant there is a large appetite for content.
"With all the streamers, the market for animation has doubled. We find that sales aren't so much of an issue; it's talent. It's a global talent business and colleges physically can't keep up with the demand for production. So most companies around the world, from India to Toronto to Dublin, are starting production without the whole crew because we can't get them, and that's got a big impact."
Earlier this year, it acquired a company in Bali and now 300 people are employed there. In addition to Dublin, Brown Bag employs 140 in Manchester and around 23 in New York, with the remainder based in Toronto.
That makes it one of the world's largest independently owned animation studios. For Gaffney, the goal for Brown Bag is to make an international hit show that it owns. Merchandise such as toys is extremely lucrative for the animation sector but who benefits depends on the nature of each project. "Sometimes Disney will come and write a cheque and we will produce Doc McStuffins. And other times, we will create an IP (intellectual property) like Angela's Christmas, which was a global hit for Netflix."
The company's ambition is to create more of the IP content. "It's about becoming much more of an IP owner and exploiter," says Gaffney.
He is very measured in his commentary in relation to the treatment of animation in Ireland as compared with live action movies and TV, although he has been vocal in the past.
"We do get lumped in together but the business model is very different," he says. "The difference between animation is we carry the overheads 52 weeks of the year, which is the equivalent of hiring all your editors, and all your actors, your lighting people and electricians, and so on, in live action.
"Live action would get commissioned to do a show and then scale up for a duration of that show, and then scale back down again. There is a significant capital expenditure; it's not for the faint of heart to set up an animation studio."
He is also keen on ensuring that Revenue and other State agencies continue to be supportive of the industry. "When the tax credits came out in Ireland first, I would say they were the gold standard that the rest of the world followed. It's under review at the moment and I would hope that Ireland maintains its competitive position because, if we don't, production will be taken elsewhere," he says.
Given that Gaffney likes to regularly take stock of where the business is going, what does he plan now for Brown Bag?
"I don't want to sound glib and say more of the same, but more of the same. We're really happy with the trajectory that we're on."
He says that better monetisation of the company's shows is part of the plan, as well as developing a major hit owned and created by Brown Bag.
"Obviously, we want to create the next Peppa Pig or something, but it is impossible in a business plan to say that. So we want to do really good work."
Having struggled in the early years, big changes in media consumption have meant animation and Brown Bag are in a good place.
"For years, everybody focused on sport and drama, and now I think they have realised that if you have a good children's content offering, that the parents will stay and continue to pay the subscription," he says. "We are in a really strong position now to maximise demand for content.
"Everybody talks about the streamers and the iPad and the devices but Aristotle came up with the three-act structure a couple of thousand years ago and in a thousand years' time, kids are just going to want good characters and engaging story lines.
"As long as we are making good characters and engaging story lines that children around the world identify with, then we're on a path to creating our own global hit show, which we can own and exploit."
COO of 9 Story Media Group; managing director and co-founder Brown Bag Films
Graduate of 'Leadership For Growth' executive education programme at Stanford University in Palo Alto, California
Children Ross (14) and Gina (11)
Photography, cycling and a bit of kung fu
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What advice do you have for people interested in getting into the animation business?
It is an extremely rewarding and satisfying industry. To get paid to do something you love is amazing. It’s never too late to train up and to figure out a path into it. The creative economy has always been stable and has always grown, because it’s export-focused.
Given there are several international offices in the 9 Story Media Group, where do you spend most of your time?
Dublin and Dublin Airport.
Has becoming group COO changed your role significantly?
My role is a lot different than it was five years ago. The irony of it is that my arty, animation friends think I am all about the business, and all the business guys think that I’m the creative guy.
Sunday Indo Business