The Perfect Storm: How Debt, Strategy, and Market Forces Sank a Media Giant
This article distills key insights from a guest lecture I delivered to the Masters degree students in the Telecommunications and Media Management program at Université Paris Dauphine PSL in April 2025. While the live presentation included a deeper analysis and Q&A, I wanted to share these fundamental lessons more broadly. For inquiries about similar presentations, please contact us.
Technicolor Group's collapse in February 2025 sent shockwaves through the creative services industry. In just over two years, a company commanding a €1.1 billion market cap at IPO became near worthless at €8.9 million, putting 4,000 artists suddenly out of work across the UK, Europe, Canada, US, and India. Though I was only at Technicolor for a short time from 2019-2022, my observations plus the longer history of the firm create stark lessons every creative business leader needs to understand.
Three Fatal Flaws Converge
Technicolor's demise wasn't sudden. I boil it down to three primary factors, each problematic alone, which created a perfect storm when combined: an unsustainable debt burden, strategic incoherence, and unreadiness for unexpected external pressures.
1. Unsustainable Debt
The numbers tell a brutal story. Technicolor's financial fragility stemmed from debt problems that began even before Thomson SA's acquisition of the original Technicolor in 2001. The company, seduced by growing Hollywood post-production spend, shifted its assets away from consumer manufacturing towards creative services. The drumbeat of acquisitions (a sound strategy when executed well) in this case created an unsustainably precarious financial structure. By 2009, these issues forced the company to seek procédure de sauvegarde, the French equivalent of Chapter 11 bankruptcy protection, leading to a 2010 restructuring and rebranding from Thomson to Technicolor - lipstick on the proverbial pig.
Despite this serious wake-up call, the company never properly emerged from its debt burden. To the contrary, the acquisition spree continued on for several more years. By 2020, debt remained a stubborn €1.466 billion against revenues of €3.006 billion, with a debt service ratio during the first year of COVID of 9.4x. Compare that dangerous situation to Disney or Netflix or the major advertising holding companies, all with healthier debt service ratios in the same year of ~1.5-3.5.
This had the clear effect of draining resources through interest payments and severely limited strategic flexibility. Fast forward to the next bankruptcy event in 2020 followed a failed €300 million rights offer during COVID. The new restructuring plan, which aimed to reduce debt to €1.1 billion, still left the company paying €126 million/year in interest each year. Try innovating or readying for headwinds when that much cash bleeds out every year.
2. Strategic Incoherence
Working inside Technicolor, I witnessed firsthand how the company's siloed divisional structure hindered collaboration and created internal competition for limited resources.
Unlike competitors like Framestore or DNEG, which developed integrated solutions, Technicolor couldn’t navigate the boundaries between divisions, all incomplete acquisitions (and in the case of The Mill and MPC Advertising, long-time competitors) each at different stages of incomplete integration. This revealed itself in painful ways:
Operating in silos, competing for resource
Competing for extremely limited capital and corporate support created distrust and under-investment in each highly competitive business unit. Caught in a cycle of under-resourced projects, business units could not easily share resources or double-up recruiting efforts because of a lack of cross-training and process fluidity, or even shared cultural values.
Merging the acquisitions was a logical next move (on paper) but…
An inexperienced CEO rushed mergers, drowned staff
The new TCS CEO instructed the team to merge Mill Film into Mr X, then merge Mr X and Mikros VFX into MPC, and merge MPC Advertising and the Mill together, each within 6-month timeframes. None were successfully completed on those deadlines, client projects and morale suffered from the mayhem, and shared services were left in shambles.
Lost differentiators, lost clients
Merging business units also had the effect of exasperating and ultimately forcing out key tenured talent (and their client relationships with them). And in a production procurement world where clients triple-bid projects and the Mill and MPC used to fill two of those three spots, the merger eliminated at least one Technicolor bidder from every client bid sheet and created opportunities for competitors. The merger of MPC Advertising with The Mill reduced combined revenue in the first year by an estimated 25%. Yes, this is actually a clear case of 1+1=1.5
Unrealistic corporate expectations of SpinCo
Technicolor’s governing board was legacy Thomson, and didn’t really understand creative industry dynamics. The relentless COVID-19 demand for content was unsustainably high, but the board was encouraged that the creative services division (TCS) could be spun out as a newco unlocking new equity value. But they were blithely unaware that Technicolor’s ability to deliver growth was at its ceiling. Reasonable internal projections of revenue delivery was, according to my sources, in some cases doubled for prospective investors.
3. External Perfect Storm
Technicolor faced a series of external shocks that would have challenged even the healthiest company but proved devastating to an organization already weakened by debt and strategic incoherence. The COVID-19 pandemic created an immediate crisis by disrupting production schedules across the entertainment industry and destroying the company's opportunity to raise capital through its planned €300M rights issue in early 2020.
Following the pandemic, the "peak content" era pushed VFX studios to unsustainable delivery demands. And finally, the 2023 historic dual WGA and SAG-AFTRA strikes dealt the coup de grâce, shutting down production for nearly a year and fundamentally shifting studio economics away from high-end content production. These external pressures demanded agility and innovation that Technicolor's debt-burdened and strategically divided organization simply couldn't deliver.
The Domino Effect
Debt pressure forced desperate restructuring and the spin-out. Rushed and messy restructuring disrupted operations. Disruption cost client relationships. Lost clients necessitated unrealistic promises to investors. The Technicolor Creative Studios IPO roadshow promised growth that operational reality couldn't deliver.
The IPO ended predictably. After just six weeks on the public market, Technicolor Creative Studios issued a shocking EBITDA warning reducing profit expectations by a whopping €80 million. One would think that the numbers so close to IPO would be airtight. Before long, the company was trading down 87% from IPO, and TCS ultimately delisted.
There were still so many talented, industry-leading employees at Technicolor at this time. But arguably there was nothing they could do from within to fix the situation. The key to understanding tentpole VFX and animation studios is there is no room for a movie production to fail. They get one shot at it. if a major vendor goes under during production or post, and the studio cannot successfully relocate the work within budget and time constraints, it could jeopardize the entire release and cost the financiers dearly.
So even if a client would love to work with your team or your proprietary technology, if there are clear signs that your company could go into administration in the next 6-12 months, no one will be allowed to procure your services. In sum: nobody was buying Technicolor Creative Studios services despite their capacity, talent, willingness, and extremely aggressive pricing.
The final attempt at salvation came too late. Enter another new CEO (a former Technicolor CFO whose CEO experience came from Europcar) and a glossy "Re*Imagined" transformation. They burned through cash and papered over issues by renaming the company again, this time to “Technicolor Group” for genuinely no good reason. Adjusted EBITDA plunged to -€15.7 million.
Each of the company’s restructuring attempts share a common pattern of failures:
Only offering temporary financial relief
Ignoring the blind spots of the board, CEO & CFO
Wishful thinking on cost structure and realistic cash flows
Misrepresented the realities of a creative services business
Behind the scenes, Technicolor attempted to sell its pinnacle brands: The Mill, Mikros, and MPC. But without meaningful assets, buyers would only inherit problems. So when a last-ditch acquirer pulled out in January 2025, current investors refused to fund operations any further.
Technicolor entered administration, and in another shocking managerial failure, did so without having kept reserves for February payroll.
Hard Lessons for Creative Leaders
Industry competitors like DNEG, Framestore, and Weta FX navigated through the same perfect storm. They survived because they:
Maintained financial discipline: Lower debt loads provided strategic flexibility, and their acquisition strategies were far more modest
Built integrated operations: Unified structures created more value than siloed divisions
Invested in leadership and technology: Never deferred critical hires or key service technology improvements
Understood the dangers of the business model: As successful creative services companies they lived within their means, expected and responded well to volatility, and prioritized client success over all other activities.
The Real Warning Signs
Creative business leaders should watch for these danger signals:
Debt service levels beyond industry norms
Consistent negative cash flow despite growth
Strategic divergence between business units
A growing list of clients unwilling to trust you to their business
Technology investment falling below competitors
Financial restructuring taking precedence over fundamental business improvements
Some, but not all of Technicolor's talented staff found new homes within weeks of the collapse. Their skills and creativity remained valuable; the corporate structure managing them did not. This stark reality underscores the responsibility creative leaders bear: to build businesses that amplify rather than constrain the extraordinary talent they're privileged to lead.