The Business Journal of Film, TV Broadcasting, Broadband, Production, Distribution
September/October 2012
Volume 32 No. 5
Life As a Program Buyer Has Changed, But Attention Hasn’t
By Lucy Cohen Blatter
It isn’t easy being a program buyer these days. Advertising dollars are down and viewer alternatives are up. Local production is down in many parts of the world and cost of imported programs is up. Competition is increasing and the budget to face it decreasing in many instances.
Angus Ross of Seven Network
Plus, the buying business models are ever-changing with exclusivity often a thing of the past, and shared windows a new reality. And the challenges are not over yet, with new technologicalTV formats to contend with, such as 3D.
If all these weren’t enough, consider the TV trade shows that are constantly multiplying around the world (though the opportunities to attend even some of them are dwindling). No wonder deep down, some buyers wish they were sellers — perhaps the challenges are equally daunting, but the pay might be better. Yet for some, the attention one gets as a buyer is still a big plus and an incentive not to jump ship.
Perhaps unsurprisingly, buyers interviewed for this article indicated that ever-advancing technology has been a major game-changer for their business. Several buyers mentioned the prevalence of DVRs, a potential challenge for securing advertising money.
At the very least, DVRs are forcing buyers to be more creative about getting those advertisers’ product seen in more places. “There is a lot of time-shifted viewing occurring with our programming (particularly U.S. dramas) whether it is using a PVR or through our catch-up service through Yahoo7,” said Angus Ross, director of Programming at Seven Network in Australia.
Ross added that the biggest challenge his company faces is the tough advertising market in Australia at the moment (which can be credited in large part to fragmentation of audiences). “Cost control is key,” he stressed.
Due to some tight budget constraints, buyers around the world must find ways to better invest their budgets and decide whether to seek output or volume deals with U.S. studios or simply deal with new series on a case-by-case basis. Formulas for the former could be very complicated, contrary to movies that now are pegged to local box offices (used to be the U.S. box office).
According to Ruediger Boess of ProsiebenSat1, his company prefers to “buy exclusive rights over non-exclusive rights so that we can use the program effectively on all our stations and platforms,” he said. About 50 percent of their programming is imported.
Though Boess denied that his budget is smaller these days (“In recent years, programming investments were at about 900 million euro with most of the programming investments usually relating to the German speaking countries,” he said), he admitted that expenses are high: “Costs are certainly not decreasing — particularly U.S. programs are of great significance in the German area accompanied by strong competition for these formats,” he said.
Aside from the high cost of programming, the Internet has also created more challenges for buyers. Aldo Di Felice, president of Canada’s TLN, a TV network that transmits programs in Italian, Spanish and English, said: “We are now almost always buying program rights on a platform-neutral basis. This allows our channel to simultaneously be offered on mobile devices and online. We also have a library of programs that are offered non-linearly, a la carte.”
Technology can, nevertheless, be a good thing. There are certainly upsides, like being able to attract more viewers across more mediums. “Our social media app FANGO is playing a key role in driving viewer engagement with our Australian programming and helps drive viewers to view the program live,” said Ross.
Indeed, their online services have helped TV networks recapture some of the audiences and most of the ad money originally lost to the Internet. As New York’s media economist Jack Myers told VideoAge last May right before the Upfronts, “A lot of the money that’s shifting to the online marketplace is shifting to the networks’ own video assets — like ABC.com, CBS’s TV.com and Hulu. About 50 percent of the money spent on online video will go to the broadcast and cable networks, and the lion’s share of that goes to broadcast,” he said.
Another upside to new technologies: They’ve made market meetings more efficient. “You used to come back from a TV trade show with mountains of DVDs and catalogs to review… Now distributors use hard drives and tablets so you can have a complete view of the content they are offering during the meetings,” said Ana Maria Nuñez Toledo of Chile’s VTR pay-TV channels.
Additionally, “We can now show international series almost immediately after their domestic transmission using file server technology. However, technology also means these shows can be pirated,” said Dermot Horan of Ireland’s RTE.
Buyers are also attuned to ways to better exploit content. For example, Guido Pugnetti, a buyer for Italy’s RAI, advocates a longer gap between pay and FTA windows, especially for movies. This, in his view, would increase the value of movies to broadcasters who would count on higher ratings.
Standing out from the (ever more crowded) crowd has become more of a challenge for almost every network — whether it’s free-to-air, PPV, cable, or anything else. “We operate in probably the most competitive single language territory in Europe, with not only domestic Irish competitors, but also over 75 percent of homes receiving hundreds of U.K. channels, all in the same language. Thus, acquiring shows and making them stand out in this cluttered world is a real challenge,” said RTE’s Horan.
Emiliano Saccone, of the just-launched MundoFox Spanish-language American broadcast TV channel, came from the pay-TV world, and is finding new challenges in broadcast TV. “Relative to my pay-TV experience, the broadcast business is highly sensitive to the economic environment, which I bet could turn into something extremely difficult if the macroeconomic conditions were not the right ones.
“MundoFox is a nascent business amongst very dominating players in a world that has increasingly more media choices and screams fragmentation while our intrinsic objective is to reach critical mass like any broadcast network. Anyone could argue they are opposing forces,” he said.
Since many buyers are facing the same challenges, it’s no surprise they often seek one another’s advice. (Most often, buyers know all other major buyers in their region as well as those looking for the same niche programming.) “There are always a lot of familiar faces at the TV markets,” commented Seven Network’s Ross.
“Keeping in touch with other buyers is a really good idea. You find out how shows you may have bought have performed in their territories, how they have scheduled them, how they have promoted and publicized them,” he said.
But, there is more than one reason for buyers to keep in touch. Indeed, one never knows when those contacts will become useful; after all, for buyers, making the jump to selling can be an easy task, as recently demonstrated in territories such as Germany and Italy, though arguably less often than once was the case. (On the distribution side, many sellers are themselves buyers of programs needed to replenish their catalog, so the jump is not too difficult).
Plus, opportunities for buyers to mingle are everywhere, through professional associations, such as EBU in Europe or NAB in the U.S., or during markets such as the so-called “Sauna Meetings” during MIP and MIPCOM.
To truly get inside the minds of our buyers (and find out information the sellers want to know), we asked them what time of year they tend to be most flush with cash. It seems that answer varies greatly depending on the company.
“It depends on many variables,” said MundoFox’s Saccone. “Your company may have a long term output deal and in turn rely solely on that. Some other companies may not have enough scale to sustain big volume deals and in turn are forced to be opportunistic so they are in the market all year round.
“Some other companies are increasingly trying to crack the original content formula while decreasing their acquisition budgets…Some companies go by calendar year, others by broadcast and others by fiscal year. So, it depends, really,” he said.
“The first six months of any given year are less about buying and more about intelligence gathering,” said RTE’s Horan.
On the other hand, Ross of Seven said funds tend to run dry in June, “as we approach the end of our financial year.”
Finally, we at VideoAge wondered whether advertising budgets and the tough economic climates of the past few years mean all work and less play, and whether sellers have ceased trying to woo their buyers.
There are probably fewer parties than there used to be in the past. Buyers and sellers are busier than ever with more linear and digital competition in every market,” said RTE’s Horan.
“I don’t need to be wooed,” said Seven’s Ross simply. “I’m just looking for great programming ideas at the right price.”