Distributors Survey 2011 by Media Business Insight

This year’s Broadcast Distributors Survey features fewer companies than in recent years, the result of mergers, acquisitions and financial pressures. Gone are RDF, now part of Zodiak, and Outright, now part of Warner Bros International Television. Power, in administration last year, is not included – but may bounce back now that it is active again under new ownership. Those that remain have turned in healthy performances – virtually every The year-on-year revenue growth. The company reported success stories include Passion, Mentorn International, Electric Sky, Endemol Worldwide and All3Media International, which vario usly put on between 39% and 87% in terms of tur nover. Also impressive were the top two. These figures are formidable when you 2011 consider that the year-on-year increase at both firms was larger than the total turnover at most of our respondents. Comparing 2011 turnover at the top five companies with last year, we see a rise from £643.5m to £709.2m – about 10%. Tally up the list, and the revenue generated is just shy of £1bn. True, a lot of respondents elected not to tell us their profit figure for the year, so we can’t tell if they are all growing sustainably. But BBC Worldwide, All3Media Interna tional, Content Media, Passion DistributionIn association and Part with henon are among those that did, and all showed healthy returns in a tough economic climate. Interesting to note compact group is the number of boutique distributors able tomedia point to A Broadcast supplement

Distributors is Survey

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Distributors 2011

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Contents 6

Thinking global pays off Welcome to Broadcast’s seventh annual survey of the UK distribution sector. This year’s survey includes 25 of the UK’s leading rights management groups – and we’d like to thank them all for taking part. The number of companies included in the survey is lower than in recent years, mainly as a result of mergers and acquisitions (Zodiak/RDF, Warner Bros/Outright). But those that remain have turned in strong performances. All told, 14 of our surveyed Andy companies shook off concerns about the economic Fry climate to report revenue increases of 10% or more. To some extent, this resilience reflects the fact that British broadcasters are commissioning again. But with the exception of BBC Worldwide, the most successful groups in our survey are those that have spread their bets, adding US and Australian content to their portfolios then selling into emerging markets like Eastern Europe, Asia and Latin America. Increasingly, the UK resembles the FA Premier League of the global distribution business, with half of the top 10 (by revenue) now under foreign ownership. For the UK distribution business as a whole, globalisation provides some stability – which is why more than 80% of them come out of the survey feeling more confident than they did a year ago. But it also represents a challenge for our small-to-medium-sized companies as they try to acquire the most attractive content and brands for their programme catalogues. Historically, the biggest concern for UK boutiques was competition from larger UK companies. But today, they are competing for rights with the distribution arms of US majors and continental European distributors – which are increasingly comfortable trading English-language programming. With access to cash still a concern for many boutiques, it would be no surprise if we see a few more mergers in the next 12-24 months. Could digital distribution make a difference to this scenario? Unlikely – smaller companies expect the big players to be the main beneficiaries. ➤ Andy Fry, supplement editor A note on methodology To be included in the survey, companies need to be key players in the UK distribution market, selling their own or third-party product. They must be UK-based or with a sales team based in the UK. Companies must state distribution financial turnover in their responses. Participants are ranked based on distribution turnover for the year to April 2011 or their latest financial year. Our thanks to all the companies that took part this year. If you’d like to be included next year, email robin.parker@emap.com

Contents 16

4-11 O verview Mergers and acquisitions mean there are fewer companies in this year’s survey, but revenues have risen across the board 13-14 Trends Rise in VoD services is increasing opportunities for programme sales as the battle for rights becomes increasingly fierce 16-18 Peer Poll All3Media International retains its place at the top of pile, boosted by the addition of US-originated content With thanks to Compact Media Group for sponsoring the supplement. For more information, visit www.compactmediagroup.com

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Broadcast Editor Lisa Campbell Supplement Editor, Writer and Researcher Andy Fry Features Editor Robin Parker Production Editor Dominic Needham Group Art Director, Media Peter Gingell Sub Editor Sangeeta Chauhan Senior Commercial Director, Media Alison Pitchford Acting Group Advertising Manager Amanda Pryde Senior Account Manager Jack Coleman Account Manager Sonya Jacobs www.broadcastnow.co.uk

16 September 2011 | Broadcast | 3

Distributors 2011 Overview

Distributors

in healthy shape

Catalogues brimming with foreign content, the rise of DTT and demand from emerging economies has resulted in revenue growth for our surveyed companies. Andy Fry reports

his year’s Broadcast Distributors Survey features fewer companies than in recent years, the result of mergers, acquisitions and financial pressures. Gone are RDF, now part of Zodiak, and Outright, now part of Warner Bros International Television. Power, in administration last year, is not included – but may bounce back now that it is active again under new ownership. Those that remain have turned in healthy performances – virtually every company reported year-onyear revenue growth. The success stories include Passion, Mentorn International, Electric Sky, Endemol Worldwide and All3Media Inter national, which variously put on

most profitable Company

BBCW All3Media Content Parthenon Passion

Profit

£64.0m £5.3m £3.7m £2.1m £2.0m

Note Table only includes companies that revealed profits

The Million Pound Drop: Endemol 4 | Broadcast | 16 September 2011

‘UK distribution is an outdated term. To survive, you must be a global distribution business’ Dan Allen, FME

between 39% and 87% in terms of turnover. Also impressive were the top two. BBC Worldwide’s revenues grew by 8% to £260.6m (from £240.8m), while Fremantle Media Enterprises generated £169.4m in revenues – up 7% year on year from £153m. These figures are formidable when you consider that the year-on-year increase at both firms was larger than the total turnover at most of our respondents. Comparing 2011 turnover at the top five companies with last year, we see a rise from £643.5m to £709.2m – about 10%. Tally up the list, and the revenue generated is just shy of £1bn. True, a lot of respondents elected not to tell us their profit figure for the year, so we can’t tell if they are all growing sustainably. But BBC Worldwide, All3Media International, Content Media, Passion Distribution and Parthenon are among those that did, and all showed healthy returns in a tough economic climate. Interesting to note is the number of boutique distributors able to point to healthy profit margins on fairly small turnovers.

Come Dine With Me: ITV Studios GE

10%

The rise in turnover at the top five companies compared with 2010 – up from £643.5m to £709.2m With Europe and the US cut adrift on a sea of debt, you might wonder why the UK distribution business continues to defy the economic gloom. FME chief operating officer Dan Allen probably has the right answer when he observes: “UK distribution is an outdated term. To survive in this market, you must be a global distribution business. UK-only operators will find it increasingly tough.” FME’s business illustrates the point, since it is based on 70% non-UK content and includes hits such as American Idol. With strong pre-sales already in the bag for the US version of The X Factor and the BBC commissioning a new series of Merlin, next year’s headline numbers are already shaping up well. ➤

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THE UK’S TOP DISTRIBUTORS Company

Distribution turnover to April 2011

Distribution turnover to April 2010

% change

BBC Worldwide

£260.6m

£240.8m

FME1

£169.4m

£153m

ITV Studios GE1

£132.7m

Endemol Worldwide

Pre-tax profit to April 2011

Value of international prog sales to April 2011

Value of domestic prog sales to April 2011

£64m

£191m

£70m

n/a

£101.7m

£132.3m

n/a

£80m

£55m

45%

Hit Entertainment2

£66.5m

£62.4m

Zodiak Rights

£45.6m

Shine International1

Top-selling programmes include

Hours of programming in catalogue

% of catalogue from third-party producers

Human Planet, Top Gear, Doctor Who

50,000

26%

£67.7m

American Idol, Merlin

20,000

75%

£88.9m

£43.8m

Hell’s Kitchen US, Come Dine With Me

40,000

45%

n/a

£63.6m

£16.4m

Hot In Cleveland, Extreme Makeover

27,000

40%

6.5%

n/a

£53.4m

£9m

980

25%

n/a

£36.9m

£8.7m

Wife Swap, Being Human

15,000

65%

£39m

£36.5m

n/a

£36.4m

£2.6m

MasterChef, Biggest Loser

3,600

60%

All3Media Int

£36.2m

£26m

39%

£5.3m

£31.2m

£5m

Midsomer Murders, Undercover Boss

4,000

15%

Cineflix Int

£27.3m

£24.1m

13%

n/a

£23.9m

£3.4m

Mayday, Border Security

2,000

35%

Digital Rights Group

£23m

£22.4m

n/a

£19.5m

£3.5m

Doc Martin, Shameless

8,000

100%

Content Media

£16.7m

£16.3m

£3.7m

£15.7m

£1m

Emmy Awards, Heartland

3,400

40%

Passion Distribution

£12.9m

£6.9m

87%

£2m

£11.6m

£1.3m

Ace Of Cakes, Too Fat For 15

2,700

100%

Electric Sky3

£11.8m

£7.9m

49%

n/a

£8.3m

£3.5m

Place In The Sun, Customs

1,750

100%

Parthenon

£11m

£10m

10%

£2.1m

£9m

£2m

Nordic Wild, Mystery Files 2, Jakers!

1,350

70%

Beyond Distribution

£11m

£9m

22%

£1.5m

£10.5m

£500,000

Mythbusters, Love It Or List It

4,000

60%

Target Entertainment

£10.1m

n/a

£9.1m

£1m

Taggart, Popstars, Tool Academy

3,900

99%

DCD Rights

£9m

£8.3m

n/a

£7.2m

£1.8m

Amy Winehouse…, Heavy Haulers

2,500

30%

Optomen Television

£7.6m

£6.65m

14%

n/a

£7.35m

£250,000

Kitchen Nightmares US

1,600

TVF International

£5.6m

£5.1m

16%

n/a

£5.1m

£500,000

William And Kate: A Royal Love Story

2,800

95%

Cake Entertainment

£5m

£4.5m

11%

n/a

£4.5m

£500,000

Total Drama Island, Skunk Fu

400

80%

3DD Entertainment

£4.4m

£4m

10%

£189,000

£3.6m

£800,000

Album Chart Show, 360 Session

1,500

40%

Hat Trick International

£4.2m

£3.2m

31%

£590,000

£2.3m

£1.9m

Episodes, James May’s Man Lab

332

Mentorn International3

£2.26m

£1.3m

74%

£423,000

£2.24m

£20,000

2,600

15%

DLT Entertainment

£1.4m

£1.25m

12%

£250,000

£300,000

£1.1m

950

70%

Argonon International1

£950,000

£1.2m

- 21%

n/a

£900,000

£50,000

1,720

Thomas, Angelina Ballerina

Katie: My Beautiful Face My Family, As Time Goes By Cash In The Attic, Day The Immigrants…

Notes All figures are for year ended 31 March 2011 unless otherwise stated. n/a refers to an entry where figures were not provided. Where figures were supplied in foreign currency, these figures have been exchanged into sterling at the rate applicable at the company year-end. 1. Turnover for Argonon International, Fremantle Media Enterprises, ITV Studios GE and Shine International is to 31 December 2010 2. Hit Entertainment has a July 2010 year-end 3. Turnover for Mentorn International and Electric Sky is to 30 September 2010

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Overview ARE YOU MORE CONFIDENT THAN LAST YEAR? 4% 13%

83%

Yes

Same

Allen’s point about globalisation is also reﬂected in the fact that 15 of our surveyed companies have 30% or more foreign content in their catalogue, while 10 have 50% or more. While some distributors make a virtue of being specialists in selling British content, most have added Australian, New Zealand and US cable content to their offering. Consider, for example, how three of the top five distributors cite US shows as their top performers (FME’s American Idol, ITVS’s Hell’s

30%

The amount of foreign content in the catalogue of 15 surveyed companies; 10 respondents have 50% or more Kitchen US and Endemol Worldwide’s Hot In Cleveland). DCD has followed up the success of Bridezillas with Heavy Haulers, while this year’s fastest-growing distributor, Sally Miles’ Passion (up 87% year on year), has built a business predominantly around non-UK shows such as Ace Of Cakes. It’s not just portfolio diversification that is boosting the Brits; it’s also crucial to note that there are still plenty of buyers in search of content. Many distributors cite the growth of DTT channels around the world as a reason for their resilience. But just as significant is that more emerging economies are in the market for goodquality completed shows and formats. Territories that used to be blank spaces on the distribution map are now turning over significant revenues. This year, we asked our respondents to be specific about where they were 6 | Broadcast | 16 September 2011

Ace Of Cakes: helped Passion become the fastest-growing distributor

seeing sales increases. They picked Russia, Poland, India, Korea, China, Ukraine and pan-regional channels in markets such as Latin America. Not visible on our table, but also worth noting, are sales to US Hispanic, Mexico, Argentina, Pan-Africa, PanMiddle East, Turkey and Japan. In other words, there are opportunities everywhere, and some distributors have responded by increasing the size of their sales forces. All3Media’s team is up by 39%, while Cineﬂix International chief executive Paul Heaney says: “A 500% increase in sales to Russia is down to a new Russian-speaking sales executive who understands the market dynamics.” Having said all that, there is still strong demand in traditional markets. You won’t see any evidence of 500% growth, but our surveyed companies still named the US, Australia and Scandinavia as their biggest non-UK money-spinners – with our table backing the contention that UK secondary revenues remain substantial for many. Only Germany

‘a 500% increase in sales to russia is down to a russianspeaker who understands the market dynamics’ Paul Heaney, Cineﬂix International

biGGesT iNCrease iN reVeNUe Company

Passion Distribution Mentorn International Electric Sky Endemol Worldwide All3Media International Hat Trick International

% change

87% 74% 49% 45% 39% 31%

Revenue 2011

Revenue 2010

£12.9m £2.26m £11.8m £80m £36.2m £4.2m

£6.9m £1.3m £7.9m £55m £26m £3.2m

Top iNVesTors iN DeVelopmeNT Company

All3 BBCW DRG FME Zodiak Passion Hit Cineflix Parthenon

Total annual spend

£4m £4m £3m £2m+ £1.5m £1m £750,000 £600,000 £250,000

(Content’s top market) and France come close to the big four. It’s factors like these that explain why 80%-plus of our respondents are “more confident” than they were a year ago. But this doesn’t mean any of them can relax; as their replies show, there are still issues of concern. The most prominent issues are tougher terms from broadcasters and a trend towards local programming, which sells less well internationally. Beyond that, there tends to be a divergence between the big groups and the small-to-medium players. At the top end, where most companies have broadcaster backing or large portfolios of production companies, there is little concern about the content pipeline. Instead, the focus is on how to stop revenues being eroded. For this reason, the decline of home entertainment revenues and threat of piracy loom large. Further down the table, concerns tend to revolve around the dominance of a few big players. One pulls no ➤ www.broadcastnow.co.uk

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OVERVIEW MOST NON-UK CONTENT IN CATALOGUE Company

% of catalogue content

Content Beyond Endemol Worldwide Passion FME Shine International

95% 85% 80% 75% 70% 70%

Hours of catalogue content

3,230 3,400 21,600 2,025 14,000 2,520

MOST UK CONTENT IN CATALOGUE Company

% of catalogue content

Hat Trick BBCW Argonon Hit DCD Rights Optomen DRG

100% 99% 94% 90% 85% 78% 75%

ARE YOU CONCERNED ABOUT NEXT YEAR? 17%

83%

Yes

Hours of catalogue content

332 49,500 1,616 882 2,125 1,248 6,000

‘While there is plenty of confidence, there’s no complacency. Some 83% of respondents acknowledge concerns about volatility in the economy’

punches when he criticises the “unmanaged growth” of BBC Worldwide. For others, the threat from big companies is more general. A typical complaint is that superindies such as Shine, All3Media and Zodiak have tightened their grip on content, buying up indies and sourcing top shows from the US. When you factor in broadcaster-backed businesses, this makes it harder for nonaligned distributors to secure marketable shows. While there is plenty of confidence, there’s no complacency. Some 83% of

Fresh Meat: All3Media show for Channel 4 developed by Objective and Lime

respondents acknowledge concerns about volatility in the economy. This has an impact in three ways: it could dampen demand in debt-ridden markets such as Greece, Italy, Spain and Ireland; it makes loans for acquisitions hard to come by; and it forces distributors to be more financially exposed than they’d like. As Parthenon says: “We have broadcasters wanting to spread out payments, which means we are cash-flowing producers.” As this comment implies, the ability to invest remains critical. Most of our companies claim to offer deficits of 10-25% on shows, with some going as high as 50% for hot properties. Several also have sizeable development budgets. Last year, All3Media didn’t specify how much it spends in this area, but this year, it cites a figure of £4m, which puts it top of the pile. Not everyone answered this question, but of those that did, five spend more than £1m a year. Among the small-to-medium players, recognition

of the importance of development comes in the shape of numerous pots in the £100,000 range. Parthenon stands out with its £250,000 budget. There are a number of big stories worth noting. First, Cathy Payne’s

£4m

All3Media tops the pile with its development budget. Five others spend more than £1m Endemol Worldwide Distribution has surged ahead of the pack and is looking well placed to break the £100m barrier in the next two to three years. That’s quite an achievement when you consider that EWD’s parent company continues to grapple with an immense debt burden. For more on the reasons for EWD’s growth, see the ➤ Trends piece (page 13).

MOST RELIANT ON THIRD-PARTY PRODUCER CONTENT Company

DRG Passion Electric Sky Target TVF

% of catalogue content

100% 100% 100% 99% 95%

8 | Broadcast | 16 September 2011

Hours of catalogue content

8,000 2,700 1,750 3,861 2,660

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OVERVIEW MOST IMPORTANT MARKETS BY COUNTRY 2%

11% 23%

9% 9% 22% 22% Australia

USA

Canada

Nordic

France

Germany

Other

This is the first full year of integration between Zodiak and RDF. Last year, the companies separately reported a total revenue base of £44m. This year, the newly combined total is only slightly higher, at £45m. Given the rampant growth at other distributors in Zodiak’s revenue band, this suggests that a lot of energy has gone into internal reorganisation. For the current financial year, Zodiak will be looking to demonstrate the benefits of the merger by putting on a growth surge. It will be interesting to see next year how the company’s finan-

£12.9m Turnover for Sally Miles’ Passion Distribution. The figure is up 87% year on year, while profit is £2m cial input into the US version of Being Human has paid off on the international stage, and what impact the acquisition of The Inbetweeners producer Bwark has on the bottom line. Shine International lost its boss Chris Grant a few months back, but it continued to grow off the back of global hits such as MasterChef. Looking ahead, News Corp’s acquisition of parent company Shine portends an interesting phase for the company. How will Shine plug into a global machine that also houses Twentieth Century Fox TV Distribution? And will Shine benefit from BSkyB’s production surge? Passion Distribution’s stellar growth has continued, taking the Sally Miles www.broadcastnow.co.uk

The Inbetweeners: Bwark’s cinema hit will boost new owner Zodiak

start-up to £12.9m in just three years. With turnover up 87% year on year and a profit of £2m, how does she explain the speed of growth? “Because we had already built up a reputation at ID [Miles’ previous company], Passion never felt like a start-up. We hit the ground running, both in terms of the team we had at launch and the buyer relationships we had built up,” she says. Miles’ big success has been to establish a strong pipeline of US reality and lifestyle content that resonates internationally (shows such as Ace Of Cakes and Too Fat For 15). “We know the kind of thing we are good at and that’s what we focus on.” The same message comes out of Electric Sky, which has grown its business by specialising in factual. More recently, it spotted the opportunity of factual 3D and has established itself a key player in this area. This is presumably one reason why it was able to report 49% year-on-year growth. Things haven’t gone as smoothly at Target Entertainment over the same period. But after being taken over by film distributor Metrodome, chief executive Alison Rayson is ready to bounce back: “In the run-up to the takeover, we had an acquisitions freeze, which made it very difficult to grow the business. So to come out with a turnover of £10.1m is actually pretty pleasing for us.” During that time, Target was reliant on selling stalwarts such as Taggart

‘In the run-up to the takeover, we had an acquisitions freeze, which made it very difficult to grow the business’ Alison Rayson, Target Entertainment

and Popstars, which shows the value of its catalogue. Now, with an acquisitions budget in place, Rayson is targeting high-quality drama. Significant recent pick-ups include Cloud Street, the first Australian drama to be acquired by Sky Atlantic. “Being appointed to distribute a show of that calibre demonstrates we’re back in business and sets us up well for further drama acquisitions,” says Rayson. Rayson has always been a lateral thinker when it comes to aligning Target with other companies. So what is the benefit in selling the business to Metrodome as opposed to a TV distributor? “I think there are a lot of similarities in terms of the profile of the two businesses,” she says. “By coming together, we have created a truly independent film and TV rights management group. There’s a lot we can learn from them in terms of managing digital distribution. The way they balance the relationship between theatrical, DVD and digital revenue streams will have increasing relevance to the TV business.” A new name this year is Argonon International, a rebrand of Leopard International, which came about after parent Leopard joined with Remedy. Although this year’s turnover is just under £1m, the parent group has a turnover of around £25-30m, with an ambition to hit £100m within five years. Expect Argonon to play a more prominent role in future. 16 September 2011 | Broadcast | 11

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Trends

What the future will bring From on-demand to ownership, Andy Fry examines the developments in distribution that are providing both opportunities and challenges for everyone in the industry

83%

Proportion of distributors that are expecting revenues from new media to grow over the next 12 months

The Cube: one of three iPhone apps launched by All3Media International

On-Demand One of the most significant developments in distribution is the rise of non-standard video platforms such as Netflix, Google, Apple, LoveFilm and the many on-demand services launched off the back of established broadcaster brands. Quizzed on this subject, our surveyed companies perfectly encapsulate the sense of opportunity mixed with the threat that digital represents. Digital evangelists include Content Media, which has set up a digital division and claims to be making good money (about 10% of total revenue). In its survey response, Content says: “Digital and on-demand have provided new outlets, allowing us to monetise new and additional windows for new content and remonetise catalogue programming. The search capability of digital and on-demand makes it easier to find programming, so that it can be more targeted to the viewer. “Digital media is also vital in maintaining the value derived from traditional broadcast clients – who must maintain their relationship with www.broadcastnow.co.uk

viewers by supporting digital media. Key digital media players are also beginning to provide broadcasters with more competition for exclusive windows and licences.” This upbeat assessment is echoed by All3Media International, which sees “significant opportunities” in the emerging VoD and DTO platforms. “Interactive revenues from activities around our shows are growing for us,” says the firm. “This year, we launched three iPhone apps and are about to launch a number of online games. This will be a big focus next year.” There’s also a technical advantage: “We are exploring digital delivery options where this is feasible to reduce costs, and are digitising a significant percentage of our programme catalogue to plan for this.” The belief that digital can generate cash around the catalogue is shared by most of the companies in our survey – as is the notion that it can enhance and promote TV programme brands. But with actual revenues still quite small for most, there are still a number of negatives associated with the sector. In the Overview (page 4), we raised concerns about piracy. Another point

‘We need tough and experienced executives to make sure we know what rights have value and adequately protect them’ Paul Heaney, Cineflix International

referred to repeatedly is the fact that commissioning broadcasters in major markets tend to hold on to first-window VoD rights. While this makes strategic sense, it limits the value of digital to distributors and content creators. Another big negative, says Beyond Distribution’s Fiona Crago, is “the increased negotiation time dealing with the value to attribute to these rights and the potential prejudice to existing models”. This view is supported by Stuart Mullin, who recently moved over from Wall to Wall to become chief finance officer of Argonon. He cites “the threat of erosion of the value of the secondary broadcast window”. Sarah Tong, director of sales at Hat Trick International, says there is no standard technical delivery. “Everyone wants something different, which is expensive for a company our size.” Tong makes another perceptive observation, which relates back to concerns about the growth of superindies. In her experience, it is tough getting access to digital platforms “which restrict their supply chain to a few chosen aggregators”. With digital revenues still accounting for less than 5% of turnover at most of our surveyed companies, that isn’t yet something to worry about. But with 83% of our sample expecting new media revenues to grow over the next 12 months, it might soon be a cause for concern. Whatever the pros and cons, digital is coming and distributors need to be prepared. Cineflix International chief executive Paul Heaney agrees with Beyond’s Crago that valuing rights has become a priority. “We have increased the size of our business affairs team. We need tough and experienced executives to make sure we ➤ 16 September 2011 | Broadcast | 13

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Trends Turnover From New Media Company

% of turnover from non-TV platforms

Content DCD Hit 3DD Passion Beyond DLT

12% 10% 10% 5% 5% 5% 5%

know what rights have value and adequately protect them.” The other big guns say similar things. FME is “investing ahead of the revenue streams in things like digitising content, asset management, meta-data processing and so on”. Zodiak Rights chief executive Matthew Frank says: “We are gearing up to sell more of our programming to digital outlets, including the likes of Google TV and Netflix, by clearing rights and auditing the catalogue to ensure it’s fit for sale to digital buyers.”

Big Brands If there’s a defining trend outside of digital, it’s to do with the kind of content distributors want. While there is money to be made selling catalogue to broadcasters and digital platforms, the real heat is around big brands. In the same way broadcasters need promotable content to hook viewers, distributors need promotable shows to hook buyers at markets like MipCom. Endemol Worldwide chief executive Cathy Payne confirms: “More and more money is spent on the big shows that define a channel and less on the rest of the schedule.” Juggernauts in EWD’s catalogue include Extreme Makeover and Wipeout. “These shows work really well for broadcasters everywhere. What makes them really bankable is the volume of hours that we have across different international versions, and their repeatability.” The need for big brands has led EWD to aggressively target the US market (just like FME, ITVS GE, Zodiak, Shine and All3Media). In 2010, it delivered US cable channel TV Land’s Hot In Cleveland, which has become a global success. At MipCom, it is launching the E One/Endemol USA-scripted drama for AMC Hell On Wheels and a second US cable sitcom for TV Land, The Exes. This demand for big brands brings challenges. One is that US and UK 14 | Broadcast | 16 September 2011

Value (£m)

£2m £900,000 £6.65m £220,000 £650,000 £550,000 £70,000

broadcasters also want to hold on to more rights to feed their international distribution businesses – which makes big brands more expensive to acquire. Another is that domestic broadcasters that buy big brands want absolute control. In other words, there is greater demand for show exclusivity, with fewer opportunities for windowing. The job is to price in that exclusivity when doing the rights deal. Bolshy broadcasters concern all distributors. One executive says: “Broadcasters are more avaricious in their attempts to hang on to more rights, especially in the US.” For distributors, there’s a tough choice: relinquish rights that could later be worth something, take a bigger financial risk upfront to secure rights, or keep the rights and risk burning your bridges on future joint ventures.

‘Broadcasters are more avaricious in their attempts to hang on to more rights, especially in the US’ Off-screen activities Executive

The value of rights isn’t just linked to their on-screen and format potential, but also to ways to monetise them off-air through live events, sponsorship and promotions, consumer products, gaming and so on. All of this activity makes FME’s Dan Allen uncomfortable with the word distributor: “We do so much more than ‘distribute’ programmes; for us, the past few years have been about developing in new genres [children’s, US cable drama], new capabilities [online gambling, branded retail] and representing/building brands that do not begin on TV. Our business is about brandbuilding and rights management.” Endemol is having similar thoughts. Over and above its ancillary/off-air activities, it has followed BBC Worldwide into the channel business, entering a joint venture with Viacom International channels group in Poland for the channel Blink!. So how do small-to-medium distributors compete with this? Well,

Hot In Cleveland: EWD’s global success

some producers prefer to be with boutiques because their shows stand out more on the slate and get better attention from the company bosses. Boutiques are also fleet of foot and specialist, which means they can react quickly to emerging trends or spot new talent. Passion, Parthenon, 3DD, Electric Sky and DCD Media all have a strong centre of gravity based around a particular expertise.

Ownership Of course, one big trend that isn’t visible in our tables is the aggressive approach that US companies have taken to international distribution. During the lifespan of this survey, we have lost TwoWay to Sony Pictures Television and Outright to Warner Bros. At the same time, US majors have become directly involved in the distribution of British content. Look no further than ITV’s Downton Abbey, for example, which NBC Universal has sold to 100 territories since it aired in the UK in 2010. That’s revenue that won’t show up in next year’s table. Can we expect our table to shrink further next year? It’s possible. One of this year’s absentees is Pilot, whose founder and chief executive Ian Cross decided to place a lot of his programming with IMG. That is always a compelling option for smaller players seeking to tap into the global distribution networks offered by big players. And at the top end of the table? Hit, All3Media and Endemol are always subject to some degree of takeover talk. Given that All3Media also owns Optomen, just imagine the trans formational impact if a player such as ITV decided to buy the group (or Endemol). ITV’s own activities in the international market have slowed down in the past year, so it’s the kind of deal that might just make sense if the broadcaster is to achieve its ambition of being an A-list global player.

Downton Abbey: sold to more than 100 territories www.broadcastnow.co.uk

PROUDLY taking BRitiSH PROgRamming aROUnD tHe wORLD

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Peer Poll

All3Media: still the boss US-originated content such as Undercover Boss and Fairy Jobmother has helped the distributor maintain its position at the top of our peer poll for the second year running. Andy Fry reports The top five in this year’s peer poll took the lion’s share of the votes, with the balance shared between numerous others. Among these, UK companies included Optomen “market-defining shows”, Passion “rapid growth, hard work”, Electric Sky “success in 3D space” and DRG “quality catalogue”. One notable trend was the number of survey respondents citing foreign distributors such as Televisa, Fox, Lionsgate, ZDFE and SevenOne International. While these don’t qualify for our peer poll, the fact that they are cited is an indication that many of our companies prefer to see themselves as operating in the global space and benchmark their performance against international rivals.

1. All3Media International 21% All3Media International has held on to its number one spot in our industry peer poll for the second year running. Those who praised the company singled it out as “efficient and well run” with “a great selection of product from scripted to factual”. It continues to rake in the cash with Midsomer Murders, but the addition of US-originated content has helped to take the business to a new level. This can be seen in its revenue performance, with turnover jumping from £26m to £36.2m. The prize performer has been Studio Lambert’s Undercover Boss (right), which recently secured a new run All3Media International from CBS. But Studio turnover, up from Lambert has also £26m last year expanded All3’s US content portfolio with commissions for series like Fairy Jobmother and The Pitch. One show that won’t transform its fortunes is the US remake of Skins, dropped by MTV after one season. However. the company hasn’t placed all its emphasis on the US and the UK, adding that New Zealand, Australian and German shows “have also performed well and allowed us to grow our catalogue quickly”. All3Media intuitively understands that content is key. As mentioned elsewhere, it has a significant development budget and has “increased marketing spend significantly to ensure that we are building programme brands internationally in a managed way”. That has been done without denting profitability.

Undercover Boss is the prize performer, but Studio Lambert has expanded All3’s US portfolio

£36.2m

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Peer Poll 2. Fremantle Media Enterprises 19.5% FME continues to power ahead. Total revenues were £169.4m and its international contribution topped £100m for the first time. While some rivals are instinctively averse to companies of this size, others applaud FME’s profession alism and range. Indeed, it’s fair to say that FME is one of the few global rights man agement outfits on a par with the US studios in building brands and generating revenues around them. In pure distribution terms, FME has had huge success with fran chises like American Idol, Merlin and Jamie Oliver’s shows, all of which have gone global. More recently, it has added the US version of The X Factor to a port folio comprising 20,000 hours. One strength of FME picked out by rivals is the diversity of its port folio. Right now, it is backing everything from US cable content to British drama. In the latter cate gory, it came to MipTV with three flagship BBC dramas: The Sinking Of The Laconia, Exile and The Crimson Petal And The White. This diversification is a key part of the strategy, says chief operating officer Dan Allen. In turn, the company has to work with more and more third parties: “Over the past five or six years, we’ve been developing a lot of third-party rela tionships, as you can see from our top-performing brands,” says Allen. Looking ahead, expect the com pany’s kids’ titles to start making a contribution to overall growth.

Doctor Who: BBCW top-seller 18 | Broadcast | 16 September 2011

saying there is more to come in the coming year. With scripted content now joining the catalogue along side non-scripted, he expects a big bulge in revenue generation. Cineflix International benefits from a strong North American pipeline of content but is also going after third-party titles. “We’ll probably be increasing in size [hours wise] by 30-40% next year, around 400 hours internally and 300-400 via third-party shows,” says Heaney.

The Crimson Petal And The White: FME show

3. BBC Worldwide 18% BBC Worldwide is the Marmite of the rights business, inspiring love and loathing in equal measure. Its subsidised scale is anathema to some rivals, while others are adamant that the British distribu tion business benefits from having a world-class player. There’s been much talk of BBCW reining in its activities, but as yet there is little sign of this restricting the company’s growth. In the US, its channel and co-production activities go from strength to strength. Elsewhere, big brands like Top Gear and Doctor Who just sell and sell. And then there’s iPlayer. The headline in this survey is yet more growth – with BBCW now generating virtually double what ITV’s international arm does. To its credit, BBCW is one dis tributor that really does sell British content to the world, with Human Planet a top performer this year. But also worth noting is that it

makes just 1% of its revenue from non-UK content. Now that BBC America is com missioning shows in the US and BBCW has entered a wide-ranging alliance with Starz, it’s possible we’ll start to see that number grow. Next year, it will be interesting to see if Torchwood US contributes.

4. Cineflix International 16.5% Cineflix International is fourth in our table this year, with peers citing the strength of its catalogue and the quality of the team’s selling. Strong selling is an aspect peers always cite with Cineflix. Chief executive Paul Heaney confirms he has “a big sales force for the size of the catalogue, which means we don’t miss opportunities”. On the latter point, big boosts in markets like Russia helped the company grow its revenue by 13% year on year (42% last year). Heaney is happy with this year’s 13% growth but is not shy of

Weird Or What: Cineflix show

5. Zodiak Rights 9% The old RDF team that now runs Zodiak’s distribution arm is wellliked for its professionalism and the quality of its service to clients, which is why the company has made our top five. Zodiak still cites RDF’s Wife Swap as its number one show. While it is good to have a banker series like this, chief executive Matthew Frank wants to expand the rights portfolio. “We are investing heavily in third-party acquisitions to maintain the supply of programming to the catalogue,” he says. The fact that Zodiak recently bought UK comedy producer Bwark will help. Zodiak remains one of the most interesting business models in the global market. Despite having no broadcaster behind it, it straddles both the Anglo-American market and the major continental Euro pean markets. This is a managerial challenge but also a big opportu nity. All that’s really lacking now is a genuine global megahit.

Wife Swap: Zodiak’s number one www.broadcastnow.co.uk

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Doctor Who: BBCW top-seller www.broadcastnow.co.uk

The Crimson Petal And The White: FME show

Weird Or What: Cineflix show

Wife Swap: Zodiak’s number one 16 September 2011 | Broadcast | 19

This year’s Broadcast Distributors Survey features fewer companies than in recent years, the result of mergers, acquisitions and financial pressures. Gone are RDF, now part of Zodiak, and Outright, now part of Warner Bros International Television. Power, in administration last year, is not included – but may bounce back now that it is active again under new ownership. Those that remain have turned in healthy performances – virtually every company reported year-on-year revenue growth. The success stories include Passion, Mentorn International, Electric Sky, Endemol Worldwide and All3Media International, which vario usly put on between 39% and 87% in terms of tur nover. Also impressive were the top two. These figures are formidable when you consider that the year-on-year increase at both firms was larger than the total turnover at most of our respondents. Comparing 2011 turnover at the top five companies with last year, we see a rise from £643.5m to £709.2m – about 10%. Tally up the list, and the revenue generated is just shy of £1bn. True, a lot of respondents elected not to tell us their profit figure for the year, so we can’t tell if they are all growing sustainably. But BBC Worldwide, All3Media Interna tional, Content Media, Passion Distribution and Part henon are among those that did, and all showed healthy returns in a tough economic climate. Interesting to note is the number of boutique distributors able to point to healthy profit margins on fairly small turnovers. With Europe and the US cut adrift on a sea of debt, you might wonder why the UK The Distributors Survey 2011 distribution business continues to defy the economic gloom. A Broadcast supplement FME chief operating officer Dan Allen probably has the right