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Rights & Finance Leader 04
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All change for producers Just two months since Broadcast’s Indie Survey, and already the game has changed irrevocably. A hectic month of consolidation is creating a path to the first global mega-indie – announced just after the UK’s biggest super-indie got a new lease of life – and a US giant is getting a foothold among Britain’s public service broadcasters. Meanwhile, ITV is empirebuilding by stealth, snapping up all manner of hot Robin international indies. Parker As the news sinks in, this guide attempts to untangle what all this means for the production landscape. Does Discovery’s co-ownership of All3Media mean that the international network is closing its doors to indies on the outside? Will Discovery keep All3’s best ideas to itself? Could Viacom be a more willing negotiator than Richard Desmond? And will Rupert Murdoch have everything sown up once he has the keys to Endemol, Shine and Core Media? Meanwhile, there are hopes that new investment opportunities will ensure that medium-sized indies – whatever that will mean once a megaindie skews the market – get a lifeline to stay afloat and win business internationally. Channel 4 wants in on the action and David Abraham is likely to flesh out his plans at Edinburgh – see page 8 to read more about its markers for success. And what of the content itself? Where once an axed show stayed axed, today all manner of new players are signing chequebooks for recognised brands that put them on the map and tempt new customers to sample their on-demand archive. It’s co-production for the 21st century – and in many cases, it’s the emerging platforms calling the shots. What this means for international exposure, and rights, comes under the spotlight here. It’s our snapshot of a time of momentous change. The key question is: who’s next? ➤ Robin Parker, supplement editor
Contents 04 New buyers Indie acquisitions are again making the headlines, but now the buyers are media giants and broadcasters seeking to secure content at source
10
08 Mid-sized indies Thanks to rising demand for quality content, new investors are helping smaller producers fulfil their potential 10 Drama co-pros Working with new digital co-production partners such as Amazon, broadcasters are getting more costly high-end drama on screen
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Broadcast Editor Chris Curtis Supplement Editor Robin Parker Writer Kate Bulkley Production Editor Dominic Needham Group Art Director, Media Peter Gingell Senior Commercial Director, Media Alison Pitchford Sales Manager Sonya Jacobs Business Development Manager Patricia Arescy www.broadcastnow.co.uk
30 May 2014 | Broadcast | 3
Rights & Finance Consolidation new buyers
Celebrity Big Brother: producer Endemol is being rolled up with Fox’s Shine Group and American Idol (below) producer Core Media into a mega production and distribution company
a new era of consolidation Indie acquisitions are again making the headlines, but now the buyers are media giants and broadcasters seeking to secure content at source. Kate Bulkley reports on this grab for rights
I
t’s been quite the month. From US giant Viacom swooping to buy Channel 5, to the sale of All3Media to Discovery Communications and Virgin Media owner Liberty Global, the UK production sector is certainly moving fast. Before the dust could settle on these deals, Rupert Murdoch’s 21st Century Fox announced it was orchestrating the roll-up of Fox’s Shine Group with Endemol, the company behind Big Brother, and Core Media, owner of the American Idol and So You Think You Can Dance franchises. The result would be a mega TV production and distribution company that would be one of the largest in the world. And it may not be over yet. The appetite for content has never been greater, with TV channels, both pay and free-to-air, competing with themselves and with online players like 4 | Broadcast | 30 May 2014
‘There has been a big shift by broadcasters to make sure that they secure attractive content’ Tom Manwaring, About Corporate Finance
Netflix, Amazon and Microsoft’s Xbox, which are keen to grow loyalty to their services by offering exclusive and, increasingly, original content. Whereas in recent years, smaller indies were being gobbled up by the slightly bigger fish to create super-indies, now we are in a new era of consolidation, driven by players with global ambitions that reach beyond simply making and selling programmes. ITV, for example, has been on its own indie-buying spree for several years as it seeks to diversify revenues away from
advertising (see box, page 6). It, like other major players, views exclusive TV rights, including non-linear, as crucial to protecting and building its businesses. The pairing of Discovery Communications and Liberty Global to spend £550m on All3Media is a case in point. Discovery could, of course, afford to have done the deal alone, but there is a strong link between the two firms: John Malone is chairman of both Liberty Global and Discovery. And they have similar goals: securing compelling and distinctive content to help their respective businesses. www.broadcastnow.co.uk
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“For Discovery and Liberty, this is a defensive strategy more than anything else,” says Atul Monga, associate director of corporate finance at Grant Thornton. “The ability to source content as a distributor is getting somewhat restricted, given that there are so many places to put content today. For channels, it is a similar problem.” Liberty is the largest pay-TV operator in Europe and it owns Virgin Media in the UK. Rather than compete with Sky and BT for expensive sports rights, it has bought into one of the largest producers of factual and scripted fare, including Midsomer Murders, Hollyoaks and Undercover Boss, signalling the importance of access to content. It may seem contradictory that Liberty only recently sold niche channel business Chellomedia to AMC Networks for $1bn (£600m), but Liberty has clearly not forsaken the content business. Liberty chief executive Mike Fries calls the investment in All3Media a “smart strategic investment” at a time when there is “increased competition for great content and non-linear rights”.
Content control For Discovery, buying All3Media is an extension of its first steps into content with its purchases of Betty and Raw, but on a much grander scale. “There has been a big shift by broadcasters, including Discovery, to make sure that they secure attractive content because that is what drives their subscriptions and their ad revenues,” says Tom Manwaring, managing director of About Corporate Finance, which advised Amount paid for on the sale of Raw to All3Media by Discovery in February. Discovery and Raw produces DiscovLiberty Global ery’s top-rated show underlined in a note to Gold Rush, which is distribAll3Media employees that uted into 200 territories. “Having they have a “vested interest” in Gold Rush produces hundreds of the group’s content and will want to millions in subscriptions and ad see growth and the creation of new revenues, so the comparative cost hits that they can access for their platof acquiring Raw is very low,” forms around the world. explains Manwaring. This brings up the question of All“Discovery wants Raw to produce 3Media becoming a “slave producer” its next hot show for Discovery, not for to Discovery and Liberty. In the Raw rival channels. By acquiring Raw, Dispurchase, incentives were put in place covery was able to actively incentivise to make producing for Discovery more it to do that.” attractive, but there are also guaranBoth companies say they will not teed development budgets and change All3Media’s management or minimum guarantees if Discovery interfere with its running, but they doesn’t commission the show.
£550m
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Top down: Midsomer Murders, produced by All3Media’s Bentley Productions; Raw TV’s Gold Rush is Discovery’s top-rated show
All3’s talent – much of it in its second wave, with many of the founders moving on – is used to working for major paymasters, and will be keen to keep serving them. Thanks to another big recent deal, the UK, for the first time, will have a US broadcaster owning one of its principle free-to-air channels after Viacom splashed out £450m to purchase Channel 5 earlier this month. Richard Desmond quadrupled his initial investment in C5 – not a bad return for four years work – with Viacom beating off several other contenders for the channel, including Discovery, which balked at the large price tag. For Viacom, which owns pay-TV channels MTV and Nickelodeon, buying C5 is a huge step into adver tising-supported free-to-air telly. With C5 operating five channels on Freeview in the UK, there may be scope to swap out some of those and introduce other Viacom brands to the UK free-to-air market. Viacom also runs free-to-air niche channels in Russia, Italy and Germany. Given its ambition, it is not unthinkable that it would also look to buy free-to-air assets outside of the UK, in much the way Discovery did ➤ 30 May 2014 | Broadcast | 5
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Consolidation new buyers in 2012 when it bought a group of mega-indie. But just how the broadcasters in Northern Europe. company will be run – through a “The American cable groups have centralised or federated system, or a growth issue in their domestic whether Endemol, as the largest of the market, so international is where they three in terms of turnover, ends up in see potential,” said one senior broadmanagement control – is all speculacasting executive. tion for the moment. Early signs from Viacom indicate On the face of it, their combination that it will look to increase the proshould create many synergies. A lot of gramming budget of C5 annually people could lose their jobs as a result, by “high single-figure percentages”, though perhaps with the silver lining putting the channel in line with the of the release of talent to create the rest of Viacom’s channels, which next round of start-up indies. should benefit indies. Analysts cite medium-sized Furthermore, Pact, which indies like Tinopolis, Banijay had a rocky relationship and Boom Pictures as the with Desmond, is looking next likely targets. Vitruforward to “re-establishvian, the private equity ing a productive and owner of Tinopolis, is Amount US broadcaster Viacom positive relationship certainly keen to look at paid for Channel 5 with the new owners”, offers for the business. according to Pact chief There are also rumours executive John McVay. surrounding Zodiak’s interest. And while Fremantle Media ruled out buying All3Media’s assets, Audience crossover with chief executive Cecile FrotViacom chief executive Philippe Coutaz saying “the economics didn’t Dauman believes there are synergies work” because “any deal has to be between the C5 audience and Viacom’s accretive to shareholders”, it’s not to stable of pay-TV channels, explicitly say she isn’t interested in looking at pointing to C5’s pre-school strand other potential acquisitions – at the Milkshake! and Viacom’s children’s right price. channel Nickelodeon. “In a fragmented world, it’s harder Other synergies are perhaps harder to get hits and when you do get them, to see. With an older audience than they tend to not be as big as they used the typical Viacom channel demoto be and people burn through them graphic, picking Viacom content to quicker, so you need to have an ability put on C5 will have to be done very to launch more things more quickly, selectively, given the commitments and you need to have the capital and Viacom has with Sky, a part owner of the global breadth to do that,” says the UK Nickelodeon channel. Frot-Coutaz. “In the end, it’s about Meanwhile, the potential roll-up of creative engines, and that isn’t simply Endemol with Shine Group and Core about size.” Media could mark the first truly
£450m
Milkshake!: synergies with Nickelodeon 6 | Broadcast | 30 May 2014
itV sHoPPinG sPree
Pawn Stars: hit for Leftfield
The ITV indie buying spree that began nearly two years ago has involved 10 purchases and well above £300m in initial deal valuations – topped off last week by its biggest indie purchase yet – and shows no sign of letting up. Owning independent producers is helping ITV diversify its revenue base and build itself into a global player at a time when the biggest companies in the TV industry all seem to be bulking up. The broadening of ITV’s content business in
‘The deal for Leftfield could cost ITV as much as £475m if all its targets are met over the next few years the US comes as the biggest UK commercial broadcaster revealed that its TV viewing share has fallen 8% so far this year. ITV’s latest indie purchase was by far its biggest, paying £212m in initial consideration for 80% of Leftfield Entertainment Group, the New Yorkbased production company that makes hits including Pawn Stars and Real Housewives Of New Jersey. The deal for Leftfield could cost ITV as much as £475m if all its targets are met over the next few years, but adding Leftfield also makes ITV the largest independent producer of unscripted TV in the US. The deal doubles the size of its US production business to a revenue run rate of around £175m
a year, according to Credit Suisse Bank. “ITV has got over the hurdle of whether it is a channel business or a content business, and which is more valuable,” says Atul Monga, associate director at Grant Thornton. “It has convinced the analysts that the combination works and it is cashflow focused.” ITV chief executive Adam Crozier said that buying Leftfield was “a significant addition… to build our content business over the long term”, underlining that buying indies and the cash that they generate is helping ITV to “rebalance” the business away from advertising income – a central plank of ITV’s five-year transformation plan. Since its purchase of a small Norwegian indie – Mediacircus – in 2012, ITV has snapped up three UK programme producers, including Big Talk Productions, the maker of Rev, five American producers including High Noon, the maker of Cake Boss, and Tarinatalo, a small Finnish producer. One observer expressed concern with having such a large percentage of the business of Leftfield (70%) and High Noon (80%) generated from returning series. “Projecting recurring revenue is an easy calculation for analysts to make, but what happens when the series isn’t recommissioned? Unless they have new shows, that predictable income can fall really fast.”
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Schools Out....End of Term Report
Be
Factory Transmedia’s Award Winning ‘Strange Hill High’ benefitted from the recently introduced production tax credit for animation
Compact Media Group’s View On Key Developments Within Broadcasting Over The Last 12 Months
T
he last 12 months has seen major developments within the UK broadcast arena with the introduction of the UK Television Production Tax Credit and a rise in M&A activity. Compact Media Group’s (CMG) executives offer their opinions on some of the most transformative developments and what these might mean for the future.
(1) The Production Tax Credit - It’s early days, but the UK Production Tax Credit introduced in April 2013 has started positively. The number of productions are increasing and inward investment is on the rise, which in turn has translated into business confidence across the sector.
Rosemary Klein, Head of Kids & Factual, Rights TV, explains more, “The UK is an attractive production base because of the effectiveness of industry lobbying over the years, this has enabled UK producers to retain the rights in their productions and create truly sustainable businesses with valuable long tail rights incomes. The attractive tax regime around content creation has also played its part in making the UK one of the top creative destinations.” For the right production these tax credits provide a valuable source of cash flow funding and assist in closing funding gaps. The cash and cost benefits for projects is helping limit the loss of IP or critical deal points. HMRC has recently clarified its position that producer fees may be included as part of the “core expenditures” to qualify for the tax credit. HMRC have also stated that official co-productions do not qualify for tax relief under an EIS scheme. Traditional film financiers are now financing scripted television, animation, and games, but the business plan has to hold up and indicate a 3 times return on investment within two to three years. Producers should be cautious of the upfront costs and backend share of profit and IP with such financiers. It pays to shop around and compare.
(2) The Competition For Content
- In order for broadcasters and distributors to grow audience share and revenues they both need to find the best available content in an increasingly competitive environment. Broadcasters can’t just rely on traditional methods of receiving ideas from a commissioning brief or by a speculative pitch. Similarly distributors have to be more pro-active acquiring content whether by investing at the development stage of a project or bidding for distribution rights during the production cycle. Structuring bigger deals to secure a steady stream of new exclusive content from programme originators or by strategic acquisitions are increasing in popularity again. Channel 4 officially announced a £20 million investment fund in January 2014 to invest over a three year period in a number of independent production companies, which the broadcaster says will enable it to help and nurture new emerging producers by
providing an alternative funding stream. Discovery Communications and Liberty Global have joined forces to acquire all3media, giving them access to 19 leading production and distribution companies operating in the UK, USA, the Netherlands, Germany and New Zealand. Angela Amanchukwu, Head of Scripted, Rights TV, comments, “Both the Channel 4 Investment Scheme and the Discovery Communications - Liberty Global acquisition aim to preserve the creative independence of the production companies involved, which suggests that the winning formula in creating a great idea exists within the DNA of the production company itself.” Further consolidation and strategic partnerships show no sign of abating, and a widening of the tax credit landscape strongly suggests further inward investment. Windows are narrowing and becoming more distinct. One thing is for sure - it’s good to be a rights holder, as long as you get the right advice!
Extending Services To New Markets In The Far East & Australasia
C
MG is already highly experienced at assisting producers here in the UK to obtain funding for television and theatrical productions by linking our services from business affairs and funding specialists (Rights TV) to Rights Savvy, which works with producers to secure revenues from new windows. CMG offers a complete service for production funding from co-production advice and structuring to deficit funding. The combined services have proven to be a very popular funding model here in the UK, so CMG made the recent decision to expand this service to producers outside of the UK, with an initial focus on Australasia. CMG believes that assisting producers outside the UK is a natural extension, given the number of international broadcasters who have strong links to the UK market. The new services have received a warm welcome in Australia and New Zealand - the Intellectual Properties coming out of these countries have great appeal to international broadcasters. We are using our experience and connections to build on our local presence in these markets. UK producers can also benefit from where we can introduce them to new partners overseas who are already established players with new programmes and formats. Nicola Andrews, Commercial Director, Rights Savvy comments, “Although Australasian producers have been enjoying great local success, there are always more good ideas than there are homes for them on local channels. It is a fact that Australasian producers are already getting traction with international broadcasters, but CMG offers the added benefit of being an expert in soft funding, securing new commissions, pre-sales and brokering global distribution deals; All of which results in more productions becoming fully executed, with a wider selection of broadcasters.”
Compact Media Group offers a range of solutions focused on maximising value and revenues from Intellectual Property. Services include business affairs and funding support through to international rights management and royalty collection. With more than 700 clients worldwide, CMG represents over 250,000 Film & TV programmes - many of which are BAFTA, Golden Globe and Academy winning
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Rights & Finance Mid-sized indies investment
Nurturing the start-ups Indies of a certain size have struggled to grow in the past, but thanks to rising demand for quality content, new investors are helping producers fulfil their potential, says Kate Bulkley
The Trip To Italy: Baby Cow
S
tarting up and growing an independent production company takes time, effort and talent. Creative people have these skills in abundance, but what is often missing is the investment capital and business acumen needed to grow beyond a certain level. The problem hits when founders find their business has the potential to grow bigger, but that they have neither the time, the capital nor the skills to take it further by themselves. Over the years, a wide array of investors – including other indies – has emerged to tackle the growth problem. A new group of investors is now active, including Channel 4’s Growth Fund, which has already fielded interest from more than 100 indies looking for investment, plus a private equity fund recently spun out of Ingenious Media, called Station 12. Meanwhile, former RDF boss David Frank and his brother Matthew have teamed up and raised a multimillion8 | Broadcast | 30 May 2014
‘The idea is to find indies at a good entry price, fund them and then sell to someone interested in creating a super-indie’ Patrick Bradley, Station 12
pound fund to invest in content creators with a particular focus on gaming, according to several people with knowledge of the venture (the Franks declined to be interviewed). The role and value of content produced by UK indies has never been more in demand, not only from traditional broadcasting outlets but also from digital players like Amazon, Netflix and Hulu (see page 10). At the same time, at the top end of the market there is an appetite to acquire indies from a range of buyers including ITV, major US studios and, most recently, Liberty Global, the owner of Virgin Media, and Discovery, which have teamed up to snap up All3Media for £550m (see page 4). Station 12 chief executive Patrick Bradley says the tech players are driving a “battle for eyeballs” among broadcasters, pay-TV platforms and online services. “Technology can always be commoditised, but
premium content cannot. The opportunity now is that premium content has become king again.”
Investment opportunity In the most recent Broadcast Indie Survey, 23 of the top 30 indies in the UK not owned by a larger group have a turnover of less than £10m a year, including Love Productions, Input Media, Baby Cow and Clerkenwell Films, and 10 of them have less than £5m in turnover, including Plum Pictures, Off the Fence and Nutopia. Station 12 is in the process of raising £150m to invest in media and entertainment companies, including indies in the UK, Scandinavia and Germany, at this smaller end of the market, typically turning over less than £5m. “Smaller companies typically find that they aren’t generating significant cash flows themselves to be able to reinvest in the business and bring in the talent they need to get to the www.broadcastnow.co.uk
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next level,” says Bradley. “There is stimulate and support the next genera twilight zone of £5m in turnover; ation of independent producers,” says they get locked into that and can’t Abraham. “There is definitely a need get bigger.” out there for companies that have got Indies that create factual entertaingoing but have very little infrastrucment and drama are of particular inter- ture; for example, with little experiest because these genres can travel ence of working internationally. An beyond the UK. “We are interested in injection of capital allows them to get genres from a quality of earnings and to the next stage.” scalability point of view, rather than Heading the fund is Laura Franses, a creative point of view, and some who has worked for Zodiak Media, genres, such as news and comedy, Raw TV and Film 4, and helped found don’t always lend themselves to overNutopia with former BBC2 controller seas distribution,” says Bradley. Being Jane Root in 2008. She is interested in in multiple genres and having returninvesting up to 20% in indies with ing series is seen as a big plus. £5-10m in turnover because, like Bradley believes this is a Bradley at Station 12, she good moment to be believes this is the level of looking to invest in turnover where indies smaller indies. “The can “get stuck” in terms The ‘twilight zone’ in opportunity we see is to of their growth. turnover where indies fund ‘succession startShe expects to get ‘locked in’ and ups’, those indies that are announce two or three struggle to grow set up by creative people indie investments this who have done this once or year and another four or twice before,” says Bradley. “The five next year. “There are a idea is to identify these indies at a lot of companies out there so it’s good entry price, fund them and then really about thinking where our sell to someone interested in creating money will make the most difference,” a super-indie.” says Franses. For C4, creating a Growth Fund The criteria for investment is comwith £25m to invest in smaller indies panies that have a “creative vision” is principally a means to stimulate the and a business case that over five creative sector on which C4 depends. years can generate a “good return” Of course, the stakes the broadcaster for C4. “We are in a really good positakes now could end up being worth a tion to invest in the creative com lot more down the line if the chosen munity. We aren’t looking to lock indies grow and are sold, a strategy people into a distribution deal, it’s employed by BBC Worldwide a about equity and adding knowledge,” number of years ago with good she says. results. C4 chief executive David C4 will provide business guidance Abraham says that although a windand advice, as well as capital, so the fall would be nice, first and foremost indies can hire key executives, likely the fund is about putting C4’s surplus a creative business winner and/or cash to better use. someone to help on the commercial “It’s interpreting what our remit side. Franses will otherwise be a expects us to do and part of that is to “benign investor”, applying less pres-
£5m
Weekend Escapes With Warwick Davis: Love Productions www.broadcastnow.co.uk
‘There are a lot of companies out there, so it’s really about thinking where our money will make the most difference’ Laura Franses, C4 Growth Fund
sure and allowing a longer time frame than a private equity investor might. There is also going to be a studied effort to de-link investment in an indie to how important the indie is as a supplier of programming to C4. “I would actually be more excited if the indies were diversified away from C4,” Franses says. Channel 4 chief creative officer Jay Hunt backs this up, saying there is a “Chinese wall” between the commissioning side of C4 and the fund. “We will be involved, of course, in conversations about who in the indie sector is creatively strong at any given time, but the fund won’t influence individual commissioning decisions. I think it would be wrong if it did.”
Funding needs Hunt isn’t sitting on the Growth Fund’s advisory board, which consists of former head of Film 4 Tessa Ross, finance director Glyn Isherwood, group commercial director Martin Baker, Abraham and Franses. C4 is in the process of appointing someone with indie experience as an external member to the board. Pact chief executive John McVay says the fund and other capital sources for indies are a good thing, but there is also a structural issue that the government needs to address. He has proposed, through the Creative Industries Council, that there should be a zero-rated capital gains tax for investors and entrepreneurs, capped at a certain turnover to de-risk small- and medium-sized enterprises. “We still have many companies starting up each year. The issues are not about ambition, they’re about access to finance – and the willingness of the broadcaster/buyers to take more risk on the suppliers they commission.”
Generation Cryo: Off The Fence 30 May 2014 | Broadcast | 9
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DRAMA NEW CO-PRODUCTION MODELS
Ripper Street: Amazon recommissioned the show for a third series after it was dropped by BBC1
Drama’s digital evolution Working with new co-production partners such as Amazon, Xbox, Netflix and Yahoo! is enabling broadcasters to get more costly high-end drama on screen, says Kate Bulkley
D
rama event co-productions are not easy. They cost a fortune to produce, don’t slot into schedules easily and are harder to promote than long-running, returnable series. If change really is good, as the saying goes, then the funding of television shows over the next few years is set to be thrilling. With more platforms, new players, different ways to put up the cash, new kinds of partnerships and much more besides, the opportunities are there to be grabbed. From Amazon to Xbox, Netflix and Yahoo!, many large digital companies are leading the way into commissioning and joint-funding content – and they don’t care how deals were put together in the past. Instead, they see a bright future for themselves and are eager to do whatever it takes to find the next big hit. For broadcasters and producers starting to work with these upcoming players, there are opportunities for 10 | Broadcast | 30 May 2014
‘I never thought I’d be on the phone to Amazon as quickly as I would be with UKTV or an American studio, but I am now’ Jay Hunt, Channel 4
new funding and creative ways of thinking about how to craft and distribute programmes. There is even scope to bring shows back for further series after they have been axed by the commissioning broadcaster. Witness Amazon stepping in to recommission Tiger Aspect drama Ripper Street for a third series after BBC1 dropped the show. Amazon will premiere series three on its platform with the BBC, a minority partner, airing it a few months later on BBC1. “Particularly in scripted, where the tariffs are so high, if you’ve got someone like Amazon or Hulu who says, ‘look, I can think in an interesting way about windowing and how we can work with you’, that’s utterly game-changing,” says Channel 4 creative director Jay Hunt. “I
never thought we’d get to the point where I’m on the phone with the head of commissioning for Amazon, saying ‘what do you reckon about this?’ as quickly as I would be with UKTV or an American studio, but I am now.”
Dual benefits C4’s recent deal to co-produce new sci-fi drama Humans with Microsoft’s Xbox Entertainment Studios is a good example. The Kudos-produced eightpart series will share a 2015 broadcast window on C4 in the UK and on Xbox in the US. Making a standout drama will help Microsoft drive subscriptions to its Xbox Live video-gaming platform, keep gamers using the platform interested between major game launches, and broaden the appeal of the service from simply gaming to more mainstream entertainment. For Hunt, it’s a way to get more “great telly” on air than C4 could otherwise afford. ➤ www.broadcastnow.co.uk
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give to a new client who is a freelancer? Every freelancer is unique, which means they require different services. We tailor our services around the client’s requirements, so that they spend as much time running and developing their
‘We tailor our services around the client’s requirements, so that they spend as much time running and developing their business as possible’ Ketan Patel, director, Mackinlay Simpson
in the ever-changing tax world. I would meet with the client, discuss their work and advise them about many issues, from keeping records to the use of a tax vehicle, to expenses that are tax-deductable. I stay in touch with my clients too, to ensure there are no misunderstandings or difficulties.
Contact details Mackinlay Simpson Ltd, 20 Exhibition House, Addison Bridge Place, London W14 8XP T +44 (0)20 7602 6366 F +44 (0)20 7602 2663 E info@ms.uk.com www.ms.uk.com To subscribe to our monthly tax saving tips newsletter, email info@ms.uk.com
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0030 Month May 2013 2014 | Broadcast | 11
Rights & Finance
In association with
compact
media group
Drama new co-production models ‘The way these players invest and the rights they want is different on a case-by-case basis’ Simon Maxwell, Channel 4
There are many new players prepared to get involved with funding original TV. At the fourth annual Digital Content NewFronts in New York late last month, a veritable conga line of services unveiled their ambitions and programming slates to advertisers. In the US, spending on digital ads has reached $2.8bn (£1.7bn), according to the Interactive Advertising Bureau, and everyone from Yahoo! to AOL and even the New York Times – which now says it is not a newspaper but a hub offering 430 videos a month – wants a slice of it. “The digital upfronts drew a sort of line in the sand for how these new players are looking to do business,”
The Walking Dead: returning franchises appeal
says Matt Forde, executive vicepresident, co-productions, TV sales and digital distribution for BBC Worldwide. “Microsoft came out with six clear propositions that it will invest in. Yahoo! is getting into the game, as is AOL. And that’s after Hulu and Netflix and Amazon have already been in the game for some time. So the whole world has expanded again.”
The holy grail in this new world is the returning drama franchise, such as The Walking Dead or Game Of Thrones. But there is also appetite for other projects, depending on the digital company involved. Amazon, for example, is interested in developing children’s shows as well as dramas. “The way all these digital players invest, and the rights they want to take, is different on a case-by-case basis,” says Simon Maxwell, C4 head of international drama, a post created only last month. “Each deal needs to be bespoke to take their parSpend on digital ads ticular modus operandi in the US, according into account. So Netflix to the Interactive Advertising Bureau does its own original productions but is also open to co-pros on the right project.” Part of the thinking behind C4’s new strategy to invest in international drama co-productions is to take advantage of the appetite for longrunning, quality drama from the likes of Netflix, Hulu and Xbox. ➤
$2.8bn
Nobody wants a creative accountant But you do want an accountant who understands the creative industries Baker Tilly’s specialist media and technology group is dedicated to helping our clients overcome the challenges of this fast-moving sector. From start-ups to established multinational businesses, we understand the key business issues facing those in the creative industry. This means we can provide you with proactive and strategic advice, freeing you up to focus on running your business.
Contact David Blacher on +44 (0)203 201 8652 or visit www.bakertilly.co.uk/sectors/mediaand-technology
www.bakertilly.co.uk Baker Tilly UK Audit LLP, Baker Tilly Tax and Advisory Services LLP, Baker Tilly Corporate Finance LLP, Baker Tilly Restructuring and Recovery LLP, Baker Tilly Risk Advisory Services LLP, Baker Tilly Creditor Services LLP and Baker Tilly Tax and Accounting Limited are not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services because we are members of the Institute of Chartered Accountants in England and Wales. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide. Baker Tilly & Co Limited is authorised and regulated by the Financial Conduct Authority to conduct a range of investment business activities. This communication is designed for the information of readers. © 2014 Baker Tilly UK Group LLP, all rights reserved. 0257
12 | Broadcast | 30 May 2014
www.broadcastnow.co.uk
Production
ADVERTORIAL COUNTERPOINT SYSTEMS
TITLE TO GO HERE SECONDARY TITLE IN BLACK
One system for all
Body left - indent. Style for subsequent paragraphs which should begin with a paragraph indent. With clients spanning channels, broadcasters and TV distribution companies, rights and royalties software developer Nativ. “Linear broadcast uses a lot Counterpoint Systems is well-placed to navigate the changing market of media rights. Senior Vice President of expensive kit with very high operaBen explainstohow tionalClasper costs. Distribution otherincreasing opportunities in on-demand and digital distribution are shaking things up. IP-enabled platforms is based on commoditised IT and is a lot more What are the most cost-effective.”
Q
challenging aspects of managing content and rights at this moment in time?
The most common challenge our clients ask us to help them overcome is the amalgamation of their linear and non-linear Content Management Rights Management content and rights requirements in one solution. For most companies, their structure and their systems have been designed around linear rights and with many deals now covering both traditional and new however starting to see companies taking media in a single contract their pre-exista step back and having learned from their Caption: to go here ing business processes cannot be adapted experiences to date, asking us to devise a to the new consumer led marketplace. future approach that better reflects how ‘Feature they want to manage their operations in online world. How has the growth of on-demand quotethe- text.
content
rights
Q
content complicated processes – Style for particularly with the variety of deal main textWith Q of many different terms to terms and expiration dates? consider in each deal, how autopull quotes inthe processes be? mated can
this section. The most obvious impact has been in data volumes, with a far higher number of Four lines Deals will never sell themselves or output deals or deals with exponentially negotiate their own terms nor will they minimum, more content associated with them than able to calculate accurately without sevenbelines ever before. This has led to issues regardemployees skilled in those areas. Those maximum’ ing how to create information efficiently key employees should be able to demand Feature quote - reference. and how to track critical events that inform theperson tools from the business to help them Details of the when content can be made available onquoted here optimise their processes and automate each and every platform. The demand is any repetitive or data-based functions. definitely still outstripping the ability to When faced with the choice of data entry supply the content with all the relevant or selling, a sales user will always choose information needed to service each to sell and naturally, management will platform. always support that decision. Our role is to devise a realistic approach to automation based on the expectations of the busiHas digital distribution made Q ness that delivers long-term savings. things more straightforward or more complicated?
We think the answer is that it could and should have been more straightforward. Unfortunately, most companies have not been able to move as fast in the right direction, to keep up with what the consumers now expect in their online world. This has forced companies to outsource or shoehorn temporary or imperfect solutions, to try and close the gap as best they can. We are www.broadcastnow.co.uk
Q In contract calculations, what
efficiencies can the system provide?
Calculating how revenue will be split, regardless of whether it is between an online store and a content owner or a producer and the talent, is always the most challenging area to automate. With margins reducing and companies
exploit calculate Exploiting Your Rights
Contract Calculations
‘Our system, Media Maestro, is acknowledged as the most comprehensive solution for royalties, talent and participation calculations in the industry’ Ben Clasper
becoming ever more creative we expect to see more complexity in the future. However, this is one area that we believe can be automated and it could provide the best opportunity for efficiency in an organisation because the right solution has been proven to last for years and years. The most compelling argument for increased efficiency is that unlike manually producing statements to suppliers, an automated solution is not impacted by growth. It is no more complex a job to process 6,000 contracts as it is 600. The complexity is in how unique the negotiated terms are and our system, Media Maestro, is acknowledged as the most comprehensive solution for royalties, talent and participation calculations in the industry.
Contact details Counterpoint Systems The Forum, 74-80 Camden Street, London NW1 0EG T 020 75437500 E info@counterp.com www.counterp.com @counterpmedia
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0030 Month May 2013 2014 | Broadcast | 13
Rights & Finance
In association with
compact
media group
Drama new co-production models Hulu has been one of the most active co-investors, collaborating on several projects already, including E4’s Misfits and BBC2 comedies The Thick Of It and The Wrong Mans. In the case of Misfits, Hulu was the first US ‘broadcaster’ for the series because the content was con sidered “too risky” by the US cable channels (after its successful Hulu launch, Misfits was then sold to a US cable network). So the appetite for risk among the new players can open up new opportunities for talent and projects. “We are in regular conversations with Hulu,” says Maxwell. His target is to commission one more international drama series in addition to Humans, plus a separate mini-series, all for transmission in 2015. “The number of episodes will depend on the appetite of our inter national partners,” said Maxwell. “It’s about finding the most appropriate partner for these projects, and that could be US cable channels like AMC and Showtime, or some of these newer players like Netflix, Hulu or Xbox, or Canal+ in France.”
Changing practices Pulling together deals with these digital players means working a bit differently. “It’s not just about selling the show,” says Maxwell. “It’s about working with them on how to sell the show in a way that is very different to TV, where you do the deal and either the broadcaster has a marketing budget or they don’t, so they either push it or they don’t push it.” With the digital players, Maxwell says you have to understand the consumer proposition in a more detailed way. “It’s about feeling the market and getting a feel for the actual consumer,” he explains. “In many ways, that gives you a much better chance of success because you can bring the producers’ vision straight to the consumer.” Netflix, Xbox and Amazon design their commissioning strategies very differently from traditional TV. These services know a lot more about their subscribers and users, and they have very sophisticated algorithms to track their preferences. All this helps them predict what kinds of shows their audiences prefer. For example, Netflix says that it knew its revival of House Of Cards, starring Kevin Spacey, would work because it had all the components that the potential audience craved, based 14 | Broadcast | 30 May 2014
Clockwise from top left: Misfits; The Thick Of It; House Of Cards; The Wrong Mans
is being co-funded by Amazon on the data Netflix collects from and Red Arrow Entertainment, its subscribers (of course, it is also and stars Deadwood and Lost actor a brilliant show that could easily sit Titus Welliver. on cable). The Bosch pilot had to pass muster Amazon Studios has taken datawith the Amazon audience before it driven commissioning a step further was greenlit to series, a novel experiby polling its users about potential ence for Welliver: “It is oddly Marxist show plots before greenlighting a in its idea, but it’s a very smart pilot. At MipTV last month, business model,” he said Amazon Studios head Roy recently. “What you’re Price unveiled online tool doing is empowering Amazon Storyteller, the people to facilitate which lets anyone turn Number of pilots this. Amazon’s not a script into a ‘visual Amazon could going to be coerced storyboard’, making the produce annually by this data, but they piloting process not only in the future look at it. It’s very, a lot more democratic, very intelligent.” but a lot bigger. ITV director of television “What if in the future, Peter Fincham believes TV has instead of producing 25 pilots a year, nothing to fear from these digital we could produce 25,000 pilots a year?” he muses. “That’s possible, and players and quite a lot to gain, but he is also watching viewing levels on his would be an interesting outcome.” linear channels “like a hawk”. For The digital players have brought in people who know television to head him, the biggest potential battle is around access to talent. their original commissioning push. “We are involved in new drama They are also putting in funding, developments with a number of devising creative marketing stratethem,” says Fincham, who admits he gies, and attracting big-name talent. has a Netflix account and likes to Steven Spielberg is executive “binge view” as much as anyone. “I producing an original series for Xbox can’t talk specifics about Netflix or based on its Halo games franchise. Amazon or Xbox, but we are absoThere are also reports that Simon lutely talking to all of them. Drama is Cowell is talking to Yahoo!. The newly expensive and as long as what we get commissioned drama series Bosch, works for our audience, I would based on Michael Connelly’s books always look at partnerships.” about LA detective Harry Bosch,
25,000
‘Drama is very expensive and as long as what we get works for our audience, I would always look at partnerships’ Peter Fincham, ITV
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