V I D E O • A G E JU N E/ JU L Y 2 0 1 0 26 BY NORMAN HOROWITZ Herb Lazarus, my friend and associate, and I once made a secret deal with Nine Network Australia’s Len Mauger for $8 million. Many years later, Herb, Len and I were having dinner and Len told us that he had the authority to pay us $10 million and was praised by his boss for saving $2 million. Herb and I replied that we too had been praised by our management, which was prepared to accept $6 million for the deal. We all laughed. We were never sure about program prices, but then again, neither was our management. I have worked in the content business since 1956, following a stint in the air force. I started out at Columbia pictures. In those days, when Columbia produced a movie, the powers that be had no clue whether or not people were going to pay to see it. The joke was that wonderful movies were produced in California and if they were found lacking when they arrived in New York, the shipping company should be blamed. Television was very different. The business evolved into one where U.S. broadcasters ordered programs from production companies, which as a rule, broke even when they produced what was ordered. Years ago, my Air Force roommate, Richard Carlton Miller, visited me in California and asked what I did for Columbia Pictures Television. I told him that I sold Columbia Pictures theatrical movies and the television content that had been made for the networks to overseas buyers and reruns of the TV stuff to local stations. He thought for a few moments and said: “Norman. You are in the ‘used’ film business.” He astounded me, but he was correct. Most studio management teams treated international television sales with total disdain. We were in the “ancillary rights business,” meaning of secondary importance. In the overseas television marketplace inthe ’60s and ’70s,manyU.S. companies were dishonest in that they believed that producers cheated them when they made content and the studios were just getting even. Many U.S. individuals were dishonest and often took kickbacks from buyers and justified it as an “off-thebooks commission.” Many international buyers solicited bribes. Many U.S. sellers were happy to pay bribes. Many U.S. sellers were anxious to keep their jobs, and did so by regularly selling content to people that they knew were never going to pay for it. In those times, the supply of content far exceeded the demand. This meant that in every single TV market the buyers could pick and choose what they wanted and the distributors would whine and yell about the lack of “equity” in the prices paid, yet they would ultimately be thrilled to accept what was offered. Explaining how these prices were reached would be a guess at this time. However, it is clear to me that the buyers made them up AS they were well below what they could have afforded to pay. I once asked a big program buyer why he thought it was okay to pay so little for shows. He smiled and said, “Because I can.” It was in the mid ’70s that Kerry Packer of Australia’s Nine Network told me why he wanted to buy American programming for as little as possible and sell time inside U.S. shows to advertisers for as much as possible: “After all, Norman, it’s my money.” audience. Bohm noted that, “the rollout of digital channels in countries such as The Czech Republic, Slovakia, Poland and Russia, has led to the launch of an increasing number of themed channels focusing on clear demographics, which, quite often is the female demographic.” This is a trend also noted by Joss Duffield, Program Sales executive EMEA, at AETN, who notes “with the proliferation of new digital channels there is an increasing demand for female skewing programming, a demand which is very well met by the addition of the Lifetime programming to our catalogue.” And she also insisted that this process means, “We no longer regard Central and Eastern Europe as an emerging market.” The fourth edition of the now wellestablished DISCOPRO is evidence of the growing maturity of many of the region’s countries. DISCOPRO is a day-long event that takes place on the day immediately prior to the market proper and is devoted to co-production. Last year, DISCOPRO introduced a pitching element to the day’s proceedings, which will again be the main focus of this year’s edition. The pitches will be in drama and documentary, and there are real benefits to be had for the winners. The winning projects from last year, pitched by Romania’s Media Pro and Hungary’s Havas Films, are both now in the final stages of funding. Additionally, DISCOPRO 2010 will present a format session run by FRAPA, the format companies association, and featuring contributions from Grundy Light Entertainment, FremantleMedia, Absolutely Independent and Armoza Formats. Another new innovation at this year’s DISCOP East is the unveiling of DISCOP Tools, a new range of back office services designed to make the sales efforts of DISCOP attendees as efficient as possible. DISCOP Tools will link 4,000 programming and distribution executives in over 100 countries from Central and Eastern Europe, Central Asia, Africa and the Middle East. The majority of these new services will be unveiled during DISCOP East itself, but the first of the DISCOP Tools is DISCOP Tube which went live last month. The service stores, indexes and profiles content offered by distributors and allows potential buyers from more than 100 markets served by the combined DISCOP content markets to search and view this content online. without crisscrossing financial interest by: I) The broadband highway itself (meaning the network also called the backbone or pipeline). II) The content providers: Producers, distributors, aggregators, search engines, P2P services and press. III)The service providers: ISPs, telephone companies (audio and video), virtual stores. This way, all companies will have the possibility of making money and everyone will be interested in providing the best product at the lowest possible price. Such a well-defined structure would result in better management of the illegal distribution of copyright-protected content over the Internet. Plus, it would solve the “fair competition” issue, like, for example, when broadband providers bundle other services, like voice and video, at a below-market costs in order to generate more broadband subscribers and drive out voice and video competition. When multinational-multimedia corporations invoke the unwritten rules of “convergence,” it’s a smoke screen to obfuscate progress for the opportunity to make a quick buck to satisfy their Wall Street-dictated quarterly agendas. Convergence should not be the excuse for keeping an inefficient vertically and horizontally structured system that is also in constant danger of speculative raids. In order for broadband and digital technology to be heading towards the 21st Century, the key word has to be “divergence,” which is a great tool to succeed in any core businesses. For example, since TV stations don’t need terrestrial frequencies any longer, they have to decide if they want to be in the content or in the wireless broadband business. Cable companies and telcos have to decide if they want to be in the content, service or “pipeline” business. ISPs (e.g., AOL) have to choose between being content or service providers. Under such a well-regulated structure, the consumers, would subscribe to a broadband network (the “pipeline”) of choice (based on price, speed, download allowance and convenience), be it cable, wire or wireless. Once connected on broadband, consumers can then subscribe (for free or FEE, according to the various services’ business models) to an Internet provider, which offers various Web services (these are companies such as AOL, Yahoo, etc.) and can also offer voice and video telephone services. Similarly, consumers can subscribe to a content service (for free or fee). Kerry Packer on Paying Little: “Norman, After All, It’s My Money” T h e H o r o w i t z F i l e s Norman Horowitz (Continued from Page 22) Broadband Revolution (Continued from Page 14) DISCOP
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