V I D E O • A G E Se p t e m b e r/ Oc t o b e r 2 0 0 9 30 That there is enormous pressure on budgets for television production and acquisition is hardly news. But there are some very different views as to whether the good times will ever roll again. “To me, this looks very much like the dawning of a new age.” Gary Carter, the London-based president, Creative Networks and CCO, FMX, FremantleMedia Enterprises, said with a touch of cynicism. “The research we have done suggests that advertising and budgets will take several years to return to the levels they were at pre-credit crunch, if indeed they return to those levels at all. If they do manage to bounce back, it is very unlikely that they will ever rise at the rate they once did.” If you think that sounds depressing, wait — there’s more! Carter continued, “This recession is very different from those that preceded it, in that previously, broadcasters spent their way out of recession. This time, the pain is being passed on, and I am sure that some of the smaller production houses will see losses and there will be some consolidation over the next 18 months or so.” Karoline Spodsberg, international director of Sweden’s Nordisk was no more hopeful. “It is certainly true that at the moment budgets are being squeezed very heavily, and I cannot see them recovering to anything like their previous levels, even when the credit crunch is over,” she said. “Now that broadcasters have appreciated the cost at which content can be produced, they won’t want to go back to paying the old prices, even if they do have the money – why should they?” “In theory,” suggested Carter, “this is a good time for companies with big catalogues, because schedules still need to be filled, and the cheapest way to do that is buying programming from other sources. But, I am not sure how long that can go on for. Sure, a broadcaster can save money by acquisitions and increased repeats, but the danger of that strategy is that you risk breaking the link with your audience.” Spodsberg concurred. “Viewers will continue to demand high quality on television,” she asserted. “They might be willing to tolerate lower quality on the Internet, but they won’t tolerate it on television.” London-based Tobi De Graaff, director, Global TV Distribution at ITV Studios is very upbeat in regard to the future of budgets, predicting, “In the key programming areas for major broadcasters, budgets will not only recover, but they will actually increase.”The main reason for this optimism is the power of the brand. “We don’t sell programming,” De Graaff explained. “We sell brands. And these brands have a ‘reserved’ audience. Dedicated fans that will find these shows in any market, no matter how crowded. In the future, this [loyalty] will be vitally important to broadcasters, and so they will pay for it.” Although De Graaff concurred with Carter and Spodsberg that new funding will have to be found, he believes this will come through more direct commercial means as opposed to a realignment of relationships with advertisers. “One of the advantages a broadcaster gets from a big budget show is visibility,” he said. “And I am sure we will see major broadcasters looking to increase their earnings through ancillary revenue streams like licensing, greater brand extension on associated channels, and greater 360 degree exploitation.” Somewhere between these poles of caution and optimism sits Paul Heaney, managing director of the U.K.’s Cineflix International, which specializes in supplying content to smaller channels. “[Television] ad revenues have taken a battering this year,” he said, “But there will always be a need for acquired content, it is the modus operandi of the smaller channel business, thus programming budgets will likely stay the same.” But, he does caution, “The clever part is to find new ways to fund projects, other than the traditional commissioning structure, whether it be through consumer product deals, advertiser funding, or other ancillary rights. Rights management is also a key issue, and now is the time to ensure that only the rights needed are granted.” Saralo MacGregor, the Santa Monica, California-based executive vice-president of Fireworks International believes, “Whether it’s new or library programming, it still has to satisfy the networks’ ratings expectations, and with the amount of library material available to them, networks will be as selective now as they have always been.” Whatever the future holds, it is difficult to avoid the conclusion that whether it is a bright future or a cloudy one, it is definitely going to be very different from the past. BJ E c o n o m i c B l u e s Times Are Tough, Budgets Are Down
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