V I D E O • A G E OC T O B E R 2 0 1 1 56 (Continued from Cover) Countries Affecting Int’l TV Biz a 1.1 billion euro budget) has yet to be found. Under these conditions public stations are accumulating deficits that, at times, like in the case of RTVV in Valencia, can reach the order of one billion euro (U.S.$1.43 billion). One solution, proposed by the Popular Party in case of victory at the upcoming November elections, is to privatize all the public regional stations (grouped under the FORTA association). On the commercial side, with the digital terrestrial channels, the audience registered a strong fragmentation with subsequent lower ad revenues. This change induced channels like La Sexta to switch from a generalist schedule to a reality format channel, and some DTT channels, like Veo7, have gone off the air. However, Sabrina Ayala, VP, Sales and Acquisitions, Latin America and Iberia at Cineflix reported, “overall, volume deals have gone up in markets where there are new players due to the arrival of new DTT channels, Spain and Italy are, in particular, examples of this.” Although Dermot Horan, director of Broadcast and Acquisitions at Irish state broadcaster RTE, admitted, “At the moment I would say that we are probably buying a bit less than we did in the past” adding, “we are certainly trying to get more value out of our purchases by securing more runs.” In terms of pricing, Horan said, “The prices we pay are either steady or going down, it depends on the product, but they are definitely not going up. It is certainly the case that we are doing everything we can to put as much of the money as we have got onto the screen.” Horan’s comments in regards to pricing were endorsed by Iacono, who said, “Prices in Ireland and Italy have been stable, while Spain, if anything, has been going up. Prices in Greece at the moment are very difficult to comment on as they are buying so little.” The low dollar-euro exchange rate helps with U.S. acquisitions, even though the low dollar masks the problem of speculation that keeps economies stagnant. This may be true of acquired programming, but Andrea Zoso, CEO of Italy’s De Angelis Group, said that in terms of commissioned programming, “Italian broadcasters are commissioning less in terms of both volume and price.” Heestimatedthat“domesticcommissions are down between 20 percent and 30 percent by volume and 25 percent to 30 percent by budget.” Illustrating his point, Zoso suggested, “A few years ago you might have been given three million euro (U.S.$4.25 million) to produce 30 shows. Now you’re likely to get only 1.4-1.5 million euro (U.S.$1.98-$2.13 million), but the broadcaster will still expect 26 or 27 shows for that money.” Zoso’s production figures were considered much too high for Italian TV productions by other Italian producers, one of whom commented: “It’s absolutely impossible. On the average, a high-budget drama series costs about 500,000 euro per hour [$710,000],” or about $21 million for a 30-episode order. According to Italian indie producer Antonio Ferraro, “If you are talking about drama, you may consider that five years ago the budget was around two million euro for a TV movie of 100 minutes. Now we are talking about a cost of 1.5 million euro for the same format (naturally miniseries and serials are less expensive).” But Zoso stood by his figures and added: “At this sort of budget level, it is not possible to produce the sort of ‘local’ drama that is most popular. As a result, co-productions have increased over the past two to three years. “Of course,” he continued, “the problem with this is that the stories and cast are not so ‘Italian’ and, as a result, the programs are not as popular as they might be — but they do meet the budgets!” Another consequence of the economic downturn Zoso highlighted is that Italian broadcasters are now much more focused on both budgets and deals. “In the past,” he observed, “Italian broadcasters paid attention to the above the line, but used to be fairly relaxed about the below the line budget. Now all of that has changed. They want to examine the entire budget both before and after production; additionally, they want a percentage of the net profits and are much more determined to have their distribution arm handle any rights that are going.” Although Zoso pointed out that “these comments relate to scripted programming, it is much more difficult to generalize over unscripted, as there are so many variables here. Some networks,” he continued, “are still buying formats, while others are seeking to develop their own, and some such shows are more reliant on their presenters than others. But, overall, since formats are cheaper to produce than drama and they can deliver the same sort of ratings, production of unscripted may have gone up.” In Portugal, however, Nuno Bernando, co-founder and CEO of local producer BeActive was much more pessimistic. “Over the last few years,” he asserted, “we have been faced with a contraction from broadcasters in terms of any kind of investment in new programs. The new government,” he continued, “has agreed with the IMF to sell-off RTP (the state broadcaster) and is facing severe budget cuts prior to the sell-off. Additionally, commercial broadcasters are constrained by increasing competition from cable and also by cuts overall in advertising spend.” Bernardo elaborated, “Broadcasters are now only investing in proven winners such as soaps and reality formats like Idols, Master Chef and The Biggest Loser, as well as the odd comedy.” Additionally, Bernando reported, “Budgets are being reduced every quarter and, in order to get ‘more bang for their buck,’ shows now also have longer running times. Many international formats now have ‘gala’ editions running between two and three hours, whereas, in the past, they would probably only have run for 60-90 minutes.” His predictions for the future were also bleak, “with cable and digital channels experiencing strong growth rates and not having any local programming quotas, commercial channels are facing a loss of revenue as advertising budgets are switched away to them from terrestrial broadcasters.” He predicted that budgets from the four main networks will shrink over the next few years, with the exception of a few major crowd pleasers such as football matches, telenovelas and big entertainment formats. Similarly pessimistic was John M. Triantafyllis of Athens-based JT TV Film International, who offered the following assessment: “Due to the current economic situation in Greece, the motto of the station management is to keep cost cutting, acquire programs that are either cheap to produce or cheap to license and make do with what is available in their stock. “In 2008 there were a total of 77 new local productions, with the majority from Mega andAntenna. Last season there were only 10 local productions and they were discontinued sooner than anticipated, as they were not generating the ratings and consequently advertising revenues. The local productions consisted mostly of formats and reality programming. “As far as advertising is concerned, during January-February 2011, there was a reduction of 27.31 percent in total TV advertising income, reaching 71.82 million euro in comparison to the same period in 2010, when it was 98.8 million euro. It is anticipated that for the whole of 2011 there will be a decline of almost 60 percent from 2008 in advertising revenues, estimated now at between 280 million euro and 320 million euro. “Mega tends to absorb the lion’s share of the advertising investment, which in February 2011 reached 13.4 million euro, followed by Ant1 with 10.6 million euro. Star Channel came in third with some 6.5 million euro, leaving behind Alpha with 6.4 million euro. Alter TV was left in fifth place with 3.77 million euro, while Net’s advertising income reached around one million euro and the rest of the TV stations shared more or less 100,000 euro. “Another deciding aspect is the outcome of Elefteri Tileorasi/Alter Channel, after it filed for Chapter 99 (bankruptcy), as the owners believe this is the only solution to its current problems. The court decided to grant the Chapter 99 protection for a period of four months. The channel has had four months to settle the debt. Since last August Tasos Kazinos is the new CEO and CFO of the station,” Triantafyllis said. These are clearly tough times, but for those who are prepared to live with the current realities there is still business to be done. As RTE’s Horan put it, “we have been doing business in Hollywood for 50 years and we have been understanding when the studios have gone through tough times, and they are being understanding now. The balance will change, maybe not for another two or three years, but it will change, and this is a business about relationships.” De Angelis Group’s Andrea Zoso RTE’s Dermot Horan Lionsgate’s Peter Iacono
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