V I D E O • A G E SE P T E M B E R/ OC T O B E R 2 0 1 2 22 The troubles in the Euro Zone are well known, even though one wonders why the euro continues to be strong against the U.S. dollar. In any case, the question remains as to the effect this financial and economical crisis is having on broadcasters in the zone, and in the wider European area. Jens Richter, managing director of Germany’s Red Arrow Distribution (formerly known as SevenOne) said, “It is undeniable that there is a great deal of uncertainty in the market right now, and that is for the obvious reasons we all know about, the economic difficulties, and the crisis in the Euro Zone.” Richter is also clear as to the consequences of these difficulties, “The effect is to make broadcasters very much more selective than they were in the past.” He added, “Once, it was not unusual for broadcasters to buy programming in bulk and, at the time they did the deal, not to knownecessarily where all of it would be scheduled. Now they buy very specifically for very specific slots. This means that, not only are they only looking for programming that they know will work well in the specific slot for which they are buying it, but also that they are only buying the number of episodes they need to fill that particular run.” Jane Millichip, managing director of Zodiak Rights, said, “Distribution has proved to be a more stable business than production in recent years as broadcasters have replacedcommissions with acquisitions, particularly in nonpeak areas of the schedule.” But she added, “When the economic crisis broke in 2008, the impact on production and broadcasters in Europe was immediate and dramatic. Broadcasters cancelled commissions and reduced budgets dramatically, but distribution was not so badly affected, and is not subject to the same boom and bust cycle as is production.” Richter took issue with this, insisting, “It isn’t just a case of having to fill schedules. The European television market is now fiercely competitive and local shows are almost always more popular than bought-in shows; broadcasters know that if they show too many imports they risk losing market share, and it is very difficult to get market share back again.” Richter also reported, “Acquisition budgets are under pressure, [but] if you have the right program that will work in primetime, there is still good money to be had. But, if you have a ‘could buy’ series rather than a ‘must buy’ series then prices are flat, and in some places, under pressure.” Both Richter andMillichip concurred that none of this has affected profits, with Richter noting that, “In 2008 we actually saw growth and we were not the only producer, distributor to experience that.” Millichip agreed, saying, “At Zodiak we have seen our business grow year on year, every year since 2008.” However, she admitted, “It is possible that the percentage growth might not be as large as it was before the crisis broke, but we are still seeing healthy growth and margins.” Maria Kyriacou, managing director at ITV Global Entertainment, also reported good sales. Ahead of MIPCOM, Kyriacou said she was, “in a buoyant mood with good sales and good prospects.” But her optimism was tempered by the fact that, “In Europe we have been seeing a change in buying patterns, rather than straight rises or falls in prices. For one thing, we have seen the rise of the smaller buyers, smaller pay services and new OTT services such as Netflix (which launched in the U.K. in January and Scandinavia in August), and these are outlets to which distributors are paying attention. But she conceded, “This makes windowing very much more challenging, but it is, of course, fantastic news.” But for all the feel-good factor on display, it is undeniable that the Euro Zone crisis is having an impact. Millichip noted a much more cautious approach among buyers, claiming, “The most dramatic effect of the economic downturn is that broadcasters are much more risk averse now than they were.” Richter also noted this trend, commenting, “As well as becoming much more selective, we have also seen a move, amongst some buyers, to ‘retro programming.’” Richter believes there are two main reasons for this. “First, broadcasters know these shows have worked in the past, and therefore feel confident that they will work again, and second audiences like the warm feeling that these shows give. They remind them of a time when they were less anxious.” Whatever the programming trends that are emerging as a result of the economic difficulties in which Europe currently finds itself, there is still the question of budgets. Millichip believes, “It is to the credit of the European production community that the quality of production has not dropped, even though budgets have to an extent.” In part Millichip attributes this apparent anomaly to the selection of cheaper formats, saying, “We have, for instance, seen the rise of the managed, and often scripted access driven documentaries at the expense of more complex formatted series.” And she also noted, “In the U.K. especially, there has been a noticeable move to the U.S. pilot system in factual, whereas, in the past, the tendency was to go straight to series.” Richter also notes a downward pressure on budgets, but pointed out that, “While it is true that budgets are under pressure, it is also true that television production budgets are not that flexible; there are some savings to be made for sure, but it costs what it costs to make a show and if you tell a German or a French producer that he has to make the same show as in the past, but with only half the money — he simply won’t do it.” That’s the state of European television at the moment; what the future might hold is difficult to assess. Yet Richter finished on an ominous note, “Advertising markets vary from one market to the next and in some markets, advertising is under a lot more pressure than others, but, I think it is fair to say that Europe as a whole had a pretty tough Q2.” BJ Distribution a More Stable Business than Production E u r o Z o n e C r i s i s Jane Millichip, managing director of Zodiak Rights Maria Kyriacou, managing director of ITV Global Entertainment Jens Richter, managing director of Red Arrow Distribution
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