Jorg Graf, RTL’s head of Acquisitions and Sales Pedro Lascurain, a buyer for TV Azteca in Mexico 24 A recent report by U.K.-based Essential Television Statistics, Madigan Cluff and Digital TV Research stated that between 2008 and 2012 the value of sales of scripted series in Europe fell by 16 percent. But whether this is actually bad news for sellers gathering on the Croisette this week depends on where you look and what you’re selling. The past few years have seen content license fees on something of a rollercoaster. But most of the buyers and sellersVideoAgespokewith agreed that, for now at least, the ride is over and prices are remaining stable. Of course, as with any rule, there are exceptions. From London, Don Taffner Jr., chairman of DLT Raydar, recalled that, “five or six years ago in the U.K. therewas an explosion in the secondary rights market for top U.S. shows, which probably reached its peak when Comedy Central bought Friends, reportedly paying £100,000 (U.S.$153,000) per episode,” but he now believes, “activity has leveled off.” This comment was supported by Sasha Breslau, head of Acquired Series at the U.K.’s largest commercial broadcaster, ITV: “there has been no change in our acquisition budget, but still we remaincompetitive.Of coursewecan’t compete with what Sky will pay,” she said. “Our prices are competitive with other U.K. FTA channels.” Taffner added two caveats to the vision of stability, both of which he believes hold true around the world and not just in the U.K. The first caveat is, “the increasing tendency of studios to own outlets, which then of course buy from the studio, and act as a drag on the upward movement of prices.” But, on a more positive note Taffner also said that, “the prices for major live events, especially major sports events, have gone through the roof.” Although he added, “in many ways this is just a reflection of a trend that has been well established for at least 15 years, which has seen the cost of ‘must have’ content go up and up, while prices for everything else have either stagnated or fallen.” Pedro Lascurain, who buys programs for TV Azteca in Mexico, sees program costs continue on their upward track. “Prices are always going up regardless of a recession or a devaluation in our country. The average is about five percent every year on almost every product we buy from the U.S. In other countries, since we do not need to buy many programs, it is more likely to negotiate a better price,” he said. A buyer from Brazil, who asked to remain anonymous, said he hasn’t seen the price for U.S. programs increase much over the last five years, “maybe five-to-ten percent.” He added that primetime versus non-primetime prices don’t vary much and that sitcoms and dramas are still a much more affordable option to theatrical films. Paul Heaney, managing director of Londonbased TCB Media Rights, pointed out that the proliferation of outlets DLT Raydar’s Taffner referred to, “makes the managing of rights crucially important.” He added, “broadcasters are much more willing now to be realistic about exclusivity, so it is possible to make much more now from a market than was the case a few years ago, but you have to stay on top of platform launches and manage the rights forensically or you can lose out by as much as 20 percent.” Generally though, Heaney concurred with Taffner that, “prices are holding up,” though he cautioned, “Australia, while still a market that pays good money, is ruthless and genres fall out of favor very quickly — so you really do have to stay on top of that market, and factual prices in Germany are probably falling. Certainly the days of 120,000 euro (U.S.$159,000) an hour are over.” However, he added, “this is probably as much a reflection of the factual market, where most series these days are a lot smaller in scope than was the case a few years ago.” Jorg Graf, RTL’s head of Acquisitions and Sales, echoed this sentiment, saying, “prices reflect both the economic situation of the country concerned — for example, prices in Spain have fallen significantly — and the performance of the product in individual markets, which can cause the price per hour to be adjusted both up and down. In Germany the market is stable, but recently the product has not always been suitable for targeting broad European audiences.” More positively, Heaney noted that, “Russia, China and India are all paying more than they used to. They have all been good markets for a few years now, but that has been mostly about volume, now prices per hour are starting to rise as well.” In a reversal of this effect, Emma Simpkins, director of Sales at British factual specialist Passion, described Italy as a market where, “the increase in competition resulting from the arrival of new broadcasters has not had a significant upward effect on prices per hour, but it has led to an increase in the volume of deals it is possible to do.” While Simpkins also agreed that, “as a broad generalization, prices are pretty stable,” she did note some exceptions, pointing to, “some of the Mediterranean countries where business has fallen off, although this has been more about fewer and smaller sales rather than lower prices per hour.” On a more positive note, Simpkins said, “OTT services have had a dramatic impact in Canada and the Nordic countries. Many — Netflix in particular — have moved away from their initial revenue sharing model and have been pricing very aggressively. This has meant that traditional broadcasters have either had to compete or decide to walk away from programming they would otherwise have bought. They can only lose out so many times before they will have to start to compete.” Simpkins admitted that, “so far this effect has only been apparent in scripted, especially comedy, but we are confident it will soon be seen in lifestyle as well.” Liza Thompson, SVP of International Sales at All3Media, echoed a comment made by DLT Raydar’s Taffner as to the imbalance between “must have” content and everything else, noting: “in factual, prices are pretty stable, though a key audience driver can command a premium.” Territorially she sees Scandinavia as “really quite a competitive market across the board where strong concept factual programming and drama are achieving price increases and, often, early offers as a result of this competition.” In drama, however, Thompson noted that, “a lot of the bigger players like older skewing series with the ‘favorite/classic’ tag — which means there are fewer opportunities for younger skewing dramas unless they fall into a niche category such as sci-fi.” Over in the Great White North, recent figures supplied by the Canadian Radio Telecommunications Commission showed that private conventional television stations saw their revenues severely eroded in 2012 due to increased expenses and a decline in national advertising. Profits before interest and taxes (PBIT) declined from C$151.6 million to C$22.9 million, and the PBIT margin decreased from 7.1 percent to 1.1 percent. The industry players don’t discuss pricing, but given this economic downturn, the major Canadian broadcasters would have gone to the L.A. Screenings with a cautious approach to spending for the 2013 season, likely wanting to keep pricing flat. Nevertheless, acquiring U.S. network drama series, particularly those that can be simulcast, is a major priority. There are several buying scenarios: renewals, run-of-themill drama, and hot properties, each carrying a price tag. The actual price is obscured by several factors: the drama series being bought as part of a larger acquisition package that includes reality or cable properties and add-ons, such as VoD and streaming rights, to help maximize the value of the acquisitions. Program Prices Get Off the Rollercoaster October 2013 Sales & Revenues
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