(Continued from Cover) Mark Kaner, president of 20th Century Fox Television Distribution and Marion Edwards, president of International TV Distribution (Continued on Page 56) Keith LeGoy, SPT president International Distribution, VideoAge’s Dom Serafini, John Weiser, SPT president of U.S. Distribution 54 October 2013 Economy of U.S. Studios MovieMarket Moves toDigital don’t tend to find as much value in going to the Cannes event. So what are buyers looking for at the AFM and what do exhibitors bring to the table? Buyers seem to have an appetite for action, horror, scifi and family films, according to Breakthrough’s Cordoni, who added that this is, “outside of star power in any genre.” Multicom’s Holender said that his company will bring to AFM any “features that may not be ready for MIPCOM.” However, according to Shapiro, MarVista launches “content at MIPCOM but not at AFM because AFM is so soon after. AFM is also a good opportunity to pre-sell new projects,” she said. As far as territories go, Asian countries and the U.S. are high on MarVista’s list. “The U.S. market will be key for us this year as we launch our new movies and updates on new projects, including new in-house productions,” Breakthrough’s Cordoni said. But exhibitors aren’t just thinking about which territories to set their sights on. Reflecting on the industry, Imagination Worldwide’s Goebel said, “the business continues to be challenging from a lot of different perspectives.” “Indie films are challenging,” he said, because although buyers are looking for them, “there is a tremendous supply, and in some ways, if you focus on the DVD market, the buyers are getting more selective, so you have to be in the upper tier of quality and availability to continue to make sales,” he said. “It’s affecting our acquisitions because I’ve already turned down two films that I would have probably acquired a year ago because I know that buyers are being more selective; it’s causing us to be more selective,” Goebel added. “What’ll be interesting about the fall season at MIPCOM and AFM is whether or not there is still an oversupply and very selective demand from buyers, or whether it will start to balance out.” For Goebel, “The challenge going forward is the quality of the programming we have, and if we can increase that, we can increase the number of distributors that will be interested in our product.” IFTA’s Wolf was enthusiastic about the fact that AFM is “continuing to build and add programs for the production community. AFM’s core is buying and selling, importing and exporting. We provide every service these companies need to do that, and nowwe’re expanding our programs. We launched the conference series in 2011, and we are enhancing our educational programs. Over the years, we will continue to add more,” he said. SA Additional information about programs at the 2013 AFM will be available in our special AFM issue in November. percent coming from advertising, 47 percent subscription fees and nine percent public funding. Considering that programming costs account for about 50 percent of total TV outlet income, we can safely assume that content represents at least a $160 billion portion of that amount. As a point of reference, in the U.S., cable networks alone collectively spend over $20 billion a year on programs. Granted, the U.S. represents nearly 36 percent of the total global TV market, but Europe is not far behind with 30 percent, followed by AsiaPacific (21 percent), LATAM (nearly nine percent) and MEA (nearly three percent). In terms of TV/video rights exports, the U.S. generates an estimated $20 billion a year, which, added to the U.S. domestic TV business, would bring the total TV content sales business to nearly $70 billion a year. If we further consider that up to 70 percent of that business is controlled mostly by U.S. studios, some $50 billion is shared among seven companies, for an average of $7 billion each per year. Recently, Chase Carey, president of 21st Century Fox, reported that in 2016 the company expects to generate $9 billion, which would include its theatrical business. That’saseriousandrichTVbusiness indeed, and given the numbers and the growth potential, the future could not be brighter. Only five countries absorb more than 58 percent of U.S. audiovisual exports (the U.K., Canada, Germany, Japan and France). Reportedly, the value of imported drama series for 119 European broadcasters alone across 21 countries reaches $7 billion a year, or 15 percent of total programming investments, of which the U.S. takes at least 80 percent. There are also emerging countries with large domestic TVmarkets such as Brazil ($14.1 billion), China ($11.3 billion) and India ($6.9 billion) that are already big consumers of American movies (with India the fourth largest and China the seventh largest) with great growth potential for TV content. The U.S. studios’ economic power, though, has to match their financial power, considering that each episode of a drama pickedup by anAmerican broadcast TV network carries a deficit of at least $2 million, which, for a 13-episode order, adds up to $26 million. Multiply that by the 29 new dramas introduced this fall alone, the additional episodes to complete the season and the newly discovered summer original programming, and it is clear that only a studio system can finance production deficits to the tune of $1.5 billion a year collectively. Indeed, the U.S. television studios’ business model is so unique that no other country has been able to duplicate or replicate it. Basically, this is because it doesn’t make any business sense. Would any other TV industry in the world be willing or able to spend more than $500 million a year on development to come up with shows that have up to an 80 percent failure rate? (In the view of a former top-level studio executive, the failure rate can indeed reach 80 percent, but the norm is just 20 percent, with large studios averaging close to 50-60 percent). And this is after having invested $240 million to produce pilots (last May out of 98 pilots commissioned to the major six U.S. studios, about 50 were actually picked up), and accumulating the aforementioned estimated $1.5 billion in deficit per year. (Continued from Page 44)
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