I N T E R N A T I O N A L www.V i deoAge.org Photo Caption By Dom Serafini Naysayers who underestimate the business of traditional television had better research the rich potential of the medium. The only drawback could be that those riches are concentrated among some 100 companies worldwide and, in turn, these companies get most of their content from just seven U.S. studios: CBS, Disney-ABC, NBCUniversal, Paramount, Sony Pictures, 20th Century Fox and Warner Bros. Before reporting on the comments of U.S. studio executives regarding current and future opportunities, let’s analyze the global audiovisual market and what it represents for the U.S. TV industry. According to a study by Francebased IDATE, the 2013 world TV market will generate a total business of $323 billion, with 44 The Economyof U.S. Studio BizModel is Financial, Art (Continued on Page 54) What to expect at MIPCOM that the organizers didn’t tell you New U.S. TV season with seasoned “reviews” Program prices are steadily stabilizing all over the world Withholding Tax: The hidden costs of int’l content distribution Page 42 Page 26 Page 24 Page 22 BUSINESS JOURNAL OF FILM, BROADCASTING, BROADBAND, PRODUCTION, DISTRIBUTION SEPTEMBER/OCTOBER 2013 - VOL. 33 NO. 6 - $9.75 Everything Is For Sale, ButWhat’s Left ToBuy? The reality in a Wall Streetdominated and indomitable world is that mid-size and large entertainment companies can only grow by acquisition. And, in the recentpast,thisiswhathashappened at a pace as voracious as Wall Street speculators’ appetites. But now that mergers and acquisitions (M&A) (Continued on Page 52) (Continued on Page 50) We all know what we love about this business — that’s why we’re here in Cannes, right? (And we do all love Cannes, especially at MIPCOM, don’t we?!). So, it takes a particularly brave person to come out and say what he or she doesn’t like about this business. VideoAge spoke with a few of these courageous folks. Others, possibly because of the large number of dislikes that come up, ultimately “didn’t feel comfortable talking” about any of them. What Irks TV Execs About the Industry “I’ll bet a billion dollars that we’ll be clearing two billion this year.”
“…the most popular reality program in cable history.” —Wall Street Journal
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MAIN OFFICES 216 EAST 75TH STREET NEW YORK, NY 10021 TEL: (212) 288-3933 FAX: (212) 288-3424 WWW.VIDEOAGE.ORG WWW.VIDEOAGELATINO.COM WWW.VIDEOAGE.IT P.O. BOX 25282 LOS ANGELES, CA 90025 VIALE ABRUZZI 30 20123 MILAN, ITALY YUKARI MEDIA YMI BLDG. 3-3-4, UCHIHIRANOMACHI CHUO-KU, OSAKA JAPAN TEL: (816) 4790-2222 EDITOR DOM SERAFINI ASSISTANT EDITOR SARA ALESSI EDITORIAL CONTRIBUTORS ISME BENNIE (CANADA) ENZO CHIARULLO (ITALY) LUCY COHEN BLATTER CARLOS GUROVICH LEAH HOCHBAUM ROSNER BOB JENKINS (U.K.) AKIKO KOBAYACHI (JAPAN) DAVID SHORT (AFRICA) MARIA ZUPPELLO (BRAZIL) PUBLISHER MONICA GORGHETTO BUSINESS OFFICE LEN FINKEL LEGAL OFFICE ROBERT ACKERMANN, STEVE SCHIFFMAN WEB MANAGER MIKE FAIVRE DESIGN/LAYOUT CARMINE RASPAOLO ILLUSTRATIONS BOB SHOCHET VIDEO AGE INTERNATIONAL (ISSN 0278-5013 USPS 601-230) IS PUBLISHED SEVEN TIMES A YEAR: JANUARY, MARCH/APRIL, MAY, JUNE, JULY, OCTOBER AND NOVEMBER/DECEMBER. PLUS DAILIES BY TV TRADE MEDIA, INC. © TV TRADE MEDIA INC. 2013. THE ENTIRE CONTENTS OF VIDEO AGE INTERNATIONAL ARE PROTECTED BY COPYRIGHT IN THE U.S., U.K., AND ALL COUNTRIES SIGNATORY TO THE BERNE CONVENTIO AND THE PAN-AMERICAN CONVENTION. SEND ADDRESS CHANGES TO VIDEO AGE INTERNATIONAL, 216 EAST 75TH STREET, SUITE PW, NEW YORK, NY 10021, U.S.A. PURSUANT TO THE U.S. COPYRIGHTS ACT OF 1976, THE RIGHTS OF ALL CONTENT DONE ON ASSIGNMENT FOR ALL VIDEOAGE PUBLICATIONS ARE HELD BY THE PUBLISHER OF VIDEOAGE, WHICH COMMISSIONED THEM I N T E R N A T I O N A L www.VideoAge.org PhotoCaption ByDomSerafini Naysayers who underestimate the business of traditional television had better research the rich potential of themedium. The only drawback could be that those riches are concentrated among some 100 companiesworldwide and, in turn, these companies get most of their content from justsevenU.S.studios: CBS, Disney-ABC, NBCUniversal, Paramount, Sony Pictures, 20th CenturyFoxandWarnerBros. Beforereportingon thecomments ofU.S. studio executives regarding current and future opportunities, let’s analyze the global audiovisual market and what it represents for theU.S.TV industry. According to a study by Francebased IDATE, the 2013 world TV market will generate a total business of $323 billion, with 44 TheEconomyofU.S.Studio BizModelisFinancial,Art (Continued onPage 54) What toexpectat MIPCOM that the organizersdidn’t tellyou NewU.S.TV season with seasoned “reviews” Program prices are steadily stabilizing all over theworld Withholding Tax: The hidden costs of int’l content distribution Page42 Page26 Page24 Page22 BUSINESS JOURNALOF FILM,BROADCASTING,BROADBAND,PRODUCTION,DISTRIBUTION SEPTEMBER/OCTOBER 2013 -VOL.33NO.6 - $9.75 EverythingIsFor Sale,ButWhat’s LeftToBuy? The reality in a Wall Streetdominated and indomitable world is that mid-size and large entertainment companies can onlygrowbyacquisition.And, in the recentpast,thisiswhathashappened atapaceasvoraciousasWallStreet speculators’ appetites.Butnow that mergers and acquisitions (M&A) (Continued onPage 52) (Continued onPage 50) We all knowwhatwe love about this business — that’s why we’re here in Cannes, right? (And we do all love Cannes,especiallyatMIPCOM,don’t we?!). So, it takes a particularly brave person to come out and say what he or she doesn’t like about this business. VideoAge spokewitha few of these courageous folks. Others, possiblybecauseofthelargenumber of dislikes that come up, ultimately “didn’t feel comfortable talking” aboutanyof them. What IrksTV ExecsAbout the Industry “I’llbetabilliondollars thatwe’ll beclearing twobillion thisyear.” Why skip TV commercials when they’re more entertaining than the programs? Page 62 26New U.S. TV Season: -TV Critics Press Tour -L.A. Screenings Report 24Content license fees are finally stabilizing News 46Road to NATPE 14Tech Talk: HDTV, OTT, Sat TV, TV on a cloud, Cost of GHz Features 16Book Review: Larry King, A Good Listener on TV Talks in Print 6 World: U.S., Vietnam, Zimbabwe. Plus, Notable Quotes 18Mart Review: Indies and studios harmonized at NATPE Budapest 42TV Biz: MIPCOM Preview 60Calendar of events with news you can use Quantity, quality, marketing and star power add to the studios’ strength Everything is for sale, but what’s left to buy? What TV executives don’t like about the industry Territories 38Latin America: Brazil offers a new TV landscape 36Canada: Begging for production money becomes fun 32Middle East: -Crowdfunding and online distribution for Arab filmmakers. -myTV partners with media gurus Cover Stories 22Withholding tax represents one of the many hidden costs of international distribution 40Festivals: Venice Film Fest and Market Report 48Focus on SPORTELMonaco 44Movie Biz: AFM Showcase
October 2013 6 World (Continued on Page 10) Those included popular programs like the PGA golf championship, the NFL (American football) season and two soap operas, in addition to NCISand60Minutes. According to some reports, the dispute erupted in August in order to have sufficient time to resolve it before the NFL games started in early September. (Note: The CBS-TWC dispute was resolved on September 2, exactly one month after it started.) TWC also pulled CBS-owned cable network Showtime, home to Dexter and Ray Donovan, two top series. The cable industry is up in arms over retrans fee because it tends to increase cable subscription prices, since cable continues to offer bundled packages, instead of a la carte selection. In the early days broadcast channels were happy to negotiate carriage for cable channels owned by the broadcasters, but now the focus is in getting cash from the cable operators. Reportedly, by 2015 retrans fees will increase to $4.3 billion from $2.4 billion in 2012. Nonetheless, CBS was able to quietly negotiate retrans fee with other cable operators without any issue, while in its negotiations with broadcasters, TWC has had the tendency to block the channels. In addition, it has been pointed out that the argument about broadcast channels being FTA is no longer valid since only about five percent of U.S. TV households now receive FTA via aerials, making them, in effect, subscription channels. TWC flashed this message about pulling CBS in New York City Last summer the battle of the giants was between CBS and Time Warner Cable (not associated with Warner Bros.) over retrans, the fee that cable operators have paid broadcast channels since 1992. The position of broadcasters has been that their channels garner high ratings and yet get lower fees than some cable channels with ratings of less than one percent. Reportedly, CBS was asking for an increase to $2 per sub per month from the previous fee of about $1 (a similar popular channel like ESPN is said to be getting a $5.54 fee per sub a month). Withnegotiationsbreakingdown, onAugust 2TWCpulledCBS from3.2millionsubscribers (out of its 24 million) in the New York City, Los Angeles, Dallas and five others areas with a note on the CBS cable dial also stating that it was “providing replacement programming from Starz Kids and Family.” On August 4, CBS counteracted with newspaper ads indicating the programming TWC customers were missing. Retrans...Again CBS countered with this newspaper ad TWC posted this message in Los Angeles 14 x 30’ THE WORLD OF LOST PACKAGES AND THE MOTLEY CREW THAT TURNS THEM INTO GOLD! Nat Abraham, President, Distribution t 416.366.6588 x 114 e nabraham@breakthroughentertainment.com Kate Blank, Director, Int’l Distribution t 416.366.6588 x 231 e kblank@breakthroughentertainment.com Jodi Mackie, Int’l Sales Executive t 416.366.6588 x 112 e jmackie@breakthroughentertainment.com 122 Sherbourne Street Toronto Ontario Canada M5A 2R4 t 4I6.766.6588 f 416.769.1436 distribution@breakthroughentertainment.com breakthroughentertainment.com
October 2013 10 World Big Payday For Big U.S. TV Cos Despite some definite challenges (including competition from online streaming services and fractured audiences), television companies and TV divisions within large media companies are still seeing profits — especially in comparison to their theatrical counterparts. In the U.S., TV distributors DirecTV and Time Warner Cable reported second quarter revenue increases despite drops in subscribers. The two rival companies — Time Warner is a cable company and DirecTV a satellite provider —managed to pull this off by focusing on more profitable subscribers: those who stick around longer and pay more for monthly services. Overall for the quarter, DirecTV posted a profit of $660 million (which is down from the same time last year, though average revenue per household is up) and Time Warner Cable posted an increased profit of $481 million for the quarter. The loss in subscribers for both companies is largely attributed to online streaming services like Netflix, which have caused viewers to become “cord-cutters.” Media companies Comcast (owner of NBC broadcast network) and CBS Corporation (which owns the CBS broadcast network) had good news to celebrate for the second quarter of 2013, too. Comcast’s earning rose to $1.7 billion (from $1.35 billion) and CBS Corporation’s to $472 million compared to $427 million last year. CBS’s strong performancewas attributed in part to licensing deals with Internet streaming services like Amazon. In the third quarter of 2013, the Walt Disney Company saw growth fromthe company’s cable television division (specifically its sports cable network ESPN). Operating income at the Media Networks unit roseeight percent, to $2.3 billion. In the second quarter, MGM Holdings, the parent company of Metro-GoldwynMayer, reported a net income A newmove by Viacom seems to indicate that the U.S. is embarking on a new era of TV competition. Viacom — owner of cable channels Nickelodeon, Comedy Central and MTV, among others — has entered into a tentative agreement with Sony, which is working on an as-yet-unnnamed Internet service that would let paying subscribers receive streaming live cable channels. The Sony service could provide another option for the way most people in America get their television service — via cable, satellite provider or in some cases Telcos. Sony is planning to stream cable channels and on-demand programming over the Internet, posing new competition for cable, satellite and phone companies. The service would be beamed to Sony devices such as PlayStation, as well as the company’s Bravia high-definition TVs. Plus, Sony plans to extend it to other Sony devices, including tablets and smartphones. Sony has sold more than 24.4 million PlayStation 3 consoles in the U.S. alone, and many households own other Internet-connected Sony electronics. The deal is considered a major boost for Sony, and may help the company sign on more major programmers. Sony plans to start selling the service in the fourth quarter of 2013 or early 2014, according to reports. Sony, Viacom To Stream Together (Continued on Page 12) (Continued from Page 6)
October 2013 12 World of $35.9 million, down 16 percent from $42.6 million during the same quarter last year (though the 2012 report included a one-time gain related to the sale of Latin American pay-TV assets to Chellomedia). On the up side, MGM’s income increased to $339 million, up 164 percent. The company recorded a significant rise in its home entertainment business, with revenues of $179.9 million, up 533 percent. Vietnam TV Lost In Translation The Cable and Satellite Broadcasting Association of Asia is concerned over the Vietnamese government’s mandate that foreign TV channels pay for simultaneous translation of all programs into Vietnamese. The mandate caused VSTV, a pay-TV operator owned by France’s Canal Plus and Vietnam’s national broadcaster, to suspend 21 TV channels, including CNN and BBC. “Now the U.S. Congress wants to get into the act with a bill that is not considered a tax increase, but simply a means of collecting existing state taxes.” VideoAge’s March 2012 story on tax downloads “The Marketplace Fairness Act passed the U.S. Senate in May, with broad bipartisan support and the backing of President Obama. The bill would allow states to force collection, with no need to prove nexus [physical presence].” Fortune’s June 10, 2013 issue on “Amazon’s War [on Internet sales taxes]” Notable Quotes In July, 1st TV launched in Zimbabwe as an alternative to Zimbabwe BroadcastingCompany, the statebroadcaster that for 30yearshasdominated the country’s radio and television industry and has been criticized as being a mouthpiece for President Robert Mugabe’s Zanu-PF party. The new free-to-air satellite network has branded itself as the country’s first independent, impartial television station, immediately prompting the country’s ruling party to call it a pirate station and threaten to “cripple” it. The new network, which airs for five hours a day, is being broadcast from neighboring South Africa, as it was unable to obtain a TV license in Zimbabwe. The station’s executive producer says there are 700,000 households in the country with satellite decoders. Funding for the channel comes from private investors and donors, he said. The July elections — which saw the controversial re-election of Mugabe — provided a catalyst for the station’s launch. Zimbabwe State TV’s “1st” Rival (Continued from Page 10)
14 A Smart OTT Recently, Turkey’s D-Smart began offering OTT services for its twomillion subscribers for live and VoD programmingforTVsets,PCsand tablets since the technology used supports a variety of streaming standards. By deploying Broadpeak’s BkS400 OTT system, D-Smart is able to reduce congestion and provide good video quality. Getting a Clear Sat TV Picture Satellite TV interference is a problem that the industry is determined to solve by working on the root causes of common VSAT interference issues. Meanwhile, working on rules and regulations and technology that can easily identify the interferer and the host without disruptions, the industry is betting on vast improvements. For example, one solution is foundingeolocationtechnology, which enables operators to locate the source of all types of interferences for international signals. Broadcasters on a Cloud Users consume video in a variety of ways, so broadcasters should be able to make their programs accessible on all devices, or as it is described, across multiple platforms (the so-called “TV Anywhere”). For this purpose it is advisable to utilize cloud technology because more than 90 percent of all connected consumer devices have cloud services integrated into them. Spectrum Costs IDA, the authority for communications in Singapore, has sold a total of 270 MHz in the 1.800 MHz-2.5 GHz spectrum for fourth generation (4G)telecommunicationsservices to three operators: M1 Ltd. obtained 80MHz of spectrum for S$104 million (U.S.$82 million); SingTel Mobile Singapore was allocated 100 MHz of spectrum for S$136 million and StarHub Mobile got 90 MHz of spectrum for S$120million. The TV sector was barely accommodating standard HD when 4K, another highdefinition TV technology two times the resolution of HD, came into the picture. Content providers aren’t even ready for 4K and now 8K, yet one more super-definition technology, has crawled in. 8K TV sets have resolutions in the order of 7,680 x 4,320 pixels, 16 times that of HDTV, but, for now, 8K is like 3D: Just a multifaceted dream. First HDTV, Then 4K and Now 8K October 2013 Tech Talk ALWAYS ready entertainmentcrime actionlifestylereality D E V E L O P M E N T • D I S T R I B U T I O N • R E P R E S E N T A T I O N +1 203-855-7979 | info@cableready.net Visit cableready.net to see full episodes of our entire program library. MIPCOM 2013 Contact sales@cableready.net to schedule a meeting 13x30 (In Development) 6x60 11x30 13x60 (In Development) 8 Events 50x60, 10x120 73x30
Visit eOne at RIVIERA BEACH RB.43 • Watch the trailer at eOnetv.com Follow us on Twitter @eOne_TV • tvinfo@entonegroup.com Event Mini-Series (2014) • 3 x 120 minutes or 6 x 60 minutes
October 2013 16 Book Review For 25 years, starting in 1985, the man with the glasses and suspenders sitting in front of a backdrop of the world map with a microphone on his desk (it was just a prop, it didn’t actually work!) was a fixture on Americans’ TV screens. Each night on CNN’s Larry King Live — the longest-running show with the same host on the same network in the same timeslot — talk show host Larry King interviewed a famous guest, national or international in scope, covering topics ranging from film to politics to money to medicine and beyond, asking poignant questions of the interviewee and refraining from saying too much himself. The Brooklyn-born King’s career behind the microphone began in 1957 at the age of 24 as a deejay in Miami Beach, Florida. Now that he’s left CNN, he’s written his own book (actually, his 15th), Truth Be Told: Off the Record about Favorite Guests, Memorable Moments, Funniest Jokes, and a Half Century of Asking Questions (Weinstein Books, 225 pages, $25.00), giving King — who’s 79 years old — the chance to do what he didn’t for so many years: to have his say and share his stories (and he’s got a lot of them). Even the winding subtitle sounds like a trip down memory lane, and that, along with careful insight into the man behind the suspenders, is what the reader is served in King’s memoir. Though he shares the origins of his famous suspenders (“It all started as a simple suggestion from an ex-wife of mine after I lost weight following heart surgery”), if you were hoping to hear about the juicy details of his eight marriages to seven women, or the private lives of those he interviewed over the years, you won’t find anything to drool over here. King doesn’t explain how or why any of his marriages ended, nor does he share the details that led him and his current wife, 54-year-oldShawn, to file for divorce around the time his show was coming to a close and then reconcile, just as he didn’t ask actress Angelina Jolie how she felt about breaking up Brad Pitt and Jennifer Aniston’s marriage. King simply feels it’s nobody’s business. And he’s right, though, undoubtedly, it’d make for some great gossip and juicy reading. But as the reader learns, King is unlike other talk show hosts in that he didn’t enjoy doing “the tabloid stuff” just to get ratings. In fact, he explains that, “If one of the suits had ever asked me to yell at a guest, I wouldn’t do it.” For King, regardless of the ratings, the “ideal guest would still be someone interesting who walks over and surprises me,” and he saw his job as “the facilitator…To get the guest to open up so he or she can hit a home run.” His guests’ respect for him over the years is a testament to King’s character. In a letter to King Frank Sinatra wrote: “Unlike so many others — [you] were not there to trap or ensnare me or to sensationalize in any way…Be aware, my friend, you are very rare in your line of work, never asking self serving questions or competing with your guests in any way. And you’ll never know how much that means to all of us who have sat opposite you.” This is exactly what King strove for. Still, the reader is treated to countless stories about big stars and gets the sense that King is just as fascinated by the stories, and in many cases the fact that he even had the opportunity to be in the same room with these folks, much less have them as guests onhis cable TV show. The reader has as much fun reading about King’s encounters with celebrities and key figures such as Frank Sinatra, Marlon Brando and Vladimir Putin as King did interviewing them, and he shows that ultimately he is just as grateful to have met them as your average Joe would be. It’s obvious that King truly enjoyed what he did because it gave him the opportunity to spend time with people he may otherwise never have met: “The joy of my life is meeting somebody interesting every day.” For King, it’s all about getting to know and understand people. The reader learns to appreciate King on a human level because his writing and stories make him feel human. He is acutely aware of the opportunities his career brought him throughout his life, and he’s thankful for them. For example, he reflects on listening to Paul McCartney play the piano in his living room, saying, “On days like that, I go home and say to myself, Did that really happen?” While showcasing King’s knack for telling stories, the book also gives readers insight into his insatiable curiosity, and what ultimately led him to end his talk show run. King explains his decision to leave the show, saying, “It may have seemed abrupt...But it was a process of evolution on my end.” It was time for King to devote the hours he spent on Larry King Live to being home with his wife and their two young sons, Cannon and Chance. But even after he decided to leave CNN, King couldn’t escape his curious nature, and the questions kept coming to him: He wondered, “What was I going to do with all my questions when I no longer had a show to ask them on?” (Incidentally, he can ask questions again on his new show, Larry King Now). Through his book, King brings the reader inside his experiences with these intriguing people. The reader gets a glimpse into the life of the world’s wealthiest man when he writes about being invited by business magnate andmulti-billionaire Carlos Slim to speak at a scholarship event in Mexico City. King explains that Slim personally drove himon a tour of the city, and that he is aman who is deeply dedicated to his family, painting a picture of Slim that most readers have never seen before. Later, the reader shares King’s frustration when he describes trying to get actress/singer Barbra Streisand to begin a taped interview on time. “She tried on many different dresses, changing over and over for hours, checking how each one looked not only in the mirror, but on camera,” and just as they were about to begin the interview, Streisand interrupted to complain about the color of the flowers on the desk. As he said, “She drove me nuts.” Another interesting story: When Elton John sang “Candle in the Wind” at Princess Diana’s funeral, he was worried that he might accidentally sing the lyrics written for Marilyn Monroe, so he used a teleprompter to remind him. King’s storytelling technique is endearing, and the reader senses his honesty and thoughtfulness. Though at times it feels as though King is namedropping,he’salsogivingus insight intothepeople behind those names. The reader might wish he would offer more details, but maybe that’s what his show was for — a chance for the interviewees themselves to give us more, whatever they were comfortable sharing — while the book is a space for King to reflect on his experiences with them, without overstepping his bounds. Anyone who wants insight into King as a person, as a talk show host and a philanthropist (he established his own Cardiac Foundation to raise money for people who can’t afford heart surgery, and often donates his time to charities), should pick upTruth Be Told. Through the stories King chooses to share, and even those he doesn’t (such as personal details about his relationship with his wives), the reader gets a sense of King’s personality, modesty, intelligence and generosity. “I don’t offer a point of view. I try not to use the word I. And I ask short questions. My motto is: I’ve never learned anything while I was talking.” But this book represents King’s turn to “talk,” to offer his side of the story, and we’re ready to listen. SA Larry King: A Good Listener on TV Talks in Print
18 In Budapest this past June, the Americans seemed to have disappeared from the usual tourist spots. Similarly, the Germans were gone, as were the French, while the city was full of Italians who could be seen at flea markets, bars, restaurants, jogging and going shopping along Vaci Street. They were everywhere, with the exception of the NATPE Budapest market, as if the international TV business does not concern Italy. In contrast to the empty utcas (streets), Americans, Canadians, Brits, French and Germans could be found at the Sofitel, headquarters of NATPE Budapest, along with representatives of 23 other countries. For theNATPETVmarket at theSofitel—situated on the Pest side of the city, next to one of the bridges over the Danube that connects to Buda — more than 50 rooms (for 46 exhibiting companies) were converted to offices. Plus, the large conference rooms in the basement accommodated more, for a total of 152 exhibitors catering to some 400 buyers. Between those companies that didnot returnand37 new ones, the number of exhibitors did not change from the previous year. On the first market day, the comments heard on the three market floors — the hotel mezzanine and the conference rooms in the hotel basement — were mostly related to slow foot traffic. That was attributed to the fact that, that morning, two studios, CBS Studios International (CBSSI) and Fox, as well as the indie Lionsgate, screened their new season TV fare outside the hotel, drawing an estimated 200 buyers, about half of the contingent. While CBSSI screened in a nearby theater, Lionsgate rented a screening room at the Four Seasons, and Fox used the Café Gerbeaud, as did WB and NBCUniversal the previous day. The exceptions were Disney, which attended with a table, and Sony Pictures, which did not attend the market, but according to NATPE, set up shop at the nearby Intercontinental Hotel. In order not to siphon away buyers from the market,most of thewell-attended screenings took place the day before the market, which this year began Tuesday afternoon rather than Monday. However, the Fox screenings, which extended past 1p.m. on Tuesday, caused some grumbling, tempered by the realization that the studios’ presence attracted more buyers to the market. All the exhibitors VideoAge visited in the afternoon on opening day indicated that they would have a full schedule the next day, but it would wind down on Thursday. However, some exhibitors, such as Caracol, Televisa and RAI, were busy on opening day too, with some noshow meetings replaced by walk-ins. But how did the market go for exhibitors as a whole? According to The Fremantle Corporation’s Diane Tripp, there were “Lots of opportunities for our scripted family series. This is an underserved genre in a world of reality and lifestyle. Buyers still require wholesome family series…even if they’re rerun in the market.” For Peace Point’s Andrew Schreiber, “The market went extremely well. As we were introducing an entirely new line of product to these buyers, there was considerable interest and we were able to initiate serious negotiations on a number of packages of films with both panregional and national buyers.” Helge Köhnen of Global Screen reported that “The market itself went well, the meetings were valuable and I met many of my important regular clients as well as new promising contacts. However, all clients in general are very careful with spending money, in view of an uncertain financial outlook, so they check very thoroughly which programs they really need.” For Caracol’s Roberto Corrente themarket “went much better than expected. Tuesday was a little slow, but it was stable and the meetings were very productive.” As far as finding new buyers, The Fremantle Corp.’s Tripp noticed “Dedicated VoD channels launching all over Eastern and Central Europe.” She added that, “Sadly, buyers have limited budgets and some did not even attend.” Similarly, Peace Point’s Schreiber found that “the biggest change is the increase in the number of buyers who focus primarily on VoD rights.” Global Screen’s Köhnen “noted a shrinking attendance fromRussia/CIS—I think they prefer to go to Kiev Media Week instead,” he commented. For Tripp, the best response from buyers came from “Poland, Romania, Croatia and Russia.” For Schreiber, “[the] strongest [response came] from the Balkan territories.” For Corrente, “Hungary, Poland, Serbia, Croatia, Russia and Albania, among others,” and for Köhnen, “Hungary, Czech and Slovak Republics and Poland.” He added that, compared to last year, “It seemed that the market was weaker in terms of participants in general. [But] for Global Screen, it was better because the majors’ screenings and the market were now separate events — I could meet with everybody I wanted to see.” Among the buyer contingent, one lingering mystery is why so few Polish TV acquisition executives attend NATPE Budapest, while a great deal of support was shown by local Hungarian buyers, who numbered more than 25. Among the first-time buyers was Tamar Zardiashvili of Georgia’s TV9, who said she was looking for all kinds of programs because her network was new and in need of lots of content. Shewas very busy at the market, noting that she “had meetings every 30 minutes all four days…and some business dinners afterwards. I also had business lunches, so I used all of my time. All in all the market was productive.” However, she commented that the market set-up on various floors made it difficult for her towalk around the floor and stop by stands that struck her interest, because, for example, “at the lobby they had meeting tables, but since I had no meetings there, I never stopped by to see which companies had stands.” Only six Italian companies were present at NATPE Budapest, and all under the umbrella of ICE Budapest Italian Trade Commission. Latin Americans also had a small presence, with only seven exhibitors. However, the Canadian presence increased (with a total of nine companies), together with a strong showing from the British (20 companies), French (12 companies) and Germans (nine companies). As usual, the U.S. (with 26 companies) dominated the event (sometimes with representatives from their U.K. offices). The weight of the U.S. was also felt through the aforementioned screenings by the studios (and, at the last minute, by Lionsgate) of their new season productions. The presence of some new countries offered a good indication of new trends in production and sales, although it is difficult to imagine how Indies and Studios in CEE Harmony October 2013 NATPE Budapest Review (Continued on Page 20) ScreenMedia Ventures’ Todd Jackson, Peace Point’s Eric Muller, Andrew Schreiber ITV’s Ahmet Ziyalar and Can Okan Televisa’s Claudia Sahab, Hugo Treviño, Beatriz Rodriguez
(Continued from Page 18) 20 content from India, China or Russia could compete, since the audiovisual product from those countries was not highly sought after. In this regard, it has been suggested that in order not to disappoint the expectations of some exhibiting countries, the organizers themselves should help them select content from their libraries so that they can be better received by the territories they are targeting. For example, Bollywood films are not generally found to be suitable for Central and Eastern European TV markets, though India could be successful selling documentaries. Russia, which has had difficulty selling a showabout the life of a famous Polish singer to Poland, could also use guidance. Also, it is hard to justify the presence of six Chinese companies at NATPE Budapest. Turkish productions, on the other hand, continue to be very successful at the international level. This year, NATPE Budapest experimented with a breakfast session at the Sofitel’s nearby Café Gerbeaud (also the venue for some of the U.S. studios’ screenings) just a short walk from the market’s headquarters. During a two-hour pre-market program on Tuesday, four panelists and a chatty moderator presented their views on TV industry issues in front of some 100 NATPE participants. Antony Root of HBO Europe documented the success of Central Europe’s local original HBO productions. Chello’s Peter Radnai explained his company’s strategy to get involved with shows with “high PR potentials.” FRAPA’s chairwoman Patty Geneste illustrated the benefits offered by her protection programs for format shows, after recognizing format veteran Michel Rodrigue as one of FRAPA’s founders. Eurodata’s Nassina Boudi mentioned that today “there is a global nostalgia for retro” programs, which are becoming increasingly popular with TV audiences, “because the future offers little appeal.” At the opening party, Rod Perth, president of NATPE, stressed that participants fill out a questionnaire to be used as a road map to figure out a better future for NATPE’s June CEE show; especially in light of the fact that the Sofitel doesn’t offer screening facilities, forcing the studios to go outside the venue. For next year, at least, the city and venue will remain the same. As for suggestions on how to improve the market, Fremantle Corp.’s Tripp said, “Maybe NATPE should find a venue that can offer more affordable and universal meeting spaces.” Global Screen’s Köhnen noted, “It has been discussed to move the venue of this market. I believe it would be best to keep it in Budapest.” Caracol’s Corrente felt that, “If NATPE Budapest wants to still be relevant in the years to come, it must deal with the fact that the independent sellers, the ones that keep NATPE alive, should be a priority. Instead of having the [U.S.] studio screenings take place before NATPE, they should allow the beginning of the event to be for the independents. This way the independents do not get overlooked. The majors can have their event after.” October 2013 NATPE Budapest NATPE held its first Breakfast Briefing Session this year, attended by about 100 participants.
22 Here’s the story: American companies are subject to U.S. taxation on their worldwide income. The same is true in many other countries. In order to avoid “double taxation” (i.e., being taxed in the U.S. and also in the country in which business is done), countries have negotiated treaties with each other, which reduce and/or eliminate “import” taxes. The technical term for this levy is “withholding tax,” yet, it isn’t a sales tax (like VAT in Europe or GST in Canada), since it affects the seller and not the buyer. Out of 170 countries around the world, 26 don’t impose any tax on the import of “royalties.” Among the larger countries with zero taxes are Hungary, Sweden and Holland. Countries with the largest taxation are: France (33 percent), Colombia (33 percent), Italy (30 percent) and Brazil (25 percent). However, for the acquisition of film and TV content, the U.S. has treaties with 43 countries, which reduce the tax, for example, from33 percent in France, to zero. Another treaty has reduced the tax in Italy from 30 percent to eight percent. All in all, thanks to treaties, the number of countries that don’t tax imported U.S. content increased to 38, while 15 countries have reduced the tax to anywhere from five percent (e.g., Australia, down from 30 percent) to 10 percent (e.g., Canada, down from 25 percent). With 22 treaties for zero withholding tax, Hungary leads the pack, followed by the U.K. (20) and the Netherlands (19). Here’s how it works, according to Harry C. Vasavada, a media consultant with 25 years of U.S. CFO experience. When, for example, a U.S. distributor licenses a program for $1,000, let’s say to Italy, the buyer only pays $920 to the seller and $80 to the Italian government if the seller sends a completed IRS (U.S. tax office) Form 6166 (Certification of U.S. Tax Residency, which is a letter printed on U.S. Department of Treasury stationary), to the buyer, who in turn sends the seller a certificate stating that $80 was paid to the Italian government on behalf of the seller. For accounting purposes, the seller still records the sale as $1,000 and claims the $80 as distribution expenses. This is because U.S. content distributors can claim from their IRS tax returns the portion not returned as expenditures, considering that it is also a burden to keep track of all the accounting. Not only that: For Americans, the IRS has only one small office in its Philadelphia, PA division to deal with the matter of international withholding taxes. In order for the IRS to release Form 6166 (which can be valid for one to two years) the seller has to submit another document, called IRS Form 8802. Forms needed to recover some or all of the tax can at times be used by the buyers to delay payments, which is what happened in one case VideoAge reviewed in Poland where before sending payment, the buyer wanted a copy of IRS Form 6166. For companies inMexico,Marcel Vinay, Jr., head of Distribution for Comarex, says that buyers, too, send the sellers certificates stating that a certain amount of moneywas paid to their government as tax on behalf of the sellers. However, the sellers do not recover the withholding tax, but when it is possible they can deduct it from their own income tax statements. For countries that sell to others without tax treaties, the solution is to findanagent inacountry with the largest number of treaties, from which to bill the sale. Naturally, it is also possible that a country with favorable treaties might have a high income tax. In that case the seller normally finds a tax haven (offshore offices) from which the sale transaction originates. For tax and withholding tax purposes, U.S. studios prefer to set up offices in Holland. At one time these offices were just an address, but have now evolved into functional, fully-staffed offices from which most, but not all, international sales are made to originate. Diane Tripp of Toronto-based The Fremantle Corp. mentioned that Canada’s program sales to Japan, for example, are heavily taxed with little recovery. Similarly, a sale fromArgentina to theU.S. gets a withholding tax of 31.5 percent by the U.S. government, while in the U.K. it’s only 15 percent. To reduce the bureaucracy, some big companies with large volumes of sales even set up enterprises in local territories (e.g., Canada in addition to the popular Netherlands) so as to get paid locally. For U.S. companies, selling to American pan-regional international TV outlets also streamlines the process. An added burden on the shoulder of sellers is when, in addition to the withholding taxes, a country has a “remittance” tax, as is the case with Brazil. While the withholding tax can be fully or partially recovered, the remittance tax is not creditable. Last August, the U.S. resolved a dispute with China over the remittance tax on theatrical movies. With the China-U.S. treaty negotiated in February 2012, in addition to the 10 percent withholding tax, the Chinese government imposed a non-creditable two percent tax from the U.S. distributors’ share of theatrical revenue. With the new understanding, state-owned distributor China Film Group will reimburse the accrued sales tax to the U.S. companies. In some cases, due to this burden, small distributors leave the recovery process to the producers they represent. An alternative would be using intermediaries, such as the bank-owned, Holland-based Fintage House or its subsidiary Batrax that — with the buyers’ blessing and for a fee that depends on the volume involved but could range from 1.5 percent to 2.5 percent — will deal with the withholding tax recovery and sales collection by making the sale originate from countries with the best mutual treaties. Withholding Tax: The Hidden Costs of Int’l Content Distribution October 2013 Economy & Finance Thanks to treaties, the number of countries that don’t tax imported U.S. content increased to 38, while 15 countries have reduced the tax to anywhere from five percent to 10 percent. Marcel Vinay, Jr. , Comarex’s head of Distribution
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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
26 For over 35 years the California-incorporated Television Critics Association (TCA) — representing 220 journalists writing about TV in the U.S. and Canada—has been organizing a TV Critics Press Tour twice a year, with the past two years alternating between the Langham Huntington Hotel in Pasadena, Calif. in January and the Beverly Hilton Hotel in late July. At this summer’s 15-day Press Tour, which ended August 7, executives from six broadcasting organizations, cable TV representatives, Showtime andHulu commentedonprogramming and changing television viewing. VideoAge’s reporter on the scene offers this summary from the four major U.S. broadcast TV networks: ABC, CBS, FOX and NBC, and their executives: ABC’s Entertainment Group president, Paul Lee, cites the international success of his U.S. shows as the recipe for the network’s success. “We were looking at our international numbers, andwe’re really seeing growth, not just onmultiple platforms, but internationally. From the slate of new shows, we have eight newpilots fromour own studio this year. And a lot of people are talking about our shows, and not just Scandal,” he said. He also mentionedOnce Upon a Time, Nashville, Marvel’s Agents of S.H.I.E.L.D., Once Upon a Time inWonderland, Resurrection, andLucky 7as series that have garnered attention overseas. After spending time overseas for an Irish wake, Lee was struck by the number of people who approached him to talk about American television. “I think we don’t give ourselves enough credit for just how powerful American television is. I mean, sitting in a land a long way away at 4 in the morning...and you’re talking about Breaking Bad and Homeland and Scandal and Modern Family andMad Men. You know, there’s a reason why so manyof the talent fromfeatures—and I’mtalking behind the scenes, writers as well as directors — are moving across to us, to television. And there’s a reason why people around the world are watching our shows. We’re making extraordinary levels of very sophisticated television across all platforms, from Internet to pay to cable to broadcast...I was struck by it, by leaving the country and coming back. It is reflected in a very real way in the revenues that we see coming in from the shows that we sell. I mean, Revenge is a great seller around the world and a top 10 show in Australia. Nashville is selling extremely well for us with Lionsgate. And, of course, Once is a great seller for us, and Scandal, Grey’s Anatomy andCriminal Minds. We shouldn’t underestimate the power of the storytelling in this room and its ability to speak to millions of people in 220 markets around the world,” he said. CBS’s chief research officer and president of CBS Vision, Dave Poltrack, had this to say: “Today’s viewer has been liberated from the constraints of linear access to television programming. From the early days of the DVR, pundits have seen the expansion of the viewers’ access to television programming as a threat to the broadcast networks. We, on the other hand, have argued that greater access to television programs will benefit the most popular programs the most, presenting an opportunity for broadcast networks that control these programs. Clearly, this has been the case,” he said during a research panel. “It should be clear by now that the new technology and means of program distribution have allowed the broadcast networks to provide viewerswithgreater access to their programming, and that in turn has changed the economics of the business,” Poltrack added. CBS may be the network achieving the most success under the traditional broadcast model, but that doesn’t mean it’s not open to new models, said CBS Corp. CEO Leslie Moonves. “We are traditional in how we approach the business. But we still move. We’re pretty nimble, and we look at what’s happening, and we’re able to make the appropriate deals,” said Moonves during their executive session. “So as much as we are a traditional network—and we are, and we’re very profitable doing that — we still are open to any way of doing business, as long as we can put on good shows and make it profitable.” Moonves cited experimental models like the summer series Under the Dome, which sold streaming rights to Amazon; its syndication deal for The Good Wife, which includes a Netflix deal; andHostages, which got a 15-episode order. “The whole model of putting on a big summer show has changed,” Moonves acknowledged. “We had to figure out financially how to put on a show of that size and scale. It came down to, the network license fee had to be small. There was a huge international sale and the participation of Amazon. We had to make a deal like never before…It’s been a great new model and they’ve been a great partner,” he said. The international market has become increasingly important, particularly for drama financing, Moonves explained, claiming that it has, at CBS, jumped from “about $400 million” to “$1.2billion”insixyears.“Internationalhasalways been a part of the discussion…International is a major, major part of our business.” FOXBroadcasting’s chairmanof Entertainment, Kevin Reilly, came to the defense of broadcast television: “Clearly, the broadcast system is not brokenor antiquatedor runby inept people. In fact, I really respect most of my broadcast competitors,” he said, pointing out that in the recent Nielsen cross-platform report, television consumption is up by nearly two hours on average, to 157 hours and 32 minutes per individual per month. “People are loving television. It’s a dynamic time for television. But how they’re watching it and where they’re watching it and what they’re watching is becoming just an extraordinary tapestry that I think is very difficult to always get by the tail,” he acknowledged. Reilly is not content with current measurement techniques. “Audiences are still enormous across the multiple platforms,” he said. “Certainly on television, the vast majority of viewing happens within the first three days. But on other platforms, that’s not the case. Take a look at VoD, which is a growing segment for us. We’ve been pleasantly surprised to see the way the audiences have embraced this platform as a catch-up and bingeviewing device, but what you see is the audience is equally proportioned in their viewing over that 30 days. And yet in the Nielsen measurement, we By Susan L. Hornik U.S. TV Execs Face Critics with Renewed Confidence for Broadcast TV’s Future October 2013 New Television Season (Continued on Page 30) (Continued on Page 28) Artear’s Julieta González at the 2013 L.A. Screenings Lionsgate’s Maryann Pasante, Peter Iacono at the 2013 L.A. Screenings ‘Clearly, the broadcast system is not broken or antiquated or run by inept people.’ —FOX’s Kevin Reilly Eye on the L.A. Screenings
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