Few people working in television feel the ebb and flow of market dynamics as keenly as international distributors. These executives are on the ground of market consolidation and buyers’ fluctuating fortunes — harsh realities that can have a deep impact on what they can acquire and sell. Today, distributors are more than just traders of shows — they’re a significant part of the production process and in talks as early as conception stage in order to provide the financing many international dramas rely on to become a reality. Yet as a recession looms and the perennial streaming partners of recent years quietly put their purses away to recalibrate their strategies, how are distributors conducting business? Why are we seeing so much distributor consolidation? (Banijay acquired Beyond International just weeks after this discussion took place.)
Variety’s inaugural international TV distribution roundtable delved into these questions. Participants included Jens Richter, Fremantle Intl. CEO; Ruth Berry, ITV Studios managing director of distribution; Claire Jago, Banijay Rights’ exec VP of sales and acquisitions for EMEA; Ana Langenberg, NBCUniversal Formats’ senior VP of format sales and production; Ben Barrett, Blue Ant Intl.’s global head of content financing and partnerships; and Paul Heaney, CEO of BossaNova Media.
There was a dip in revenues for many distributors in 2021 due to stoppages and delays from COVID. As we look ahead for earnings in 2022, do you expect a reversal?
Jens Richter (Fremantle): We’re all a little bit more in the flow in terms of production flow and content becoming available to market.
Ben Barrett (Blue Ant): I think the pandemic hit distribution nine to 12 months after it hit the production community. We all had our catalogs and delivered shows, and that’s what the broadcasters needed at that point. And then it was at the beginning of 2021 when all of the stuff that hadn’t been made in 2020 [affected] distribution, just as production was picking back up. I think we’ll see a good bounce back this year.
Paul Heaney (BossaNova): We’ve all come to terms with slippage. Whereas before, if something didn’t arrive, you went, “For God’s sake, I had that all lined up for that particular launch.” Now, you just have to take it on the chin, and you almost expect something’s going to be a little bit late and build it in.
How have buyers’ tastes changed coming out of the pandemic?
JR: The hunger for [uplifting] stuff will go up to the wazoo by the beginning of next year. When people get their gas bill in three months’ time, they’ll want some happy, smiley faces. We are out of COVID and we’re getting to a completely different area now, to a space that almost gets closer to people. Over the last two or three years, Fremantle loves our premium drama and docs, but we have pushed quite a bit into more mainstream shows.
Ruth Berry (ITV Studios): I have the same thing. That tide has generally been broadening out over the last few years with the streamers wanting a wider range of content. They’ve just got so much breadth and depth on those platforms, and so much more content than a broadcast channel, so anything goes. They’re looking at that continuum of anything from huge pieces of drama that cost over $100 million to a half-hour dramedy.
Ben, there’s been a lot of consolidation in the distribution sector recently with lots of small to mid-sized firms selling up. Canada’s Blue Ant Intl. recently acquired your London boutique financier-distributor Drive. Why was it the right time to sell? Will Drive still have an identity within Blue Ant?
BB: No, Drive is basically becoming part of Blue Ant and the Drive brand will go imminently. The reason for doing the deal was really scale and ambition. We set up Drive almost 10 years ago and started with program financing. We didn’t start distributing ’til 2016. As a smaller distributor, when you hit about £5 million [$5.6 million] turnover, you hit a key moment in your evolution — especially because the market has changed so much in recent years in terms of the amount of investment needed from distributors. The USP was always about content financing and helping get projects off the ground, and you can’t always keep waiting for that next presale; you need to move projects when they’re ready to go. So, for us, we wanted to move the business to the next level in terms of finding investment.
What we really love about Blue Ant is the vertical integration of having the channels business — they’ve got quite a fast-growing FAST channel business — and the in-house production, while we’ve got lots of great third-party production relationships. It felt like a really neat thing to do, to put us together. And obviously, we have greater access to finance now as a distributor, so it’s really enabled us to move to the next level.
PH: It’s the cash as well. Without that, distribution is now full of risk. You’re all taking risks all day long, and the smaller you are, you’re much more exposed.
BossaNova also sought out investment early on and is now mostly backed by Germany’s Night Train Media. What are you doing differently this time around?
PH: It’s been 20 years since I started Cineflix. So, this is hopefully the third act. But you couldn’t do [Heaney’s previous company, Kew Media-backed TCB] now, because I had no debt and no overdraft by the time Kew bought us. That couldn’t happen now. Back in 2012-2013, most shows were fully financed — probably 80%. Now it’s the reverse, so you can’t do it without the money. [BossaNova and Night Train] are very aligned. They would like us to spend even more, but we’re very, very fiscally tough this time compared to the TCB days. Before the Kew Media Titanic went down [the company collapsed in 2020 owing $13 million to its clients], they said, “Can you double in size in two years?” So we went from 11 people to 22 in two years, which was nuts. You end up making the wrong choices.
How has your decision-making — and risk-taking — process changed alongside the tectonic shifts of the market?
JR: There’s been an evolution in that the market goes much faster. Maybe four or five years ago, once you had a commission somewhere in the U.K., you would take it out for a co-production somewhere else around the world and then de-risk it. Very often now, you get the commission somewhere, you look at the show — whether it’s drama or factual — and you say “I love this. Let’s do it.” You decide much faster. The only thing that really matters is the slate.
RB: It never feels like we’re taking that big a risk. The beauty of scale on our side is probably having a large sales team where you can find the revenue. We are rarely looking at horrors [of things that don’t sell anywhere]. Our slate is very strong and, usually, in the last couple of years, I can’t think of anything that hasn’t recouped. But I think that’s about having a sales force that can manage larger volumes, and a breadth of scripted and unscripted, formatted, tape and various things.
JR: When you have the infrastructure, you can balance it out quite a bit. You can avoid the complete disasters. When it doesn’t turn out the way you wanted, it still moves. On the other hand, when you have an infrastructure like that, you also need to feed it. You have to have enough slate to feed the infrastructure.
PH: I’m also not taking the risks now that I was taking back at TCB, even though I have a fund [in Night Train Media]. Now, I’m turning away 90% of the stuff I was probably picking up four or five years ago.
JR: But that’s also part of how the market has evolved as well. It has become a lot more selective. You’d rather put more money into a premium show than less money into a smaller show where from the beginning you’ve known this show probably won’t really “move.”
RB: I do find, though, that the quality of the content that’s being made feels better, so the decisions are easier. I don’t know whether that’s just the bar going up as people are competing against streamers and trying to defend their turf. I suspect it probably is that because even if you look at large parts of Europe at the moment, I don’t see global streamers anymore. There are companies who can operate globally, but they all behave locally. And as a result, all the broadcasters locally are having to up their game.
Jens, Fremantle has been on a serious buying spree this last year, investing in and acquiring a lot of big production companies in Europe. Is this all a pipeline play? What’s the endgame?
JR: It’s a mix between writer deals and producer deals, like with Richard Brown, with whom we did “This England” for Sky, to buying production companies like Lux Vide, or investing in “Normal People” producer Element Pictures. What we did is create a team around Christian Vesper and his central drama unit. Now, we also have central entertainment and factual teams. We put more time and know-how into that space. Somebody on Christian’s team now works on budgeting so we know how, on an international show, to get the best incentives, what the best production locations are and who are the best service producers. We have casting agencies and a book scout we work with. So if you produce and you want to work with us, we have a whole toolkit.
How is consolidation out of the U.S. affecting your businesses? Warner Bros. Discovery, for example, put the brakes on originals out of the Nordics and Turkey this summer, and they’re still trying to figure out their unscripted strategy.
PH: We’re sitting and waiting. They’re renewing. They’re doing stuff. But I think it’s just a case of having to wait.
Claire Jago (Banijay): It’s definitely opened up more opportunities because there’ll be some products that aren’t available, so broadcasters are then looking at what they can do with their own services. You just keep adapting to a changing environment.
JR: We’re launching a show called “Planet Sex” with Cara Delevingne, and I will never forget the moment Simon Andreae came to my office three or four years ago, saying, “We have this show, it’s called ‘Planet Sex.’ This is the idea. Should I sell it to a streamer?” And I was like, “No.” And then we did a combination between BBC and Hulu. And since then we have sold it into the last corner of the world.
RB: I love that. Because I think what’s really important is that as a distribution community, we keep selling that breadth. Life has just changed for the streamers: They were judged by their number of subscriptions only six months ago. Now they really need to be judged by their bottom line. I think what that means is that largely, that cost-plus model could well be cost-plus-less a bit, or that there’s an opportunity for distributors to hold on to more rights or producers to hold on to more rights.
JR: That same streamer might have a conversation where they open with a global deal and then five minutes later want a local deal for the same show. Everybody has to be a little bit cost conscious, right?
How are you guys working with Netflix now? They’ve had a rocky year, and seem to be increasingly flexible.
BB: We’ve definitely seen Netflix, recently in the U.K. and internationally, coming in and buying decent packages of programming, and being much more flexible on the financing side as well, doing deals that are more co-production-focused with different types of carve-outs.
Ana Langenberg (NBCUniversal): They used to be very difficult for us on formats because of the rights: They would want to have worldwide rights but they wouldn’t really exploit them. They were basically a no-go client for us because that’s not our business model; our business model is making lots of different versions of things. But now, we find that they’re more able to consider things for specific markets only. And of course, they would want to be able to air that version in that language somewhere else. But they are open to letting us sell it elsewhere in the world, to other linear [services]or other SVODs.
CJ: And everybody else is also more open, too. It’s like, “Oh it’s been on Netflix, that’s OK,” whereas before it was, “I can’t touch it.” Now, it’s a new world and everybody’s adapting to it, because the consumer on the street isn’t aware of all of these discussions, they just want to see their shows in different places.
BB: [Netflix] doesn’t want to just pay for everything anymore. They want to say, “OK, we’re under more scrutiny now. Can we do a deal that’s like more of a traditional window?”
What about the rise of FAST channels? Are they providing an opportunity to leverage your catalogs in new ways?
JR: FAST is exploding at the moment, but it’s more for stuff that is well-known comfort food. By the end of this year, we’re going to have a dozen FAST channels out of single IP and genre-based shows. Three years ago, I had no idea what FAST even stood for — I had to go through hoops and learn it. And it’s crazy, but it’s a real business. And the numbers go up, up, up.
RB: It’s given back the longtail that we had lost for a while. When the SVODs arrived 10 years ago, they bought a lot of programming to see what would work and then they refined their content strategy. Over time, they were buying a lot less catalog and volume. So that was starting to feel like, “Oh, hang on a minute, where has that just gone?” Whereas now you can take control of that yourself and say, “OK, what can we do around the AVOD space, the FAST space?”
Around 75% of the combined Banijay-Endemol Shine slate is unscripted. How is the company trading in some of your big unscripted IP?
CJ: The non-scripted side of things has had a resurgence so far. It takes less investment than scripted. And obviously, we’ve got “Big Brother” going back to ITV, which is really exciting. What’s been the lasting thing for shows like “Survivor” or “MasterChef” is that they’ve been able to adapt to different iterations for whatever country. There’s a big appetite for those formats — there will always be.
Why did it make sense for ITV to make that big play for “Big Brother,” which was only on Channel 5 a few years ago?
RB: I think people are still very much looking at old, tried and tested formats. There’s not a lot of risk. Older formats that have got that proof of concept are certainly having a resurgence and being revitalized and supercharged. There is definitely a risk in people taking new shows, which is sometimes a bit frustrating because there’s lots of great new ideas.
AL: It is really frustrating because you want to bring new things in. And it just gets more and more difficult as broadcasters around the world and platforms want things that have already been successful in the originating country, but as well as all the countries. It used to be that if you have something in the U.S. that’s a hit, it is a hit and you can take it to market and everybody is going to sign up to it. But now it has to come back in the U.S. for a second season, and then it has to sell in the U.K. and a few other key markets before people start coming in. So you get into a chicken-and-egg situation where it needs to sell in France before it sells in Spain, but in France, they want to see if the U.K. buys it, so you’re forever wanting somebody to take a risk. And then in the U.S., even our networks and Peacock have been looking for tried and tested formats, like “Love Island.” Everyone’s so happy for having made that decision, but for us, from a format perspective, it means that things that were going into development, and were going to be launched, kind of get pushed back a bit.
JR: These formats are comfortable and feel warm. It’s easier to recommission. “Got Talent” is in 33 countries right now. That’s pretty crazy.
AL: But then to bring something new, there are less slots that you are competing for, because they are already with “Got Talent” and “Strictly Come Dancing.”
ITV Studios recently acquired natural history producer Plimsoll Prods. Was that to fill the gap in your portfolio, which has been lacking natural history for some time?
RB: Yeah, there was a gap for us. We managed to dip our toe with “A Year on Planet Earth,” which hasn’t even aired yet. We’ve been on the journey for over two years. That’s been really good for us. And we’re launching another show called “Mother Nature” from Plimsoll at Mipcom. There’s definitely appetite internationally for that type of programming.
PH: But if you’re going to do natural history, do it massively or don’t bother. That’s why I think it’s very hard to do the non-Plimsoll, non-BBC stuff. A few tiers below that, I don’t touch it, because it’s too hard.
AL: NBC Alternative Studios is producing one with BBC about the Americas. That’s a four-year wait, and it is a massive budget.
How is ITV Studios coping with the costs for drama coming out of COVID?
RB: There’s a lot of cost inflation in drama, for sure. I can’t see that changing too quickly. But people are becoming more and more aware of it, which is the first thing. But the market is good for distribution at the moment. The big U.S. streamer groups have largely sucked up a lot of their American content within themselves, so that’s not available on the market, so a lot of other buyers are turning to what they would see as the next most premium content, which would probably be British drama. In Europe itself, the streamers also have content quotas they need to hit.
JR: It’s going be interesting, with budgets, in general. We spoke about Netflix and HBO, but we’re entering a phase where platforms are becoming a little bit more careful and sensible. There’s going to be more balance between global platforms and local players. The platforms will not just outbid for any price anymore — and that’s a good thing for the whole market. It’s also good for us because it keeps the competition up.
What key business area keeps you up at night these days?
AL: For me it’s the pipeline. Is the pipeline going to come? Because, unlike some of you guys, we don’t have that many production companies. We’re a big studio, but in terms of the TV business that we distribute as formats, we don’t have that much coming in. So that’s what keeps me up at night: Are we going to have that pipeline to feed the MipTVs, Mipcoms, and always have something fresh to talk to clients about?
JR: Pipeline, pipeline, pipeline.
PH: For me, it’s about keeping investments. I’ve got Night Train, and I’m going to do the best thing for them. They’ve come in and put a lot of money into the business, so I don’t want to let them down, as well as myself.
BB: Sometimes in non-scripted, it’s harder to call what will be a success. Especially in the VOD landscape, some things just don’t deliver, and you don’t really know why. Those are the unknowns that we will try and work out.
CJ: It’s the pipeline, but it’s also the return on investment within feeding the pipeline. They go hand in hand, and we all make sure those plates keep spinning.