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TV Business Tries to Get On Top Of the World

Despite threat of piracy and local competition, U.S. media industry leaders see more opportunity than ever overseas. But like anything, it’s all in the execution. 11/04/2013 12:01:00 AM Eastern

Measure For Measure: TV Business Refines Counting Methods

It's never been harder to measure TV viewing. There have never been more statistics available, more places to watch TV or more good shows on television, according to an array of industry players at NYC Television Week.

"Like most programmers, we would like to get commercial credit for every show on every platform every time it airs," said Ed Carroll, chief operating officer of AMC Networks. "But you pick your battles: AMC is focused on VOD fast-forward disabling.

"It seems to me it's in our mutual interest [not] to train viewers to watch shows and zap the commercials," he added.

Other networks want advertisers to jump from three- to seven-day playback (C7 versus C3) measurement. Distributors are moving ahead with targeted addressable advertising.

Twitter, whose chief media scientist, Deb Roy, delivered a presentation about the platform's "force multiplier" effect on TV viewing, is now part of the equation. New weekly rankings, a coventure with Nielsen, capture the most tweeted shows.

"I hope we don't get so much [data] that it bogs us down," said Marianne Gambelli, executive VP and chief investment officer of Horizon Media.

In the center of all is Nielsen. Some still complain about Nielsen's basic measurement of linear TV. Don't get industry execs started on how it handles the world of new media.

"Look, the fact that people want to watch a TV show on their iPad or their phone, fantastic. Let's just measure it so that we can monetize it or the networks can monetize it," said Steve Mosko, president of Sony Pictures Television.

Nielsen would argue it's moving fast to keep up with the times. "We're trying to be much more open to the influences from the community and to be much more responsive and helpful," Steve Hasker, Nielsen president for global product leadership, said during a NYC TV Week Q&A. "Clients ask, ‘OK Nielsen, what's it going to be in a world that has social TV, where TV programming is viewed on tablets and smartphones, and not over three days but over seven days or 21 days?' My answer is, ‘It's not our call.' We want to be able to produce the metrics and have the community tell us which ones they're going to trade on....From our point of view, it's whatever the industry wants." -JG

Complete Coverage: NYC Television Week

Few things tickle Steve Mosko, president of Sony Pictures Television,
more than traveling overseas and hearing folks talk about one of his
company's shows.

"There's
nothing better than to go to Hungary or the U.K. [and hear] ‘I love
Breaking
Bad
,'
or ‘I love this show.' It just makes you feel good that what
you're creating is actually crossing boundaries and making an
impact," Mosko said. And that happened a lot during a month-long
European trip Mosko took last summer.

 WHY THIS MATTERS
Domestic companies have been prompted to turn toward international by a mature U.S. market, government gridlock and tepid economic growth.

It
is, however, less of a rush when Mosko's 24-year-old son, who lives
in Shanghai, tells him about a less-than-legal screening of one of
those same shows-quickly pirated and dubbed. "There's nothing
more sobering than to have him call me and say, ‘Dad, they're
doing a screening of Breaking
Bad
just
down the street.' And that's the day after it aired in the U.S.
[already dubbed] in Chinese."

Piracy
is the ugly downside of international renown. "So we have our work
cut out for us," Mosko said. "We just have to go in there and fix
the problem ourselves and be proactive. Actually, my main goal in the
next 12 months is to raise awareness of this issue."

Mosko
made his comments during the inaugural NYC Television Week, a
multi-day event presented by Broadcasting
& Cable
,
Multichannel
News
,
Next TV and the National Association of Broadcasters. He was joined
as a keynote speaker by a host of leaders and notables from across
the industry during the event, which began the morning before the B&C
Hall
of Fame, on Oct. 28, and wrapped Oct. 30.

Many
Reasons to Look Overseas

The
upside of the international angst is the huge revenue opportunity,
which has the U.S. television industry eyeing overseas markets with
new intensity. They're spurred by a mature U.S. TV market, a
government in perpetual gridlock and tepid domestic economic growth
in contrast with a nascent recovery in Europe.

And
although Americans are watching more television than ever, the U.S.
TV business has grown contentious, with studios and networks battling
tooth and nail over digital revenue, and broadcast and cable nets
engaging in bloody fights with distributors over retrans and carriage
fees. Consumer viewing habits have shifted radically, and disruptive
technology threatens to rattle things even more.

For
all these reasons-not to mention the hope of catching pirates-a
stream of programming, network and distribution execs at NYC
Television Week pinpointed growth in international markets as a focus
going forward-from Mosko, to Dana Walden and Gary Newman, chairmen
and CEOs of 20th Century Fox Television; to AMC Networks chief
operating officer Ed Carroll; DirecTV CEO Michael White; and even NBA
commissioner David Stern. Rich Ross, CEO of Shine America, talked
about one of the Shine Group's core strategies of importing and
exporting shows and formats among territories around the world.

"There's
amazing work being done [internationally], and we want in," Walden
said of the U.K.'s Channel 4, Italy's Sky Italia and SkyB and
others. "I'm hoping in the coming couple of years that
internationally, our company can grow our coproduction partners,"
Walden said, calling it a top priority for 20th shows to have global
appeal "baked into the DNA. Not just the old sort of classic,
‘We'll make our shows that are right for this market and I'm
sure that you'll like them,' because that is no longer the case.
All of these territories are producing really great shows for
themselves."

20th
is at the top of its game in the U.S. with the likes of Homeland,
Modern
Family
and
new entry Sleepy
Hollow.
Newman
noted he and Walden have seen profits grow with only "one or two
very modest exceptions" for the past 14 years. Yet the business is
getting more combative as it grows more uncertain.

"I
think our network partners respect and appreciate that they're
going to be delivered great content by our company, but they're
also going to have to contend with us as we are aggressive about
pursuing our rights and what will enable us to continue to grow our
company and to continue to develop content which has incredible
global appeal. And it's costly. And the cost of production goes up
every year [along with] our overhead," Walden said.

Evolving
the Worldview

Peter
Liguori, who became CEO of Tribune Co. this year, said a global
perspective is crucial for repositioning Tribune, which has emerged
from bankruptcy protection with ambitious plans. "We want to
participate in the longer tail of programming so that we could take
advantage of foreign and Netflix and all the streaming," Liguori
said at NYC TV Week. "Plus, we like to look at our footprint and
our distribution not just for sheer revenue but almost as a
distribution and marketing arm for the content we co-own or own
ourselves. And it's a big point of differentiation between us and,
let's say, other independent local station groups.

"Sinclair
doesn't have a cable network, they don't have a studio. Nor does
Gannett, Meredith, LIN, the Post," Liguori continued. "It's a
good strategic advantage for us, helps us to cross-promote and
cross-pollinate and better monetize the content that we're making
and better monetize our distribution."

Newman
said that secular shifts in consumer habits are also a motivation.
"We're going through one of the biggest transformational times
that's happened in the last 25 years, which is the nonlinear
viewing of programming," he said. "It is something traditionally
the studios have capitalized on through DVDs in particular,
[subscription video-on-demand] in recent years and now networks feel
as if they need to because they're losing their audience to
nonlinear viewing. So we're really all sort of battling and
competing over what is a fair way to carve up that particular pie."

Mosko
said casting is key in helping content flourish overseas, like the
star of Sony's Masters
of Sex
.
"We talked about how we were going to cast it. We talked about
getting Michael Sheen, a well-known film star, huge in the U.K.,"
he said. "Casting Michael Sheen, as big as that was inside the
U.S., it was huge outside the U.S. As we look at every show, it's
always, how can you maximize great people, but also how are you going
to make a global business. Casting Michael made a huge difference for
us in terms of being able to sell it around the world."

Bigger
Buys

Networks
have been moving international with a spate of high-profile
acquisitions, most recently AMC Networks' purchase of Cellomedia, a
group of about 65 networks in 13 countries, from Liberty Global for
just over $1 billion. With a handful of crazy popular hits on its
hands, the company is leaving too much money on the table without an
international outlet.

"If
you are in the content game, and we are ramping up our hours on all
the networks- Sundance, WE, IFC, AMC-then it makes sense to be
able to distribute shows not only domestically but internationally,"
said AMC's Carroll.

Diversification
is also key, especially for a standalone, publicly traded company.
About 95% of AMC's revenue comes from North America, so the
Cellomedia deal makes sense.

"[DirecTV
chief] Mike White before us was talking [during a NYC Television Week
Q&A session] about DirecTV's experience in Latin America,"
said Carroll. "It does make sense to expand. When the Cellomedia
deal closes, we will have about 25% of our revenue coming from
outside the U.S. So you're not beholden to one economy, one
ecosystem." DirecTV's massive bet on Latin America that Carroll
referred to represents a huge chunk of the satellite company's
business.

That
region, in particular Brazil, hit a speed bump recently as
subscribers grew less than expected in the second quarter. But White
is upbeat on the market where, unlike the U.S., he said there's
still lots of room to grow.

"In
Latin America, I think total pay-TV penetration's only 35% and our
market share's 28%. So there's upside both ways in my mind....And
I see tremendous upside in countries like Colombia, Chile and even
Brazil. In the long run, you've got a young population. We've got
a great brand and great service. You've got tremendous natural
resources down there, including oil. So I'm still bullish."

Stateside
White described a situation for distributors that's pretty much
impossible with retransmission fees rising 50% this year from last,
sports costs skyrocketing and consumers increasingly balking at
monthly cable and satellite bills of $100 or more.

The
push and pull may have reached a crisis. The "solution" for
consumers may lead to cord-cutting, and while that won't happen in
a sudden rush, there's little sense in denying the steady drip,
drip, drip.

"Cord-cutting
as I see it is not a technology phenomenon driven by all the cool
stuff you can get online. It's an economic phenomenon driven by the
lack of affordability of the traditional model for more and more
households, and they're being driven to alternatives," said Craig
Moffett, founder and senior research analyst of MoffettNathanson LLC.
The combination of Aereo, if it's ultimately deemed legal, and
Netflix, he said, may offer the more viable alternative to cable.

Moffett
said programmers had counted on 10% revenue growth for years "almost
as a birthright"-about 5% distribution growth and about 5%
pricing growth.

"But
5% pricing growth was just too fast to be able to be sustained by the
ecosystem," he said. "You see the census data and household
income [where] the bottom 40% of U.S. households, after food,
shelter, transportation and health care, are already under water to
the tune of $100 a month." It doesn't appear the industry is
pulling together to solve the problem.

"What's
the solution for no longer getting quantity growth because you're
raising prices too fast? Raise prices faster, right? The media
industry's response to [raising] prices too fast is to raise prices
faster. It is the equivalent of being in a car that is hurtling
toward a cliff and the only solution is to step on the accelerator
harder and harder and harder as you get closer," Moffett said.

"It's
not an accident," said longtime NBA commissioner David Stern, who
plans to step down in February, "that we opened an office in Africa
and we just played exhibition games in Shanghai and Beijing and
Istanbul and Manchester and Bilbao and Rio and Manila and
Taiwan-because we believe that content is going to show its
strength in the U.S., but increasingly in the global arena."

Hoping
Against Hope

If
the U.S. economy perks up soon and creates many millions of new jobs,
it may ease the pressure. If the government didn't risk shutting
down every few months over budget or debt ceiling negotiations, that
would help too. But for now, the clearer signs of recovery appear to
be in Europe. The region is pulling out of recession into an economic
renaissance, led by Germany and the U.K.

Lionsgate
CEO Jon Feltheimer, speaking during his acceptance speech at the B&C
Hall
of Fame dinner on Oct. 28, urged the industry to work together and
move ahead:

"I
would say to all the different constituencies in this room tonight,
let's find ways to be creative and ingenious about building new
partnerships that make our business bigger and better.

"Let's
remember that there's no distribution without content and no
content without distribution. And let's remember that ours is a
magical business and we are the wizards }of that magic," he
continued. "That's why I love this business, not only because of
what it is today, but because of what it will become tomorrow and the
day after and the day after that."

Measure For Measure: TV Business Refines Counting Methods

It's never been harder to measure TV viewing. There have never been more statistics available, more places to watch TV or more good shows on television, according to an array of industry players at NYC Television Week.

"Like most programmers, we would like to get commercial credit for every show on every platform every time it airs," said Ed Carroll, chief operating officer of AMC Networks. "But you pick your battles: AMC is focused on VOD fast-forward disabling.

"It seems to me it's in our mutual interest [not] to train viewers to watch shows and zap the commercials," he added.

Other networks want advertisers to jump from three- to seven-day playback (C7 versus C3) measurement. Distributors are moving ahead with targeted addressable advertising.

Twitter, whose chief media scientist, Deb Roy, delivered a presentation about the platform's "force multiplier" effect on TV viewing, is now part of the equation. New weekly rankings, a coventure with Nielsen, capture the most tweeted shows.

"I hope we don't get so much [data] that it bogs us down," said Marianne Gambelli, executive VP and chief investment officer of Horizon Media.

In the center of all is Nielsen. Some still complain about Nielsen's basic measurement of linear TV. Don't get industry execs started on how it handles the world of new media.

"Look, the fact that people want to watch a TV show on their iPad or their phone, fantastic. Let's just measure it so that we can monetize it or the networks can monetize it," said Steve Mosko, president of Sony Pictures Television.

Nielsen would argue it's moving fast to keep up with the times. "We're trying to be much more open to the influences from the community and to be much more responsive and helpful," Steve Hasker, Nielsen president for global product leadership, said during a NYC TV Week Q&A. "Clients ask, ‘OK Nielsen, what's it going to be in a world that has social TV, where TV programming is viewed on tablets and smartphones, and not over three days but over seven days or 21 days?' My answer is, ‘It's not our call.' We want to be able to produce the metrics and have the community tell us which ones they're going to trade on....From our point of view, it's whatever the industry wants." -JG

 

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