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The World Turns to U.S. TV

Domestic syndicators feast on $7 billion international market 1/05/2007 07:04:00 PM Eastern

Last October, UK cable and satellite channel Sky One scored a major coup, outbidding broadcaster Channel 4 for the popular U.S. drama Lost. Final price: £975,000 ($1.9 million) an episode, according to U.K. trade paper Broadcast.

Distributors heading toward NATPE next week hope to cash in on a booming international trade that reminds them of the good old days of the 1990s. U.S.-made dramas are once again commanding record prices and getting plum spots on schedules,

“We had a record year in 2005, and we're on track for another one in 2006,” said Tom Toumazis, executive VP/managing director, Buena Vista International Television (BVIT), speaking near the end of 2006. Two of the biggest international hits, Lost and Desperate Housewives, have been sold in more than 200 foreign markets.

Cheaper Than Original Productions

“This is a golden age for American dramas,” notes Marion Edwards, executive VP, television distribution, Twentieth Century Fox International Television, which is selling several popular U.S. dramas, including Prison Break and 24.

Prison Break's first season on the M6 in France this year was the highest-rated U.S. show in the history of the broadcaster.

Belinda Menendez, president, NBC Universal International Television Distribution, notes that her company's hospital drama House has become the highest-rated U.S. series in Australia, Italy, The Netherlands, and Spain. The show averages 4.3 million viewers per telecast in Germany, 2.3 million in Spain, 2.5 million in the U.K., 1.5 million in Australia and 1.2 million in Italy.

“The shows are performing, and that makes them very attractive for broadcasters” because they cost a fraction of an original production, Menendez adds.

Some published reports estimate that, in the year just ended, the major Hollywood studios pulled in $7 billion in international TV revenues for their film and TV products. Kagan Research pegs the international TV sales of U.S. programs at about $2.8 billion, with films pulling in an additional $5.5 billion in TV rights in 2006.

But there are problems looming, including the failure or mediocre performance of so many new dramas on the major networks last fall.

“The poor performance of the new shows this year and the rate of cancellations is a major concern,” says Michael Murphy, co-founder and director of programming at Ireland's Channel 6, which has deals with all the studios. “That will have a big impact on the program trade in the next couple of years. There is no certainty that buyers can get the minimum they need to successfully schedule the show.”

Indeed, the rapidly escalating prices are making imported dramas a riskier proposition. The investment can turn sour if the show is cancelled. The UK's Channel 4, for example, coughed up about $800,000 an episode for Kidnapped, which NBC quickly yanked off the air, leaving international broadcasters with a short run that will be difficult to program successfully.

And there's only so much American programming many outlets can air. The European Union, for example, requires all channels to fill half of their schedule with European productions and 10% from their home country. Most broadcasters easily meet that quota. A recent report from the EU found that European programs made up 63% of all broadcast and cable channels in Europe.

Spending Splurge

The studios, however, doubt that the poor performance of some rookie dramas will sour the demand for dramas in 2007.

“The buyers are very sophisticated,” says Jeffrey Schlesinger, president, Warner Bros International Television. “They know that every show is not going to be a hit. They understand you have to play the game if you are going to get the next Lost or Desperate Housewives or ER.”

The spending splurge is a major change from the early part of this decade.

“If you look at the schedules of the major [foreign] broadcasters, U.S. shows disappeared from primetime [in the early 2000s],” notes Armando Nunez Jr., president of CBS Paramount International Television.

The heydays were the mid 1990s, when German broadcasters and pay-TV platforms had multibillion-dollar long-term output deals with the majors that obligated them to purchase virtually all of Hollywood's movie and TV output.

“The big difference between then and now is that there are more outlets,” notes Keith LeGoy, executive VP of distribution at Sony Pictures Television International. “There are more broadcasters in the major territories, and the cable and satellite networks are taking in significant ad dollars and competing with the broadcasters for programming.”

The studios are working harder to work with broadcasters to ensure the success of their shows. Studios' international TV sales arms are increasingly mimicking the longstanding Hollywood practice of rolling out theatrical films internationally with star-studded promotions.

Last summer, for example, BVIT took stars from four shows to five European cities, where they did more than 700 interviews with journalists. The result, an independent research study found, was $30 million in free publicity for the 28 broadcasters airing the shows.

Twentieth took an even more unusual step, working with M6 in France to create a local theme song, “Pas le Temps” by Faf Larage, for the launch of Prison Break.

Then M6, which targets younger viewers and is a major music programmer, put the music video into heavy rotation on air.

That helped push the song to the top of the charts, establishing Larage as a major star, and the show became the highest-rated U.S. show in M6's history, notes Twentieth's Edwards. It launched at 5.2 million viewers and built to 7.4 million views for the finale.

M6 also made the music video and full episodes of the series available online, a tactic that is becoming increasingly important for the studios, for both new revenues and promotions.

BVIT in Europe cut a deal with ProSieben­Sat.1 Media, to make Lost and Desperate Housewives available on the broadcasting group's Internet download site, Maxdome, a week before the broadcast airing.

Windowing such series through all the various media is also crucial.

“We've sold Lost and Desperate Housewives in Korea on five platforms,” notes Steve Macallister, BVIT's senior VP/managing director.

Mobile Platforms

Besides the broadcast, pay-cable, basic-cable and broadband windows, full episodes of Lost and Desperate Housewives also are available to about 1 million subscribers on TuMedia's mobile-TV platform.

“Obviously, putting a show on mobile or online is a great way of launching a show and getting people to turn in,” Macallister says.

Still, many foreign broadcasters have limited budgets, and only top-tier dramas are selling for record rates.

“There are a few shows that are perceived as huge hits, and they command very high prices,” explains Warner Bros' Schlesinger. “But $2 million [per episode] is a very high watermark. The prices being paid for shows like Lost and Desperate Housewives are an aberration, not the rule.”

 

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