Syndication and Distribution

NATPE 2009: Jon Feltheimer's Keynote Address

A transcript of Lions Gate CEO Jon Feltheimer's keynote address at the National Association of Television Program Executives Market & Conference in Las Vegas. 1/29/2009 09:45:16 AM Eastern

The following is a transcript of Lions Gate CEO Jon Feltheimer's keynote address at the National Association of Television Program Executives Market & Conference in Las Vegas, January 27, 2009.  Click here for full NATPE 2009 Coverage from B&C.

Thank you, Kevin.

Kevin is the kind of executive who should inspire all of us with confidence about the future of our business.

He's smart, savvy, optimistic and, if you want to see his picture, just look in the dictionary next to "thinks outside the box." I can always count on him for a good idea, a new strategy, or an innovative approach any time of the day but, unfortunately for me, any time of the night as well.

Any credit he gives me for our television operations, I give right back to him and to his partner, Sandra Stern, who has put up with me for over 20 years.

Thank you all very much for being here today, and I'm pleased to see so many of my good friends in the audience. You have always been my biggest supporters, but you've also been my harshest critics. So, if I see any of you starting to take your shoes off... I want you to know that I can't duck... as fast as "W."

Speaking of critics, everywhere you turn these days, people are talking about how bad things are. Self-appointed experts are proclaiming the death of broadcast, the demise of packaged media and the decline of the box office. They have their charts, bar graphs and spread sheets full of stats to support their case.

I guess the rationale is that if they say the end is near for long enough, sooner or later the warning will finally come true.

But let me ask you... can things be so bad when a simple idea for a Disney Channel TV movie like High School Musical can become a $2 billion franchise, or an $8 million film shot in the slums of Mumbai can become a runaway hit and an Oscar favorite?

And I wonder, can things be so bad when a film like Dark Knight captures the second highest box office gross on record and then helps usher in a brand new technology by selling four million BluRay discs in its first month?

Or can things be so bad when new shows like Mad Men, Damages, Dexter and The Tudors are coming out of a cable television environment that has tripled in size in the past 10 years?

The answer is a resounding no.

Our media and entertainment industry remains vibrant and ripe with opportunity. You just have to look in the right places.

In fact, let me say this upfront -

Television has never been better.

The audiences have never been bigger.

Programming has never been more diverse.

Or distribution more available.

And, as a result, our industry has never had greater potential for growth.

Like many other businesses, we do need to rethink the way we make, market and distribute our product in a world driven by the powerful twin forces of digitization and globalization.

We do need to remain relevant and vital to the new armies of buyers entering the digital marketplace of the 21st century.

And, most of all, we do need confidence in our ability to connect one of the most exciting products in the market today - television programming - with billions of consumers around the world who are hungrier for content than ever before.

But I'm not talking about any dynamic at work here other than good, old-fashioned change.

What we're witnessing are simple commercial rites of passage - the passing of one era that is essential to the birth of another.

Old models don't die a sudden death - they simply transition to new ones.

For example, you wouldn't have said that the first Golden Era of Television was dead when the live dramas of Playhouse 90 gave way to great scripted series like I Love Lucy, The Honeymooners and The Dick Van Dyke Show.

You wouldn't have said that the great variety shows like Ed Sullivan, the Smothers Brothers and Laugh In were dead when, in fact, they were paving the way for new incubators of popular culture like Saturday Night Live.

And we wouldn't have said that Hill Street Blues is dead when, in fact, it led the way for NYPD Blue which, in turn, opened the door for CSI.

Television is a living, breathing, fluid and dynamic medium, and the passing of old models is a positive development giving rise to the birth of new ones.

The emergence of Fox and CW gave breadth to our content and enlarged the broadcast television landscape. Shows like The Sopranos, Sex And The City, Weeds, Six Feet Under and John Adams wouldn't have existed without the willingness of the new pay television networks - HBO, Showtime, Starz, and soon our new premium channel, Epix -- to create bold, original content.

The growth in ratings and market share of branded cable networks like AMC, Bravo, FX, Spike and VH1 are driving new types of content, additional sources of revenue and a new paradigm of buyers for our industry.

The growth of new international markets and new digital platforms is part of the same evolutionary continuum. Those ingrained in the old ways of doing business fear this transition. But their anxiety misses the dynamic potential for overall growth afforded by new markets, new voices and new technologies.

And, in any event, nothing we can do will stop these changes. Their trajectory has been set in place by forces far greater than any of us can alter. The challenge, and the responsibility, for today's television executive is to harness them in ways that are the most profitable for each of our respective businesses and, hopefully, for our industry as a whole.

I guess that's what it all comes down to -- leadership. Call them optimists, pragmatists, realists, even visionaries. The executives who will lead our industry forward have faith in the vitality of our product and the vibrancy of the technology we're harnessing to distribute it.

Our conviction is always challenged by the skeptics. I hear a lot lately, "Broadcast is dead."

Well, of course it's dead... but only in the way we used to know it. The old broadcast model of three or four major networks dominating the television landscape 24/7 is as dead as the habit of getting up to change the dial on your television.

But broadcast still remains a vital if less dominant force in today's television landscape. And the visionary, the industry leader, recognizes the natural evolution of broadcast networks toward new viewing patterns that better fit today's consumer, who wants portable and transportable programming to fit his own schedule.

If that visionary is Ben Silverman at NBC, he's already exploring game-changing prime time strategies like moving Jay Leno to 10 o'clock. If he's Jeff Zucker or Peter Chernin, he's starting Hulu for the next generation of TV viewers. If he's Les Moonves at CBS, he's teeing up TV.com as a competitor to Hulu.

If he's a producer like Mark Burnett, he's continuing to explore the world marketplace for winning formats that can be successfully adapted and then financing them with a branded integration model critical to the success of shows like The Apprentice.

If she's a cable executive like Comedy Central's Lauren Corrao, she's adapting Webisodes like Fremantle's Secret Girlfriend, a hit on Atomic Wedgie.com, bucking the usual flow of programming by migrating to, not from, a "traditional media" outlet.

Or these visionaries could be like Tyler Perry, an artist and entrepreneur who self-financed 10 episodes of House of Payne on the way to an unheard of 100-episode order. Through the distribution prowess of Debmar-Mercury, it's now playing in a dual window of Turner basic cable and Fox station group-led syndication.

Those who adapt best to the changing dynamics of the television landscape will be those who realize there are more television viewers today than ever before, scattered across more viewing platforms, more dayparts and more territories around the world. The ratings for the individual slices of the pie may have diminished, but the slices actually add up to a bigger pie.

And though the broadcast slice of this pie may have lost its dominance, it remains important. Just as I watched the Beatles on Ed Sullivan with my parents 30 years ago... OK, maybe it's been more than 30 years... my entire family watches American Idol and Dancing With The Stars on broadcast together. That hasn't changed.

But then afterward, my two-year-old turns to Barney on PBS Kids... my seven-year-old son watches SpongeBob on Nickelodeon... my nine-year-old daughter downloads Hannah Montana on her iPod... legally, I might add... and my 16-year-old converses with her friends on Facebook while watching TiVo'd episodes of Gossip Girl and One Tree Hill from the CW. My wife turns to a timeshifted Desperate Housewives in streaming HD on ABC.com, while I beg for a few glimpses of ESPN in between everyone else's choices.

And, for all the fragmentation, time-shifting and place-shifting, more eyeballs get cumed and more impressions are made than ever before... simply over a wider spectrum of choices and devices. The broadcast experience hasn't changed. But the larger context in which we view it has.

You'd be hard pressed to convince NBC that broadcast is dead when this year's Beijing Olympics drew nearly five billion viewers worldwide.

You'd be equally hard pressed to convince Fox that broadcast is dead when, 15 times a season, American Idol draws over 30 million viewers, numbers that still rival the great television series of all time.

And you'd be hard pressed to convince any of the networks that broadcast is dead when the two political conventions this year each drew nearly 40 million viewers.

Broadcast is no longer the only game in town but, when it's on its game, nobody does it better.

The experts with their charts and graphs also say, "Analog is dead."

Well, of course it's dead... but only in the exclusive form we've always known. Its death will be officially proclaimed on the day our television sets turn to digital... February 17th... or June... or some time this year... I think. Once a consumer has seen a sporting event on high definition television or enjoyed the interactivity of an online game or social network, it's hard to imagine him ever returning to a solely analog universe.

More than half of our children, the next generation of consumers, watch some of their TV online. From Hulu and Crackle to Ripe TV and 60 Frames, online platforms are beginning to reshape the face of our television business to meet consumers' desire for on demand entertainment.

This isn't an "either/or" proposition. It's more of a win/win in which television viewing and Internet use are complementary, because the next generation of consumer revels in his ability to choose and his proficiency at multitasking. And although one-third of all Internet activity at home takes place while the user is watching television, lending itself to the easy joke that some television is best viewed while distracted, the story these numbers are really telling is that the new digital marketplace offers a world of choice to forward-looking executives as well as consumers.

These executives are already looking at innovations to capitalize on digital technology, like Turner Sports and the NBA broadcasting TNT's coverage of the All-Star Game in live 3D next month.

They're already looking at ways in which online social networking can drive viewership through innovative concepts like the Widget Channel, recently announced by MySpace, Yahoo and Intel.

They're looking at partnerships like CNN and Facebook teaming up for last week's Presidential Inauguration, allowing 14 million viewers to communicate on Facebook while watching the event in streaming video.

There is a natural, methodical order in this progression from analog to digital, and the two will cohabit the marketplace... however uneasily... for many years. But, this new partnership will provide fresh opportunities for those astute enough to seize them.

Now, it may be difficult for some of you to think about opportunity in the worst economy since the Great Depression.

But let's all reflect for a moment on our trip to Las Vegas this week.

Yes, hotel occupancy is down, and so are profits. But some of the best shows in town, like Bette Midler, Zumanity and the original Cirque du Soleil, are still sold out.

I'm making a point beyond the obvious one that commerce continues and the show will go on. Consumers are still spending but, like each of us, they're rationing their dollars a little more carefully.

Like each of us, they're becoming a little more selective in their purchases. And, like each of us, they're exercising the most awesome and dreaded weapon in their arsenal-the power of choice. They're wielding it not like a club but like a laser, to target the best, the most familiar, the most recognizable and the most appropriate to their lifestyle, taste and peer group.

Now, think about that for a moment, because it has profound implications for what is produced for, delivered to and consumed by the world marketplace.

The message is clear. A bad economy is the best critic on the planet.

[PAUSE]

Call it premium, premier or branded content-the winners in today's marketplace will be the shows that cut through the clutter by being different from the rest... recognizable... identifiable... relatable... and, above all, renewable.

The Sopranos, Sex and the City and Weeds will always have a place on our TV sets and PC's, in good times and bad. The Simpsons, American Idol and The Hills will always find a home on our kids' iPods. Law and Order, Mad Men and South Park will capture the popular zeitgeist from whatever media platform they're shown.

[PAUSE]

So then, what won't work?

It's the big, soggy star vehicle with no discernible story line...

...the cynical knockoffs and remakes of the great idea done better before...

...or the sitcom written by a team of market researchers and designed for whatever audience doesn't have anything more productive to do with its time.

Because I have a secret to share with you-today's audience always has something better to do with its time.

In the 80's I worked for an independent, New World. And then, for the next decade, I worked for Sony. And I can tell you... I got paid a lot more at Sony. [PAUSE] But, that was a business era when size mattered. It belonged to the global media conglomerates and their truly unparalleled ability to aggregate eyeballs with destination programming propelled by powerhouse marketing.

Today, these conglomerates are, by their own admission, searching for ways to remain relevant in a world of fragmented audiences, market niches and declining ad revenues. While these conglomerates look for their own new models to re-energize themselves, the future must be shared with others... smaller, nimbler, more entrepreneurial companies structured to profit from smaller audiences, able to perform and succeed on a smaller scale.

Size still matters, but in today's digital marketplace, the winners... will also be those who master the art of "thinking small" in order to unlock profitable market niches. The winners will include those who have the greatest vision in planning for a timeshifted universe and who can profitably exploit this growing pie of "any time" viewers by recognizing that it's the consumer making all the appointments in the new version of appointment television.

The ubiquity and transportability of content in a digital world is also eroding national and cultural boundaries almost as seamlessly as it's eliminating the barriers between the television set, the computer and the handheld device. Billions of dollars are being spent around the world creating satellite, digital and mobile platforms to reach new and expanding audiences. The promise of creating television shows that appeal to international audiences has never been greater. And opportunities to exploit the best product from around the world here in America have never been more plentiful.

The winners in the global marketplace of the future may be those companies that master the business of replicating formats for consumption in local territories around the world, as we're doing with Paris Hilton's new MTV series from ISH Entertainment. Our unique twist on format sales in this case is that Paris is launching the format in a number of territories by starring in several of the first season episodes.

Or the winners may be those companies astute enough to keep track of and adapt the best local content produced around the world. We've seen new shows emerge from relatively small territories, like ABC's hit series Ugly Betty, based on Colombia's popular telenovela Yo Soy Betty, La Fea, which has opened the door to a whole new wave of shows based on international formats like Israel's Be Tipul (pronounced like BETTY POOL) -- In Treatment, to all of you -- Secret Millionaire, Life On Mars, Kath and Kim, The Ex List and Absolutely Fabulous.

However, there is one fundamental constant that no level of digital sophistication and no scale of international growth will ever change. If we remember that our job is to simply engage the voice of the artist with the mind of the consumer-no more, no less- [PAUSE] we are less likely to go astray.

It's hardly a leap of faith to have confidence that television programming, one of the greatest products in the world today...

Propelled by an expanding array of traditional, broadband and mobile platforms....

Harnessing the power of new digital technologies...

Connected to a growing audience of billions of consumers...

Can be a successful and profitable enterprise for those who approach it with boldness and vision.

Our content is like no other. Unlike oil and gas, which have finite reserves, or electronic goods, which start aging the moment they appear on the store shelf, entertainment is a rare renewable resource.

The better it is, the more vitality it has with each passing year. A 10-year-old TV show is not the same as a 10-year-old TV set. Episodes of I Love Lucy, The Wonder Years and Seinfeld are as capable of generating fresh revenues 20 years after they were made as the day they were first created.

The very best shows don't age. They have no half life of predictable declining value. Instead, their value is re-energized every time they are touched by the spark of a new market, technology or platform.

Take the TV-to-DVD market, a three-and-a-half-billion-dollar industry that didn't exist a few years ago. Or the more than two million downloads of Weeds and Mad Men in the past year alone. Packaged media and digital sales are not only huge financial contributors to these shows, but significantly enhance their cross promotional opportunities and exposure to new audiences.

For example, two years after it premiered, I was introduced to Entourage by watching the first 12 hours of DVD's on my laptop during a flight home from Italy. And now, today, Entourage is appointment television in my house.

That's right. Combine the timeless, evergreen value of this renewable resource with the immediacy of an impulse buy, and you've got an unbeatable one-two combination of the most powerful consumer sentiments on the planet.

Look at our Dirty Dancing franchise. It's remarkable enough that this simple story set in the Catskills of the 60's still sells nearly a million DVD's each year.

This single piece of entertainment has now been -

Seen by more than 50 million moviegoers in 150 countries --

Has sold 30 million DVD's --

A combined 32 million soundtrack CD's --

Launched a stage play - 20 years after its initial release - selling out theatres in seven cities in six countries spanning four continents, totaling 3,800 shows, more than four million theatergoers -

And is one of the most popular clips on YouTube, where it has generated 430,000 separate pieces of content garnering a total of 20 million separate views.

Phew... I think you get my point.

Nobody puts Baby in a corner, but Baby has put herself in every corner of the world marketplace and every nook, cranny, portal, platform and SKU of the media landscape.

Because of its unique properties, television content has tremendous appeal not only as a product but as an investment. The late Walter Wriston, the legendary Chairman of Citicorp, who would be rolling over in his grave if he could see what was going on right now, once said, "Capital flows where it is treated well." And I say, there is no place that capital will be treated better than invested in television programming at its best.

And "best" is no longer the exclusive province of the enduringly popular series on the broadcast networks or the "must see" critical darlings on HBO and Showtime.

The best television can also be found in the greatest gardeners of The Garden Channel, the most exciting battles of The History Channel, the best bargains on Home Shopping Network, the coolest takedowns on Animal Planet, the best interactive games from The Game Show Network and the best sushi recipes from The Food Network.

Laugh if you want, but Storm Stories on the Weather Channel has attracted millions of loyal viewers, and the channel was recently sold for a cool three and a half billion dollars.

Not only am I unpersuaded by those who predict the decline of our industry... but I believe that we're poised on the cusp of the next golden age of television. It will be driven by growing demand from audiences worldwide, an ever-expanding spectrum of current and potential buyers, nascent and emerging markets, new and improved technologies.

It won't only be measured by the number of television sets in use. Instead. it will be determined by a far more complex calculus of iPods, blackberries, PC's, PDA's and other mobile and multipurpose electronic devices that are becoming the new nerve centers of the digital marketplace.

This golden age of television won't be dependent on nostalgia for the popular shows of the past, comfort with the business models of a generation ago or corporate cultures renowned for their size rather than their speed. It will be defined not only by the quality of the programming we deliver, but also by the breadth of our reach, the extent of our penetration and the number of lives we're able to touch.

And it will be driven by the leadership of every executive in this room today - the leadership needed to grow our industry out of the current recession, realize its international potential and capitalize on its technological promise.

And this will be a golden age rich with opportunity, because we have the boldness and vision to be the architects rather than the victims of change.

I know we do, I know we can and I know we will.

Or, as my two-and-a-half-year-old would say, quoting the great sage Bob The Builder -

"Can we build it?"

[GESTURE TO AUDIENCE TO RESPOND IN UNISON]

"Yes we can."

 

 

 

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