Cathy Payne

October 2007

Southern Star International (SSI) has made a name for itself internationally as a producer and distributor of high quality programming across a variety of genres: thriller TV movies such as Wire in the Blood, the long-running series Home and Away, youth-skewing series such as Blue Water High and The Sleepover Club and factual fare like Meerkat Manor. SSI’s parent company, Australia’s Southern Cross Broadcasting, was recently acquired by the newspaper publisher Fairfax Media and Macquarie Media Group with the transaction due for completion this month. For SSI’s chief executive, Cathy Payne, it’s business as usual.

WS: What impact will new ownership have on SSI?

PAYNE: Fairfax takes control in October and we expect it to be business as normal. They will certainly want it to keep on doing what it does well and we anticipate they will be very supportive of our growth plans.

WS: One priority for SSI was looking for new libraries to acquire. Is that still a priority?

PAYNE: It certainly is still a priority and it may not be just libraries, it can be individual programs and even brands. And we are very active in looking around at what is happening in the distribution sector and the consolidation that is gaining momentum. For Southern Star it is important that we maintain long-term product supply from both within Southern Star and from our third-party producer relationships.

We are finalizing a very exciting new package of product at present, which should be announced close to the market. One of the things we did was to increase our investment in development within a number of our businesses and that has paid off with the commissioning of titles such as Bottle Top Bill, The Sea Princesses, Bear Behaving Badly and Classic Tales. For distribution it’s becoming more critical than ever in some areas, especially in children’s programming, to be able to bring overseas money to the table to make multi-episode brands.

WS: Children’s programming is a segment of the business that a lot of companies are struggling in, and yet SSI has had success with properties such as Hi-5 and The Sea Princesses.

PAYNE: In the children’s arena it’s becoming increasingly hard to finance shows out of just your home market. I know a lot of producers in the U.K. who’ve got only 10 percent of their budget covered from a broadcaster, and I think to myself, they’re just not going to get there. We have an in-house production unit that works hand-in-hand with my unit and we’re responsible for financing a significant portion of the budgets. But if we didn’t have that, we would struggle as well.

In Australia we are fortunate to have a funding mechanism not unlike Canada, though I think Canada’s is about the best in the world! We’ll have a new producer-rebate scheme introduced here later in the year. And you’ve just got to have all those contacts out there. Blue Water High is being financed through a French deal, an Italian deal, an Australian free to air network and an Australian pay deal with SSI completing distribution. It’s great that we are in a position to make those things happen.

WS: So it’s key to have a production entity with a distribution entity working together?

PAYNE: Yes because the way to maximize your returns in this business is you’ve got to earn a production fee, you’ve got to control distribution and hopefully you are going to get some back end [revenues] as well.

WS: How important is a having a large catalogue to a company like SSI?

PAYNE: In a year like last year we didn’t have much first-run drama—which is a really big driver and can [capture huge] license fees—due to production cycle reasons. But the back catalogue was able to sustain us. You’ve got to look after your back catalogue. We got All Saints placed on the BBC. It took ten years to do it but we did it! With Hi-5 it took us four years to get a sale in the U.K. and four years to get a sale in the U.S. Distribution is a long-term business and you have to maintain it. All Saints was sold by another distributor for five years and then it came back to us. You’ve got to think where is the best chance for a show [to succeed on the right channel] in the right day part. And you have to be more targeted in your approach.

WS: What new product will you have at MIPCOM?

PAYNE: We have a lot of drama. We have City Homicide, which is a series from Seven Network in Australia, fully piloted and tested, so they have high hopes for that. We have the TV movie The Old Curiosity Shop, which was made for ITV and is a beautiful Charles Dickens period piece. Bear Behaving Badly is comedy about a naughty teddy bear. We have the first Wire in the Blood TV movie made in the U.S. Our relationship with Wire producer Coastal Productions has been a great partnership, which has achieved some great milestones such as funding of our first installment in the USA. We have a first-look deal with Coastal and we look forward to increasing output from them over the coming year. Wire 5 performed very well for ITV over the summer up against strong competition from Waking the Dead and Heroes on BBC, and this resulted in the early commission of season six for 2008.