Exclusive Interview: Haim Saban

Long before the word “franchise” became the much-coveted holy grail of television and movie producers, Haim Saban had begun envisioning the world he could build around a TV property he had seen in Japan in 1987. Produced by Toei, the Japanese tokusatsu (live-action TV series) featured teenage heroes, each in a colorful spandex suit, on a mission to combat evil. Saban saw great potential in the series, but the many network executives he pitched it to did not—except for Margaret Loesch, who at the time was at the helm of the Fox Kids Network. She loved it and the rest is history. First airing as Mighty Morphin’ Power Rangers in 1993, the series continued for 17 seasons, captivating the enthusiasm and imagination of children around the world. In the process, the franchise became one of the top-selling boys’ toy brands in the U.S.

Saban, who had already made a name and a fortune for himself in the music-publishing business, creating and owning the rights to music for animated children’s series, founded Saban Entertainment, an international television, production, distribution and merchandising company, in 1988.

Known as a consummate dealmaker, Saban merged his company with Rupert Murdoch’s Fox Kids Network in 1995, thereby creating a fully integrated entertainment company that combined Saban Entertainment’s content and merchandising prowess with Fox’s extensive channel distribution.

In 1997, the Saban-Fox partnership acquired Pat Robertson’s Family Channel, a cable network that reached 81 million homes in the U.S. The joint venture was restructured under the Fox Family Worldwide banner, which included the Fox Family Channel, the Fox Kids Network, Saban Entertainment, and Fox Kids International Network, a publicly traded, European-based company with cable and satellite networks reaching 53 countries in Europe and the Middle East. Together these assets offered viewers a wide range of programming—some 6,500 titles—and a vast global distribution platform reaching more than 250 million homes worldwide.

Saban and Murdoch sold Fox Family Worldwide in October 2001 to The Walt Disney Company for a reported $5.2 billion. The deal, spearheaded by Saban, was reportedly the largest cash transaction conducted by a single individual in the history of Hollywood.
Shortly after the deal was closed, Saban began to look beyond U.S. borders. He formed the Saban Capital Group (SCG), which set out to invest in a number of broadcasting entities. In 2002, SCG led a group of investors to acquire a controlling stake in the German broadcast group ProSiebenSat.1 Media. The stake was sold in 2007 to the private-equity firms KKR and Permira.

In 2005, SCG teamed with Apax Partners and Arkin Communications to acquire a controlling stake in Bezeq The Israel Telecommunication Corp., as part of the government’s privatization of the company. The stake was then sold in April of this year. And in 2007, SCG teamed with a group of investors to acquire Univision Communications, which owns and operates the number one Spanish-language television network in the U.S.

Saban is also extremely active in the philanthropic and political arenas. A staunch defender of Israel, he founded the Saban Center for Middle East Policy at the Brookings Institution in 2002. He has donated repeatedly to the Democratic National Convention (DNC), to the William Jefferson Clinton Foundation and to numerous charities as well.

Now Saban is making a new foray into the media business with Saban Brands. The company is planning a global relaunch of Power Rangers, by refreshing the franchise for today’s generation of children. In this exclusive interview, Saban offers his vision of developing brands, investing in media assets and more.

WS: Thinking back to 1993 when you first launched Mighty Morphin Power Rangers, what elements and media did you need to launch the brand and what made it so successful?
SABAN: Power Rangers is a very unique property that I found in Japan back in 1984. I tried to sell it for many, many years unsuccessfully until Margaret Loesch, who used to run the Fox Kids network, saw what I saw. And what she saw was a show that was a) a lot of fun, b) campy and c) [had] elements that kids [could] relate to right away, which are team work, good always overcomes evil and an ethnically diverse cast. I think there is something in the show that both boys and girls find very attractive. I saw that, and much to my luck, Margaret Loesch saw that, too, in 1993.

WS: If we fast-forward to today, the media landscape is much different than it was in 1993. It’s multiplatform, multi-device; children have a million other things competing for their attention. What are your plans for re-launching the brand?
SABAN: Content is always king and we are going to adapt the Power Rangers, in terms of distribution, to today’s world. So you will find Power Rangers on all of these platforms, from television to the iPod touch, the iPhone, the iPad, and obviously the Internet, as well as gaming, simple gaming you can play on your portable device, more complicated gaming for the major consoles—Xbox and the like. So when you have content that kids can identify with so easily, frankly, the platforms will find you or you will find them. It’s a non-issue. Let’s not forget that the show has survived the test of time and has been airing in Japan for the last 40 years.

WS: The vast majority of revenues that are generated from a successful brand nowadays come from merchandising. Considering how many more platforms children have available, do you believe that television is still the most important media to get the exposure that you need for launching merchandising? Is it still essential?
SABAN: Yes, it’s crucial. You have phenomena that start on the Internet, but they really explode when someone identifies a phenomenon and brings it to television. They are completely different areas. Take, for example, Justin Bieber. He exploded on the Internet and people noticed. People who organize tours, people who distribute records, people who make movies, et cetera, noticed his success and brought it to traditional media. But these are more the exceptions than the rules. If you look at the more successful brands today, both rejuvenated ones and new ones, the bottom line is that they are either the result of a major feature film, be it Toy Story, Transformers, G.I. Joe, or the result of a very successful TV series, like Dora the Explorer. So in my view, television is still the vehicle to promote and build a brand.

WS: There are some distributors out there who will give their TV product away for free in order to guarantee exposure. Is that a route you would take or do you like the license fees that you can collect?
SABAN: Well, [Laughs] the reality is that there has been significant consolidation among children’s channels. There are basically four players, Disney, Nickelodeon, Cartoon Network and PBS, whereas before, all the broadcasters out there were in the kids’ business. That is element number one.

Element number two is that we need to be aware that the advertising pie in the U.S. has been under a lot of pressure. It has been essentially flat for the last ten years and during years when the economy was not doing that well it was even less than flat compared to what it was ten years ago. In Europe, there have been multiple limitations put on advertising for kids, such as the ones on fast food [the ban in the U.K. on advertising of HFSS foods—high in fat, salt and sugar content]. Cable, on the one hand, has control of the pipes to the home. [And cable provides most of the outlets for children’s programming nowadays] because broadcasters are no longer in the kids’ business in any significant way. But cable channels are under pressure and they have the advantage of having all the leverage. So if you are under pressure and you have leverage it’s inevitable that the pendulum will swing in favor of the cable channels and not in favor of the content providers.

WS: Nowadays, several major networks around the world that showcase children’s programming, such as Super RTL or the block on TF1, require that distributors share merchandising revenues with them in order to air their programming. How does that change the dynamics of the business compared to when you first launched Power Rangers?
SABAN: It’s a completely different world. When we first launched Power Rangers, we got paid top dollar in every single territory in the world. And we didn’t share in any back end with anybody, except for the original rights owner, which was Toei, of course.
So today the dynamic is very different. I’m not in a position to share with you the kind of deals we will be making. But we will be creative and attempt to create structures that will be a win-win [situation] for the broadcasters and us.

WS: What other brands are you looking to acquire? Will they only be children’s brands or are you looking at targeting other demographics?
SABAN: No, it will not be only children’s. We are happy to announce the acquisition of Paul Frank Industries. It’s a lifestyle company with a design portfolio of more than 150 characters. One of the first initiatives will be to take the character Julius [a monkey seen on T-shirts and other items] and the others into a variety of multimedia platforms. It is our hope that we will be able to announce more details at MIPCOM.

So we are looking at lifestyle brands, apparel brands, kids’ brands and consumer-product brands like Polaroid. Somebody bought Polaroid. Had we been in that business at the time (we were not), we would have bid for Polaroid, because we think there are a lot of things we can do with Polaroid.

The world is filled with more and more information, and brands are the only way to stand out and give the consumer a certain feeling of comfort that he is going to get his money’s worth.

WS: Looking at Univision, you had been seeking retransmission fees from cable and satellite operators. How successful have you been in that process?
SABAN: We were very successful to create a win-win situation for us and for our cable partners. We have made deals with all of the cable and satellite and phone operators—Verizon’s FiOS and AT&T’s U-Verse. I think they are very happy with the results. As a matter of fact, I was talking to some Time Warner people, and they were very complimentary about the way our team handled the negotiation with them. We didn’t have to yank Univision’s signal anywhere. The negotiation was not contentious with anybody, because we came up with a formula that we believe has created value for our cable-operator partners.

WS: In prime time, Univision has been dependent on two main sources of programming, from Venevision and Televisa. Univision has now set up its own studio. What kind of original programming will Univision be producing?
SABAN: First of all, our contracts with Venevision and Televisa run until the end of 2017, so it’s seven years away. There is no doubt that Televisa produces leading programs that we air in prime time. Venevision has now made a conscious decision to also start producing programs that would be of prime-time quality, and we are very grateful for that. Univision Studios will be complementing that programming with shows that we produce ourselves.

WS: Do you have plans in the future to set up a distribution division for the programming that Univision will be producing?
SABAN: Inevitably it’s going to happen, but everything in due course.

WS: What is your relationship with Emilio Azcárraga, the president and CEO of Grupo Televisa, and Gustavo Cisneros, the chairman and CEO of the Cisneros Group of Companies?
SABAN: I know them personally and we have a cordial and friendly relationship with the Azcárraga group and the Cisneros Group [the parent company of Venevision]. We are partners and here they are very valued number one and number two suppliers. On a personal level, the whole Televisa team and Venevision team work very well with the Univision team. So it’s a pretty harmonious relationship today. It is true that when we bought the company we inherited a lawsuit that wasn’t of our making or theirs. It was a dispute between Televisa and the prior owners. The lawsuit was settled about a year and a half ago and today the relationship is harmonious.

WS: Just as you and your investment partners sold the stake you owned in the German broadcast group ProSiebenSat.1 Media and made a profit from it, is Univision at a point now that it would make more sense to sell it than to keep it?
SABAN: No.

WS: You sold your stakes in ProSiebenSat.1 and in Keshet Broadcasting in Israel. Are you more interested in short-term strategic investments rather than building a media conglomerate?
SABAN: Saban Capital Group is an investment entity. Even though we are active in private equity, we are not a classic private equity because we don’t have LPs (limited partners). We work with our own money. We have been very blessed because all of our investments in private equity today have been extremely profitable.

I wouldn’t like to set up a rule that says we would always sell or we would never sell. We act in an opportunistic manner. With ProSiebenSat.1, somebody stepped up and made us an offer that gave our partners and us a significant profit and we decided to do it and go forward and sell it. If someone came in and wanted to buy Univision today, we wouldn’t sell it.

There are no preset rules that say that once we are at two times or three times the investment, we sell. That is not the case at all. Every investment stands on its own merit and we’ll decide on a case-by-case basis.

WS: So if an opportunity arose to acquire a broadcast channel or a group in the U.S. or internationally, might that interest you?
SABAN: We’ve always been interested in ITV and we toyed with that idea a couple of times. We went to their board with a couple of ideas over the last couple of years, but there is a valuation gap there that we couldn’t make work. The answer is we will be opportunistic, be it broadcast, cable, satellite or telecom. We are in the telecommunications investment business and we will be opportunistic.

WS: Tell us about Tiger Gate, the joint venture with Lionsgate in Asia.
SABAN: I have to admit that I am peripherally aware of that venture. It is more Adam Chesnoff [Saban Capital Group’s president and COO] who put it together, but the fundamentals are very simple. It’s an area we understand. Lionsgate as content suppliers are great partners, and we also happen to have a great personal relationship with [Co-chairman and CEO] Jon Felt­heimer and his team. Asia is a fast-growing market. So when you put all these elements together, when this opportunity presented itself to us we said yes, that is our sweet spot, if you will. And all the stars aligned and we went forward.

WS: You have had a core group of very loyal executives working with you for many years. How have you nurtured that kind of teamwork and loyalty?
SABAN: A) nobody calls me Mr. Saban; everybody calls me Haim. B) I allow them to abuse me—it’s true, I’m not kidding. C) When-ever a decision is made, I go last. Everyone has an opportunity to take pride of ownership in whatever decisions are made in this place. And D) I believe I pay them handsomely. [Laughs] So when you put it all together, there is no reason for me to replace them or for them to go anywhere else.

WS: You pay them handsomely and you allow them to abuse you?
SABAN: [Laughs] Well, I’m trying to give them all the pleasures I can so they really want to continue staying.

WS: You set up the Saban Center for Middle East Policy at the Brookings Institution. Can effective and successful businesspeople play a role in furthering relations between nations?
SABAN: Governments are the decision makers at the end of the day. However, I think that people who are interested in what goes on in this world that we live in—and not everybody that has money is—can make a difference. You see people like Warren Buffett and Bill Gates, they are obviously very interested in what’s going on in the world, and they are putting their money where their mouth is. I think that whether it be at the policy level or at the philanthropic level, people who have been blessed with success and have the financial wherewithal and want to make a commitment to give back to the community absolutely can make a difference at all the levels that I mentioned.

Unfortunately, there are people who don’t give in relationship to their wealth, and frankly I’m having difficulty understanding that, because I have checked every which way possible as to whether, when I go on to my next adventure, meaning when I die, I can take my money with me, and I found out that I can’t! There is no way that’s going to happen! I don’t want to leave my kids too much money because I don’t want them to get confused. I want them to be non-confused! So what is the purpose of not giving? And giving enough is different for different people. For some people a million dollars is enough and for others a billion is not enough, so “enough” is a relative word. But there’s always room to give if you have it in your heart to give and if your mind tells you this is simply the right thing to do. And that’s how my wife and I think about it.

WS: And you are involved in many philanthropic activities, aren’t you?
SABAN: We are involved with the Saban Free Clinic, the Friends of the Israel Defense Forces and Childrens Hospital Los Angeles, among others.

WS: On a personal note, when my son was a little boy, he adored the Power Rangers, especially the Blue Ranger. Today he is a researcher at Carnegie Endowment for International Peace, right next door to the Brookings Institution, and he’d like to change the world, so I wonder, maybe it was Power Rangers that planted the seed!
SABAN: It was, it was! I’m going to quote you! It was!