Forging Ahead

Even though the television industry has slipped into the worst recession in its history, sales of factual programming have remained strong.

For the documentary and factual programming business, the current global economic crisis has given new relevance to the old cliché about every cloud having a silver lining. Despite shrinking ad revenues, which have led to major cutbacks in programming budgets, many distributors of factual content are boasting of strong, even record sales.

“The first [half] of 2009 [was] our best ever,” states Nathalie Bobineau, the senior VP of international distribution at France Télévisions Distribution (FTD). She attributes much of that success to the popularity of the company’s big-budget six-part documentary Apocalypse: World War II, which was timed to the 70th anniversary of the start of the war in 1939. But FTD isn’t alone in reporting strong sales.

“Our fiscal year runs from August to July,” explains Paul Heaney, the managing director of Cineflix International. “We had a bit of a soft middle, but we had a really strong end of the year. We were 20 percent up on last year, and in certain subdivisions, such as finished programming, we were up more than 30 percent.” The 90-minute special Manson has been a big seller, on the occasion of the 40th anniversary of the 1969 murder of actress Sharon Tate by Charles Manson and his followers.

Cineflix is not the only company to have seen brisk program sales, as cash-strapped broadcasters increasingly prefer to buy programming rather producing it in-house. “A number of clients have pushed off original productions until later this year and they’ve been looking for ready-made content and acquisitions to fill their schedules,” reports Michael Katz, the VP of programming and production for AETN International. “So far, 2009 has been a banner year for us.”

Those cost constraints have also made factual programming more attractive. “In this current economic climate, factual programming gives very good value for money,” adds Maurice van Sabben, the president of National Geographic Television International (NGTI), who also reports better than expected sales during the downturn. “Buyers are looking for more value for their money and they can get it with factual programming. There is a massive price gap between the price per hour for high-end dramas and factual programs.”

Amid the gloom, some are also seeing signs of a revival. “I think we are beginning to see some blue sky,” notes FTD’s Bobineau. “At MIPTV, some of the stations were saying they didn’t know what kind of budgets they were going to have this year even though it was already April. Now we are once again very active in terms of negotiations and sales.”

That doesn’t mean that the financial crisis, which has produced the worst recession in the history of television, hasn’t severely buffeted the factual-programming business. ZenithOptimedia recently reduced its forecast for 2009 and is now predicting that total worldwide advertising will shrink by a whopping 8.5 percent to $456.5 billion in 2009. Television advertising will drop to $173.6 billion, a 7.1-percent slump.

That has led to major cuts in programming budgets and reduced the number of new programs being commissioned by terrestrial broadcasters, making it difficult to finance new docs.

“It has become much harder to find international co-production partners, especially among the public broadcasters, because everyone struggles with budgets and needs to invest primarily in local productions,” notes Beatrice Riesenfelder, the head of sales and acquisitions at the Austrian Broadcasting Corporation (ORF).

Nonetheless, as Germaine Deagan Sweet, the VP of content syndication at National Geographic Channels International (NGCI), explains, “Co-production is pretty much the lifeblood of the community at the moment because everybody is looking to produce as much quality programming as they can with the reduced budgets.”

While co-productions have become more important, Deagan Sweet admits it is more difficult to find partners. Presales have also become challenging. “There certainly isn’t the forward buying that we’ve seen before—buyers picking up programming six months in advance,” says Deagan Sweet. “People are being much more conscious about shorter time-lines, wanting to buy only two or three months out.”

“Everyone is very risk averse and less willing to take chances,” notes Christina Willoughby, the director of sales at Digital Rights Group. “A year ago, if you went to someone with a project from a production company with a great track record, they would be willing to prebuy their latest program. That is not so much the case anymore.”

When broadcasters do invest, they are increasingly unwilling to put up as much money as they have in the past. “They all love the big high-profile blue-chip documentaries, but the buyers who traditionally prebuy or come as co-producers are finding it harder to balance the books,” Willoughby adds. “They don’t want to come in with the €400,000 they put up in the past. They might want to come in with €100,000.”

While that has opened up opportunities for program sales, prices for acquired product also seem to have declined. “Broadcasters are trying to buy programming at lower license fees because their budgets have gone down,” notes Kristina Hollstein, the director of documentary co-production and development at ZDF Enterprises.

“License fees have stayed where they are or they have gone down slightly, from 5 percent to 10 percent,” says Cineflix’s Heaney. “But people still want to do business. We’re not hearing of a complete moratorium on spending from too many people.”

WEATHERING THE STORM

Public stations in some ways have weathered the storm better than commercial broadcasters. “The crisis and the advertising downturn have not hit ZDF that hard yet, because we are not so dependent on commercial revenues,” says Hollstein. “[Advertising] makes up only 10 percent of our overall revenues.”

But some public broadcasters have also been badly hit by the advertising slump, and others are likely to suffer next year if rising unemployment rates continue to cut into their license fees.

“ORF depends 50 percent on fees and 50 percent on advertising revenues, which have excruciatingly decreased, like everywhere else,” says ORF’s Riesenfelder. “We lack money for acquisition and production, [and] licensors and producers have to be flexible with us as well.”

Thematic channels, with their dual revenue streams—advertising and carriage fees from cable, satellite or IPTV providers in many territories—have also been in a stronger position to support their programming budgets.

“Having a dual revenue stream is definitely a better place to be,” asserts AETN’s Katz. “It helps us go ahead with developing and commissioning high-quality programming in order to be more competitive with viewers.”

The downturn also seems to be favoring distributors that are tied to channels that can supply them with product and larger players that can write checks to help new projects get off the ground. Because of its many channels around the world, AETN brings more than 200 hours of programming to each market.

PUBLIC DOMAIN

With these uncertain economic times causing problems for everyone—broadcasters, advertisers, even the viewers sitting at home—what the TV industry is clamoring for is stability.

“Broadcasters want to give their viewers and advertisers a feeling of security,” explains Cineflix’s Heaney. “And advertisers want to know that they are going to have a fairly uniform rating level across the year.”

What can provide that stability in ratings are high-quality series or strands of programming, as viewers and advertisers know what to expect. “So high volume helps, and we have a lot of returning series,” continues Heaney.

As Heaney explains, it’s not only what programming broadcasters can offer, it’s how those shows are scheduled that really counts. “In some of the more competitive TV markets, scheduling has always been the name of the game. And this environment really sorts out the scheduling men from the boys, because if you have the hottest scheduling team, you can put together a good season and advertisers like that. That’s why high volume has become a bigger unique selling proposition than it ever was before.”

“The majority of clients that we’ve been working with have been picking up volume deals from us,” adds NGCI’s Deagan Sweet. “Definitely the specials are still moving, but a lot of our clients have been looking for minimum packages. They are asking for at least 10, 20, 30 hours. They want to be able to build on the factual slots they have and create perhaps one or two more factual slots.”

NGCI has a number of series that can help create that volume for broadcasters. Science and technology are two very popular subjects. “Engineering Connections with Richard Hammond is a perfect example,” says Deagan Sweet. “Science and technology are proven factual subjects in a lot of schedules. And you couple them with a really engaging talent like Richard Hammond you have a winning formula, a proven performer for the factual slots.

“We’ve also had one-off specials, like Waking the Baby Mammoth,” continues Deagan Sweet. “They will always perform, they will always slot nicely into most schedules because it’s revelatory science—it’s discovering something new and digging into those discoveries.”

The final must-have ingredient a show needs nowadays is adaptability. “We’re finding that broadcasters are looking for shows they can slot flexibly around the schedule,” says Heaney. “We’ve got a new series called Conviction Kitchen, which is a format based around a chef who uses a team of ex-cons who have just left prison to start up a brand-new business. We’re finding that is the sort of show that people can slot into prime time, they can put it into access prime, they can put it into weekends. They want a show to do more than one job for them. They want a show to multitask.”

“More broadcasters are looking for that whole 360-degree experience,” adds NGCI’s Deagan Sweet. “A show has got to fit into the schedule; it’s got to be able to perform in VOD markets. There are broadcasters that will pick up DVD rights wherever they can as well as shorter content for mobile opportunities—the full 360-degree experience.”