Indie Format Distributors

The recent closure of Montreal-based distributor Distraction has certainly unsettled many executives in the format industry. Formed in 1997, Distraction was the first independent distributor focused solely on formats. The company had expanded in recent years, taking on ready-made content, distributing a portfolio of online channels from Ripe Digital Entertainment and making a foray into production by aligning with Zebra Producciones in Spain and dSP Beyond in Australia. Diversification, however, wasn’t enough to salvage the debt-laden company, which went into liquidation last week. In the wake of Distraction’s closure, TV Real Weekly speaks with four dedicated format distributors—Armoza Formats, Global Agency, Small World IFT and Sparks Network—about the challenges and opportunities they’re seeing in this difficult market.

Fredrik af Malmborg
Managing Director, Sparks Network

Since its 2004 launch, Sparks Network has set itself up as an alternative to the heavyweight format distributors like Endemol and FremantleMedia. With its umbrella of more than 20 affiliated production companies, Sparks aims to deliver the creative advantages of having local outposts, without the massive overheads. Today, the company has members in Europe, Asia and North America, and that base is constantly expanding.

According to Fredrik af Malmborg, the managing director of Sparks, the key survival tactic for distributors today is being able to "adjust the costs in times when revenues potentially drop…. If you are well financed, there is always an opportunity to accelerate when the competitors are messed up in corporate politics and downsizing."

Like other distributors, Malmborg points to the unwillingness of networks to take a risk on new ideas. "They will rather order a new season of an underperforming show than trying a new idea. I guess many people are afraid of losing their jobs and that makes them risk averse—they don’t want to be the person behind a potential failure."

Nonetheless, maintaining a catalogue of innovative ideas is crucial. When asked about Distraction’s closure, Malmborg says: "The closure of Distraction is sad, as they have been real pioneers in the format business and have done a good job for many years. I believe their problem had been to acquire good new products as the market got more and more consolidated."

Avi Armoza
CEO, Armoza Formats

With his long history in production, Avi Armoza launched Armoza Formats with a view to bringing the best concepts from Israel to the international market. That’s a mandate that the company is sticking to as it works to make the most out of a challenging economy. That a company like Distraction "could disappear in a day," Armoza tells TV Real Weekly, is certainly a concern for everyone in the industry. "It’s obviously a trying economic time for everyone right now, but we’ve managed to do very well," Armoza adds. "We’ve got a catalogue full of creative and unique formats that are also cost-effective. This is the combination that buyers are really searching for right now," he notes, citing two titles from the Armoza catalogue: Overdraft Family and Upgrade.

Heading into "uncharted territory—things are changing quickly," and with the recession putting a squeeze on adspend, the most important thing, Armoza says, is staying focused on creativity. "There is still a huge demand out there for high-quality, thoughtful TV programming. It’s all about finding the show that’s going to both inspire advertiser revenue and consistent ratings."

With Armoza Formats’ sister creative arm, Formagination, Armoza continues, "We dedicate a lot of our time and effort to try to come to each market with new ideas and new formats, taking our knowledge and understanding of the international market and [trying to meet the] needs of our customers."

Armoza is also placing an emphasis on flexible formats that can fit into any time slot, as well as ones that incorporate product placement. "Advertisers want to be involved in formats that really showcase their brands. Our show Overdraft Family and its [affiliation] with the sponsoring bank, for example, was determined by the independent research company effect-TV as being the most effective TV branding in Israel."

With an eye firmly focused on industry trends, Armoza says that his company is able to "cherry-pick" titles to bring to the market to suit the current conditions. "I also think that not being aligned with one broadcaster or production company or territory allows us to be flexible, diverse, creative and selective. We adapt quickly to the industry’s mood; we find what our customers want, and we deliver it in a professional manner."

Izzet Pinto
Managing Director, Global Agency

Turkish-based Global Agency is keen to become a major player in the format market with its slate of reality titles, led by The Perfect Bride, a local hit that has clinched deals in a number of worldwide markets. Izzet Pinto, the founder of Global Agency, was dismayed to hear of Distraction’s closing; he tells TV Real Weekly that he was hoping to partner with the company, or acquire the brand name.

While keenly aware of an economic climate that is putting immense pressure of broadcasters’ production budgets, Pinto is feeling upbeat about negotiating through these challenging times. "My company is fairly new with just three years of history," he notes. "We are on a rising scale in terms of revenues and we expect to grow fast even in these hard times. As long as you come up with great formats and control the expenses, you would survive in this tough economy."

When asked about the strategies he is employing to remain successful, Pinto says: "We employ people with successful backgrounds, advertise more, travel more to visit clients, reserve bigger stands, represent great formats, be very selective and work day and night!"

He is also looking to take advantage of what he sees is a resurgent demand for reality shows. "Reality has become more popular than ever as it is fairly lower cost to produce. Game shows with huge prizes and amazing [sets] can be risky nowadays."

Whatever the genre, Pinto cautions distributors to be vigilant in protecting their IP. "The minute you score huge ratings in one country, copycat versions start entering the market."

He continues: "It’s not easy to find the next big thing, therefore I urge the networks to give importance to buying the original formats and reject the copycat versions."

Tim Crescenti
President, Small World IFT

Tim Crescenti, who founded Small World IFT in 2005, was saddened to hear the news about Distraction, referring to that company’s founder, Michel Rodrigue, as a "friend, supporter and inspiration…I know how hard he kept fighting for Distraction and his huge value in the format business."

Crescenti says that he’ll be meeting with Rodrigue in the coming weeks; "Maybe there could be something there," he says, adding that he particularly likes the formats from Finnish outfit Aito Media that were represented by Distraction.

For Crescenti, one of the biggest challenges for format distributors is that "buyers are reluctant to do anything different, unique, ground-breaking or dare I say, fun! However, usually in tough times, that is when innovation and risk-taking should take place. Also, everyone bitches about reducing budgets/costs to ridiculous levels."

In light of broadcasters’ risk-averse attitude today, Crescenti says he is focusing on "long-running proven formats," such as his Nippon TV titles, including Old Enough, which is being produced in the U.K., and Train of Thought. Also key is approaching clients with "every element taken care of, so turnkey formats where we have the production knowledge, resources all set up, a cost-effective price point." From the Small World catalogue, Crescenti points to Big in Japan, Rescuing Santa and the Route 66 adventure reality series.

The advantage for indies today, he says, is being able to operate "lean and mean—albeit with laughter all the time. We don’t have tremendous overhead. It also allows us to be more responsive and flexible."