Is Winter Coming?

Elizabeth Guider hears from buyers and distributors about how U.S. series are faring abroad in today’s changing marketplace.

Game of Thrones, one of the biggest global hits, may be winding down, but equally riveting tectonic shifts and power plays in Hollywood itself are ratcheting up. There is more disruption, dislocation and decisions to make than ever thanks to revved-up streaming efforts, mega buyouts and a rethink of old rules and rituals—from agents’ packaging fees to windowing to backend talent deals.

Whatever new U.S. shows foreign buyers pick up from the dozens of pilots on sale this month in Los Angeles, these ongoing developments will overtly or indirectly shape deal-making domestically and internationally for years to come.

Already, the latest wave of media consolidation to sweep the town is causing ripples abroad and will make deal-making more intense.

“Given this new notch in verticality, these newly beefed-up studios are going to be even more bent on squeezing as much juice out of the lemon as they can,” suggests longtime New York-based entertainment lawyer Ezra Doner.

Whether one is talking about Disney absorbing erstwhile rival Fox in a $71 billion gulp, or AT&T merging with Time Warner in a $85 billion takeover, or Comcast betting that “Sky” is the limit with its $39 billion buyout of the pay-TV giant, this new level of integration among the majors is impacting all their operations, including their international relationships and partnerships.

The main Hollywood program suppliers will try to strike a balance between what they supply to their traditional broadcast partners abroad and to their fledgling SVOD streaming outlets in various territories. In the future, things like same-season stacking rights for certain shows will likely be reserved for their own services, which in turn would bring license fees paid by those foreign linear broadcasters down, Doner predicts.

Further, the uproar in executive suites caused by these ownership changes—not to mention allegations of sexual impropriety that have brought down top execs like Warner Bros.’ Kevin Tsujihara and CBS’s Leslie Moonves—as well as new corporate mandates to ramp up production, reduce overlap and reconfigure distribution patterns, are going to position new faces and approaches in front of overseas partners and sales clients.

“It’s true, seismic changes are taking place,” Sarah Wright, Sky’s director of acquisitions, confirms. “We’re in a very interesting, fast-paced time.” However, she hastens to add, “We try not to let the environment distract us much; our viewers want brilliant telly. That’s the focus.”

Similarly, some U.S. sellers are taking an upbeat approach to the challenges ahead.

“Yes, there have been several major industry changes of late, and we have been evolving as well—especially via the acquisition of the Starz platform two years ago,” says Agapy Kapouranis, Lionsgate’s president of international TV and digital distribution. “We believe the changes are exciting and will make us at Lionsgate even stronger creators—and distributors—of content.

“It’s true that shows have to adapt to current trends, and yet our ultimate goal really hasn’t shifted: to connect great content with as many viewers as possible and to work with as many viable partners as we can,” Kapouranis continues, pointing to a handful of projects she believes will entice overseas buyers. These include two series with female-driven casts and storylines: a spy thriller set in London called The Rook (Lionsgate’s first premium series for Starz) and a comedy called Florida Girls.

Still, despite executives’ emphasis on business as usual, some changes will be hard to ignore at the Screenings, while others will play out behind the scenes. As part of the overhauls ongoing at Disney/Fox and at AT&T/WarnerMedia, longtime fixtures on the overseas scene—including Fox’s Mark Kaner and key HBO personnel, like president and chief revenue officer, Simon Sutton, and global distribution president, Bernadette Aulestia—have departed.

For its part, Comcast is moving to combine and relocate the NBCUniversal channel operation in Europe under the Sky umbrella, while shifting Sky’s program distribution teams under the aegis of NBCUniversal’s global licensing division. Some key personnel will inevitably be pink-slipped in the reshuffle. At the Screenings, Sky Vision will unveil a few of its own new shows for buyers under the auspices of the NBCUniversal banner, even though Comcast won’t take full operational control of the British-based satcaster for another six months.

Established international rituals are also coming under scrutiny. Disney will not be holding its annual International Upfronts event on the Burbank backlot, a bash that has kicked off the weeklong L.A. Screenings sales bazaar for the last 15 years, nor is Fox hosting the Screenings’ wrap-up party on its Century City lot.

More broadly, the efforts being made and the billions being allotted by Hollywood players to take on the Silicon Valley streamers are likely to rattle global markets more than at any time since the arrival of pay-TV channels over 30 years ago. In the wake of aggressive poaching by the Silicon Valley streamers, the Hollywood studios are falling over themselves to lock down their own creative powerhouses. Warner Bros., for example, clinched an eye-popping deal with uber-producer Greg Berlanti to keep him in-house for the next five years; Amazon recently returned fire by enticing the showrunner team behind HBO’s Westworld, Lisa Joy and Jonathan Nolan, to do a switcheroo. And on and on.

And most dramatically, Disney made a huge splash mid-April, unveiling its Disney+ streamer—which will launch in six months for a monthly fee undercutting Netflix’s—and upstaging Apple’s squishy reveal by ticking off content supply from all its component parts, everything from Snow White to The Simpsons to a Star Wars spin-off called The Mandalorian.

With the streaming wars heating up, the dollar amounts being dangled in front of top showrunners by the Silicon Valley upstarts itching to jumpstart original production—and, in response, the payouts to talent being made by the studios to keep their top creators in place—are raising eyebrows.

Some U.S. shows, both old and new, that heretofore would have landed on one or another foreign broadcaster may gradually be removed from the open market and designated for the majors’ own direct-to-consumer platforms. Already, Disney has indicated that the SVOD play for The Simpsons, arguably Fox’s most lucrative global asset, will be reserved for Disney+.

In short, as one consultant put it to World Screen, “More than ever, all these companies are under pressure to maximize revenues from the series their now highly compensated uber-producers come up with—and to place them where they’ll get the greatest bang for the buck. Increasingly, that will mean prime first-run exposure on their owned outlets.” Squeezing the lemon indeed.

This at a time when U.S. series overall—barring standouts like Game of Thrones, The Walking Dead, Criminal Minds, Grey’s Anatomy and The Big Bang Theory—have faded in popularity on most linear broadcasters abroad. Those foreign license fees have for decades offset deficits on U.S. network series but, per multiple sources, none of whom would hazard a specific number, these foreign revenues are “flat” or “barely inching up.” (And, unfortunately, three of the five aforementioned hits are nearing the end of their original runs.)

If all these developments sound overstated or irrelevant to the foreign buyers who will hit town mid-May for the annual viewing marathon, their effects on U.S. programming—what gets made, at what price points and how and to whom this content gets licensed—are pertinent issues for the overseas contingent.

They will, in fact, form the backdrop to the deal-making that gets underway at the Screenings and which, given the money at stake and the desire by foreign clients to assess initial ratings performance Stateside, often doesn’t conclude with contracts until late fall.

Says veteran European program buyer and media expert John Ranelagh, “The general view across Europe is that U.S. series no longer work. You can see the consequence in broadcast schedules, where there are not many American titles, and where there are, they are in non-peak time periods.”

The other side of this equation, Ranelagh goes on to observe, is “the extent to which the Hollywood studios have stopped packaging shows and are willing to sell them piecemeal.”

The former acquisitions head at Norway’s TV2 further notes that “overseas broadcasters with multiyear output deals with the Hollywood majors are now generally anxious to get out of them.”

That said, the media world is a complicated mosaic and generalizations about the international market always have caveats: stations in territories like Israel, Russia and South Africa, for example, still opt for long-term output deals for U.S. series.

Per Don McGregor, NBCUniversal’s executive VP of international television distribution, the media landscape is now richer and more varied than ever. “Yes, it’s true that both buyers and sellers want more flexibility in their deals, but don’t be misled; every show can find an audience abroad. And with linear broadcasters abroad diving into the OTT waters themselves, high-quality shows like ours can help them compete with global operators like Netflix.”

The current push-pull between local and acquired IP can be viewed another way: “Local shows win out everywhere now,” suggests Dermot Horan, the director of co-productions and acquisitions at Ireland’s RTÉ. “These are no longer the days of Grey’s AnatomyLost and Desperate Housewives.”

For some time now, the American presence and dominance at trade shows like MIPTV and MIPCOM in Cannes have been waning. More money is being shifted toward homegrown production by overseas station management; many of these stations are banding together on regional co-pros that are ambitious in scope, and program buyers from those stations who do hit the Croisette have plenty to choose from besides American suppliers.

There’s more. From Horan’s perspective, consumers’ habits of concentration on TV product and their overall entertainment tastes, especially young people’s, have changed.

However, every country has a unique attitude toward and use for American product. Spain is currently looking to air more U.S. content than it was a decade ago.

Mercedes Gamero, acquisitions and sales director at Atresmedia, explains, “Of course our homegrown shows work well, but we still have many gaps on-air to fill. A variety of American shows work nicely for us, even though we’re no longer doing big output deals, preferring to cherry-pick.”

Gamero points to a number of U.S. imports that outperform on one or another of the company’s six channels, ranging from The Good Doctor to The Handmaid’s Tale.

“Right now, we like high-concept, serialized dramas that are easily promotable, like, for example, Manifest,” she says. “But the chief thing we’ll be scouring for at the Screenings is replacements for The Big Bang Theory and Modern Family.” (As in several other Euro territories, American comedies have found a new lease on life on younger-skewing secondary channels in Spain.)

Consider too that production across Europe as well as in Asia and Latin America is booming—witness the various conferences, workshops, pitch sessions, award ceremonies and subsidies designed to stimulate local content in all major territories. Plus, as it turns out, American-backed platforms are in need of local European content to fill out their offerings abroad and entice subscribers.

Laurence Herszberg, the founder and head of the recently wrapped Series Mania conference in Lille, France, says, “The uptick in local production across Europe is startling,” pointing to a survey by Eurodata TV Worldwide. It counted a whopping 400 original scripted series made in 2018 across the Continent.

It’s noticeable, she adds, that American series have, overall, taken a back seat across Continental schedules, even if top-tier content from the States—she cites The Good Doctor and 9-1-1 as well as Game of Thrones—still commands enthusiastic followings.

Reflecting Herszberg’s analysis, a number of European players are ratcheting things up yet another notch.

DR, the Danish pubcaster, recently unveiled a drama strategy focused on beefing up local production specifically to offset the need for foreign acquisitions. Bertelsmann’s RTL Group, under its newly designated CEO Thomas Rabe, made a point of stressing its commitment to local fare and to boosting its homegrown streaming services. German pubcaster ZDF is spearheading several multi-territory projects, including an environmental thriller called The Swarm, to further amplify and broaden European IP.

“Let me be clear, however,” Herszberg specifies. “Game of Thrones could not be made by a European country. Such ambition is expensive and it doesn’t reflect a European sensibility,” she claims. “American series bring superheroes and unabashed sweep to their storytelling, and the best ones take over the popular imagination.”

European series, on the other hand, are, to Herszberg’s mind, very good at depicting intimate relationships and at bringing intensity to complex themes like politics and nuance to characters.

Another European source offers yet a further reason why American shows no longer drive foreign schedules. “Even when a station does have slots open for acquired product, it’s no longer automatic that the imported show will be American,” this veteran of the international sales trenches points out. “Hollywood suppliers used to compete only among themselves for those slots on Euro stations; nowadays, a station in Oslo may air a political thriller from Israel, one in Rome may opt for a film noir from the Nordics, one in Buenos Aires is as likely to bulk up on Turkish period dramas.”

That’s not to say that the top U.S. series don’t thrive around the world; it’s just that the crucial word is now “top.”

Sky’s Wright knows something about that, her company having over the last decade snapped up some of the best-performing U.S. series and parceled them out across the satcaster’s distinctive channels. Those include broad-appeal fare like Magnum P.I. and Hawaii Five-0 for Sky One as well as what she calls edgier “lean-forward” shows like The Affair and Succession for Sky Atlantic.

To hear several other European acquisition execs describe it, they too hope to ferret out American shows that are “bold and buzzy,” those being the adjectives most often bandied about by buyers when pressed about what they’re looking for from U.S. suppliers.

Jakob Mejlhede, NENT Group’s executive VP and Viaplay chief content officer, on the recent developments in Hollywood and what they bode for companies like his, observes, “At the Screenings, we’re going to have to figure out what’s for sale—and whether and when those shows are available to us.”

He stresses the advantage of “optionality,” with NENT in just three years having greenlit 40 original series to create brand-defining content for premium service Viaplay, while lessening its reliance on imports. “We’re used to negotiating second and third windows on American shows, but we have to consider if a U.S. series is milked dry in its first run (on a direct-to-consumer platform) or falls flat Stateside, that becomes problematic for us. It’s vital to have our own homegrown shows to anticipate such problems.”

Still, Mejlhede goes on to say, his multi-outlet group has had success with broad-appealing U.S. dramas like Lethal Weapon and New Amsterdam on both linear and SVOD outlets in Scandinavia. And, like a number of Nordic players, his team will be on the lookout for “clever comedies” and “ambitious serialized dramas” during the Screenings.

Most everyone agrees about one thing: streamers are going to shake up everything, and the competition among them is going to spill over into the rest of the world.

The big question hanging over Hollywood is whether direct-to-consumer platforms to be launched by Disney, WarnerMedia, Comcast, CBS and others can be nimble enough and content-savvy enough to give Silicon Valley players, most notably Netflix with nearly 150 million global subs, a run for their money.

The race is on and no one can be ruled out. The only sure thing is that it will cost new, and established, contenders beaucoup to field winnable programming worldwide—whether one has a thick portfolio of product at the ready or not.

Plus, a number of issues will have to be sorted out before it’s clear what’s working and what’s not. For starters, Sky itself has landed in the lap of new owner Comcast, which has its own vast program library to rejig abroad. AT&T’s rebranded WarnerMedia and CBS may ultimately want to hold back key series from their HBO and Showtime units, respectively, for their own overseas streaming services. Not to mention that HBO Europe might eventually (despite corporate denials) be up for grabs—say, by Comcast—if AT&T’s plans for streaming its own product abroad veer in a different direction.

Wright would not speculate on what Sky’s merger with Comcast will bode other than to say the acquisition is “good news” as the two companies share “a similar culture,” and she expects the new owner “to help us with our vision.”

In other words, we shouldn’t expect, for example, a wholesale shift of Dick Wolf procedurals from wherever they currently air in the U.K., Germany and Italy to the Sky platform, as one longtime media consultant cautioned.

“We will be selling just as before—during the Screenings and beyond,” says NBCUniversal’s McGregor. “However, as our and others’ plans develop, we may actually see new customer relationships open up for us.”

As some players withdraw product for their own services, others, McGregor contends, “will step up to fill the gaps,” as it were.

Still, before there are major changes in windowing abroad, it’s likely that domestic arrangements Stateside among disparate, and sometimes overlapping entities, will be revamped.

For example, Disney is probably already pondering which of its new series are better suited for its ABC flagship network—and which for its start-up streaming service. For that matter, Disney may also want to revisit its content provisions to Hulu, which could soon be seen as more of a competitor than as a subsidiary. (The Disney/Fox combo owns 60 percent of the SVOD service, Comcast 30 percent; AT&T/WarnerMedia offloaded its 10 percent stake back to Hulu in April.)

Changes made Stateside on some of these redundancy issues as well as new monetary relationships between writers and their agents will arguably be mirrored to some extent abroad. Stay tuned.

Pictured: HBO’s Game of Thrones.