Michael Grindon

October 2007

As president of Sony Pictures Television International (SPTI), Michael Grindon oversees three complementary businesses: the distribution of feature films and television programming; local production in key international markets; and some 40 channels in more than 130 countries reaching nearly 300 million homes. There is no doubt that the worldwide proliferation of channels, which includes SPTI’s own AXN, Animax, SET and several others, has greatly boosted all of SPTI’s businesses.

WS: Sony was one of the first major media companies to get into the channel business many years ago. What was the strategy back then?

GRINDON: Part of the strategy was [driven by the fact] that we were seeing our content being used to build channels around the world. Probably the biggest and most obvious one was HBO here in the U.S, which was able to effectively build a pay-television business based [mainly] on movies.

As you may recall, in 1980, there were several studios that tried to form a joint venture called Premiere in an effort to enter the pay-television business, which was growing very quickly at that time. Time Inc. filed a suit and the Justice Department effectively stopped that joint venture from going forward. There were real questions in the U.S. as to whether major motion picture studios could get into the pay-TV business.

So we started to look at the channel business outside the U.S. We had a number of discussions with several players and then another major venture had started, Canal+ in France. We really hadn’t acted fast enough to take advantage of that opportunity. But we did decide to start exploring pay-television opportunities to build our movie businesses. We went into a venture with Time Warner in Latin America, and our partner Enrique Cusco, and later Disney joined as well. So we had HBO Latin America and we subsequently started [HBO] channels in Central Europe, Australia, Asia and we’re looking at other opportunities to do the same.

Spring-boarding from that point, we came to the conclusion that there may be other opportunities in the cable arena and we started building on the brands that we thought were big businesses for us. But they took on very different characteristics. Latin America was a very interesting case. In the late ’80s and early ’90s, quite a few cable companies were redistributing the U.S. network feeds because they weren’t encrypted. We started to ask for more encryption so we could license our content to those players. We realized there was an opportunity for U.S. programs to be rebroadcast into Latin America as soon as possible after their U.S. airdate. So we decided to take what we felt was the best of U.S. content at the time—product from NBC, Warner Bros. and ourselves—and we created Sony Entertainment Television [SET]. So instead of waiting to air shows [until an entire season had been] dubbed, we put them on within weeks of their U.S. premiere, quickly subtitled, but in the English language. Fortunately there was a big English-language audience and that strategy worked very well.

[That was a] very different format from India, where we decided to launch SET as a Hindi-language channel. We were looking at territories around the world where there were big opportunities for broadcast, for cable and satellite and for pay television. In identifying those opportunities, our real issue was trying to maximize what we could do with our content. And we realized we could more than just supply content—we could build that content. That does two things for us: one it keeps more competitors in the market so the price for content stays at what we think is a fair market price. And it allows us to use our programming expertise to build broadcast outlets so we can earn revenues in that way as well.

WS: Europe came into the picture a little later right?

GRINDON: Yes, Europe was a little bit later in the process because some of the investment opportunities in Europe were much larger than other opportunities around the world. In general we were moving to places where we felt we could maximize our returns as quickly as possible. We thought India was a great long-term proposition and we wanted to get in there at the right time. In many European markets, the audiences were better served. In certain countries we needed to find access to distribution, and when that distribution was opening up in places like Germany, we were launching channels. When a new satellite television operator, Sogecable, commenced operations in Spain, we were there to launch channels. There was a similar situation in Italy. We’ve had explorations about launching channels in the U.K. and France but we haven’t found the right opportunity yet that we think works for our programming. When we find that, we’ll be there.

WS: How important have the networks been to Sony overall’s international expansion?

GRINDON: They are a big part of our expansion. They are good showcases for our content and more importantly they work well for Sony across a number of [businesses]. They give us more opportunities to work with our electronics company, in order to promote our Sony brand. They help us with our music company and we’re doing ventures with Sony BMG. Our international channels provide the advantages of working across a lot of our entities to build value for Sony Corporation overall.

WS: From a distribution point of view, the proliferation of channels is obviously good for you because you have more outlets for your product.

GRINDON: Absolutely and that is really one of the keys for a good [global] distribution organization. There is an explosion of channel opportunities around the world. Twenty years ago there were very small organizations that could operate effectively in a distribution arena by virtue of attending a few markets and getting into the major territories. Now you really have to have a worldwide organization that understands what the opportunities are in places as far flung as India, China, Brazil, South Africa and everywhere else. If you’re really going to maximize the value of your content, you need a distribution organization that is fully informed and aware of all the opportunities in all of those territories. And you have to be able to operate well in areas that are not just terrestrial broadcasting, but also look at all the satellite, linear and non-linear opportunities, such as the Internet, mobile and other platforms. That is fairly demanding, especially when you’re talking about all that content, windowing it, as well as tracking it and making sure it’s fully utilized as often as possible.

WS: So whereas, 20 years ago at MIPTV or MIPCOM you could spend quality time with all your major clients, today, because of the explosion of channels, you need all those regional offices to keep track of all your clients.

GRINDON: For us it’s very important to be as local as possible and try to see our clients on a regular basis. It’s a great chance to meet with people at markets when they all come together, but the real difference is being there if not on a daily basis, on a weekly basis, because you really need to market your content, promote it and help your clients utilize that content in the best way possible.

WS: Are new-media platforms helping both your distribution and your channels?

GRINDON: Well, it is a two-edged sword. Broadband and mobile are certainly attracting time and attention away from people watching television. On the one hand, you can say that for a traditional television broadcaster, it’s problematic. But you’re absolutely right, you need to take whatever challenges you have and term them into opportunities. There are excellent opportunities to promote your channels and your programs on the Internet and we’re working aggressively to do that. There’s certainly more choice with video on demand. And the Internet gives you the flexibility to choose what you want to see, when you want to see it. It’s absolutely a terrific medium.

Similarly we’re finding people now utilizing content on mobile devices. I’m not certain if there’s a great audience around the world for people watching full-length feature films on their handheld [devices], but amazingly enough people are doing it. It’s astonishing to look at the use of mobile handsets in a place like Korea, where people are spending in excess of an hour a day consuming video content.

We’re looking at lots of different kinds of programming to see how it works, how it will play across the Internet, the mobile arena, as well as traditional television broadcasting. It’s one of the reasons why we’re looking at content like the animated property Afterworld, which plays across the three media. We’re looking to develop more of that type of content.

WS: Are you producing programming for your own channels?

GRINDON: Yes. We’re doing original productions for our cable channels. They don’t all have the same scale and budgets, but we’re producing for our channels in Italy and in Latin America. We finished another local show for AXN Spain. In some cases we’ve been producing shows for our cable channels and then have licensed them to other broadcasters. So we look at these locally produced shows to see if may work for other territories as well. That was really a long-term goal for us: building our channels to get to the right scale so they could commission original content, and building up our television production business so we could deliver the kind of content they needed. Fortunately, now that’s happening.