SPTI’s Michael Grindon

October 2006

By Anna Carugati

2006 has been a good year
so far for Sony. The corporation posted its first profit in a long time, thanks
to brisk sales of its Bravia LCD TV set, and to the box-office success of The
Da Vinci Code. Sony Pictures Television
International (SPTI) also did its share. The international-channels division
increased its revenues, local productions are booming in territories as diverse
as India, Russia and the U.K., and a healthy slate of new programs is fueling
high hopes for good international sales. Michael Grindon, SPTI’s president, is
not only pleased with the established businesses, but has his sights firmly set
on the opportunities provided by new outlets such as VOD, broadband and mobile
phones.

WS: This year
SPTI has a bigger programming slate than usual.

GRINDON: Our
U.S. television division had a great year. They have six new shows, four for
network television and two cable shows, and I would say it was among the best
slate of programs we’d ever developed.

Kidnapped is for NBC. Runaway is for The CW, which they scheduled behind 7th
Heaven. Our comedies are ’Til
Death for FOX, Big Day for ABC, and My Boys and 10 Items or Less are for TBS. And Zorro: la Espada y la Rosa
(Zorro: The Sword and the Rose) is
a telenovela for Telemundo. It’s a good year.

WS: SPTI
acquired a 15-percent stake in the British production company Shine. Are you
looking to acquire stakes in other companies?

GRINDON: We
are great fans of Elisabeth Murdoch’s [Shine’s chairman and CEO] management
expertise and the talent she has assembled in the U.K. As we were working
together with them [SPTI and Shine co-produced the Sky One series Hex], we found that there were some interesting
collaborations. We thought it was important to show our interest in partnering
with them and our confidence in their future by making an investment in that
company. That doesn’t necessarily mean we are going to buy more of it in the
future, but we are certainly working on a number of projects with them.

We are also looking at
other companies around the world, where we can make minority investments and
sometimes majority investments, to grow our local production business faster
then we have been able to by just bringing our own people [into foreign
territories]. But that business continues to grow for us.

WS: A lot of
media companies are talking about India and China. Sony has been in India a
long time—how are those businesses doing?

GRINDON: Our
businesses in India are going well, and we are looking at some exciting new expansion.
We recently did a distribution deal there with the DTH [platform] that is
operated by Zee Telefilms. We are expecting to do more deals with some other
distribution outlets. We’re opening up new ways to make our programming
available to consumers in India.

We have put together a
nice array of channels and distribute them with our partner Discovery
Communications. It’s great fun to try new programming in India—I’m not
always quite certain what it is, since my grasp of Hindi is not the best! But
they are very aggressive, they like to experiment, they are doing some
interesting new things. We are very pleased with the results there.

China is always an
interesting case because, frankly, the Chinese government is not quite as open
about allowing other programming forms to circulate inside the People’s
Republic of China. They are much more cautious. We work very hard with local
governments to make sure they are comfortable with what we’re trying to do.
Nevertheless, we are producing new programs in China and we’re certainly hoping
that there will be opportunities to distribute new channels there in the
future.

WS: It used
to be, 10 or 15 years ago, when you talked about distribution, it was only for
television, whether free TV or pay TV. But today there is so much more
available. What is Sony’s strategy toward VOD or mobile, or iTunes, or whatever
new outlet that seems to come up every day?

GRINDON: You’re
right, it’s getting so intrusive these days, you can’t do anything without
finding someone putting a screen in front of your face and asking you to watch
a particular show! We’re finding that consumers, especially young consumers,
are making different choices about how they want to view [content], when they
want to view it, how much time they want to spend on it. As a distributor, we
want to find an increasing number of ways of making product available to them,
in the venue and form that they consider most convenient.

So we’re aggressively
pursuing opportunities in the mobile arena, where we have made our television
and feature-film product available to the consumer. We’re really just starting
on those initiatives now, so it’s very early days to find out exactly how
consumers want to utilize that product. Our traditional clients—broadcasters,
telcos and others—are exploring opportunities in the IPTV [Internet
Protocol Television] arena. We are working with them throughout the globe on a
number of different opportunities, to use the new media to build the
effectiveness of their traditional programming, and also to look at VOD so that
they can maximize their viewership opportunities with new programming that we
have. And that can include a wide number of options. Each market is different,
and each broadcaster has a different strategy, so we have to work with each one
to optimize the impact of our programming, whether it’s our U.S. feature films
or television shows, or local programming that we are designing for them
directly.

In effect, we are working
with many forms of electronic distribution to provide programming for the
greatest ease and convenience for the consumer. We hope to maximize viewership
for our clients, which will hopefully bring in advertising dollars.

WS: A lot of
this has to be a bit trial and error, because no one knows how this will pan
out, or what will turn out to be the two or three preferred platforms or
devices.

GRINDON: That
is a fair assessment. I don’t think anyone has a lock on the best methods of
distribution right now, so you are finding a lot of experimentation in the
marketplace. And we are certainly learning a lot as we go forward. It’s not
likely that a consumer will sit down and watch a two-and-a-half-hour movie in a
single sitting on a cell phone. It doesn’t take a rocket scientist to figure
that one out! But we’re figuring out interesting patterns of usage right now,
and ways people want to consume content and how people want to consume it.

That kind of understanding
is helping us build program models that will work better in the future. I’m
surprised, for example, that people are watching TV channels on mobile as much
as they are. We find people who are sampling some of our channels in the mobile
arena are not viewing them for long periods of time, but there is very repeated
usage, which means they are obviously enjoying something. It may be a 10- to
15-minute sampling, but they are coming back repeatedly. There are a lot of
different trends out there, territory by territory, but the ones that are
slowly starting to form will be very useful as we decide how to make our
programming available in the future.

WS: Sony
Corporation’s chairman and CEO, Howard Stringer, has talked about Sony United.
How is SPTI working with other groups either to promote product or to create
new lines of business?

GRINDON: The
theme that Sir Howard has been focusing on has been the very key element of his
new agenda with Sony from day one. It’s Sony United. It’s a chance for us to
get together with a lot of different divisions at Sony and make sure that we
are all looking at what other people are doing and focusing on easy
opportunities within our company to work together. And that can be as simple as
in India, where we’re doing a new show like Indian Idol, which was very successful for us on our channel,
to make sure that we are talking with Sony BMG about putting together a
recording contract. And then we do that with the stars and Sony BMG has a big
new hit album—that works to their benefit and to ours as well. When our
original-production arm outside the U.S. is working in a number of territories
around the world, we have been very aggressive about pushing
high-definition-television production. Ours was the first high-definition
production for the BBC in the U.K. We were the first HD producer in Russia. We’re
pushing similar initiatives in other territories around the world, and the
advantage for our electronics group is that we can come with a full setup of
high-definition equipment [to shoot those projects].

We’re doing a number of
promotions with Sony Ericsson, our mobile-phone and handset manufacturer, in
promoting new feature films like The Da Vinci Code and Open Season. They are selling more handsets; we are promoting
our feature films, and ultimately making them more popular for the consumer. I
think it’s a real testament to Sir Howard. He’s really pushed Sony to keep the
conversation level very high among our groups and to keep working together on a
number of initiatives. That has paid off in the near term and will pay even
greater dividends down the road.