Tony Cohen

June 29, 2009 World Screen
CEO
FremantleMedia
 
Reality television was already established when the American Idol phenomenon hit the scene. It was a transformational show for the FOX network and remains the highest-rated series in the U.S. The Idols format, which originated in the U.K., has been produced in more than 40 territories and has spun off countless ancillary businesses. As Tony Cohen explains, Idols is just one of the creative engines at FremantleMedia.
 
WS: What have been FremantleMedia’s biggest contributions to the international television business?
COHEN: We have contributed in four different ways. The first is our production of huge, mostly prime-time, very successful entertainment and drama formats that have in many ways changed the TV landscape. They would include everything from the productions of Idols, Got Talent and The X Factor in the entertainment sphere, to shows that have proved to have extraordinary life and exportability, like Neighbours, The Bill and formats like Good Times, Bad Times and Forbidden Love.
The second would be about the quality of our production. The number of shows that we have which are number one or number two around the world and come back, year after year, are proof of that quality. We’ve raised the bar as to what’s possible in these shows, and I would use as examples American Idol, the number one show in the U.S.; America’s Got Talent, which was the number one entertainment show on NBC last season; and The Price Is Right, the number one daytime show in the U.S., which we have been producing for 35 years or more. In the U.K. we’ve had the number one entertainment show, The X Factor. And in Germany we have the number one serial drama, Good Times, Bad Times. That’s been around since 1992. We did the top TV movie in Germany this last year, which is Die Gustloff, for ZDF, and we did the number one entertainment show for the target 14-to-49 audience in Germany, which is Idol, and we are already on season five on that and just started season six. In France, we do the number one entertainment show, which is Farmer Wants a Wife, which is [also] the number one show in all the Netherlands. In Australia we’ve got the number one drama serial for young adults, Neighbours, the number one reality series, The Biggest Loser, and the number one entertainment series, So You Think You Can Dance. I can repeat that story in Denmark, Belgium, Finland, Hungary, Sweden and Latin America.
 
WS: And you have also created brands.
COHEN: Yes, the third point is thinking about our programs as brands. In addition to being programs, they have enormous ability to attract engagement from audiences off-screen as well as on-screen. We’ve been doing that now for six or seven years, and that is everything from the American Idol attraction at Disney World in Orlando to The Price Is Right live show that we run in Las Vegas every day.
And lastly, there is our investment in creativity. We have a very connected worldwide creative network, which enables us to both create and roll out new material. It’s a collaborative effort across the territories. And over the last six or seven years we’ve had very successful, very long-term partnerships with a number of people, like Simon Cowell and Simon Fuller with the shows that they do, right through to our talent fund, which we announced in late 2007. It has enabled us to form partnerships with other players, like Ashton Kutcher and his company Katalyst. And our distribution operation has a number of very successful partnerships for shows from the Sundance Channel, from Harpo Productions, from Jamie Oliver’s company Fresh Productions, and so on. It’s the desire to throw our network open to partners so that they can create material that we can then roll out around the world.
 
WS: Has FremantleMedia made the studios rethink their business models?
COHEN: It’s made them, along with U.S. broadcasters, far more open to material that comes from outside the U.S. Many of the leading TV executives come to places like London in the weeks before MIPTV and MIPCOM to see what the local market is generating, because the material is very powerful and, in particular, the U.K. market has been the leading exporter of entertainment and reality formats for many years. The U.S. is now drawing level with it. It’s opened their eyes to what’s possible, but it has also intrigued and whetted their appetites as to what the potential of operating locally in markets around Europe might be. The only issue with that is that the execution of those ambitions can be very tricky, because in each of the local markets around the world you need credibility and relationships, the same as you do in the U.S., to make a really strong business. One of the reasons why FremantleMedia has been so successful is the strength of its local companies. They do have that credibility in the local markets, and that’s a real challenge for the Hollywood studios.        
Each year, FremantleMedia formats provide broadcasters around the world with more than 10,000 hours of programming. Production operations in more than 22 territories churn out the megahits Idols and Got Talent, the newer Hole in the Wall and The Farmer Wants a Wife, the classics Family Feud and The Price Is Right, the scripted formats The Bill and Forbidden Love and a whole lot more. Maintaining a competitive edge in today’s difficult ad market requires offering broadcasters a wide variety of options for an equally broad range of production bud-gets. Tony Cohen, FremantleMedia’s CEO, talks about the opportunities he sees even in today’s challenging media environment.
 
WS: It’s no secret that the economy is difficult everywhere now. What challenges are you facing in this kind of climate?
COHEN: It is a very challenging market at the moment, and it means two things for FremantleMedia and other production companies. TV advertising spend in markets around the world is very dependent on economic trends. We know that it is trending down pretty rapidly at the moment, so there is huge pressure on broadcaster budgets and therefore on their programming spend. That means that programming budgets are going to shrink. There will be pressure on margins, and broadcasters are already showing signs of that. The demand for high-end prime-time programming, shows like Got Talent, increases. At the same time, broadcasters are also looking for low-cost, high-volume efficient programming for off-peak time periods. Those are the two things they are looking for, and anything caught in between is going to be much more tricky to sell.
Secondly, in my mind, there is no question that there’ll be increased competition between broadcasters for ownership of rights. And that’s because broadcasters in these challenging times will be looking for alternative revenues, and they can only come from whoever’s got the rights to exploit these shows.
 
WS: Are there opportunities that a company like FremantleMedia can find even in a bad economy?
COHEN: One of the things we’ve noticed is that people are watching more of the big shows. There is a real trend in this, in particular in a downturn—people have less money to spend on going out. They want familiar programming and they want, frankly, programming that makes them feel good in dreadful times. And what we’ve noticed is that many of our series, year on year, are showing extraordinary audience gains. People really are watching telly more, which is good news for our industry. And the opportunities for us would be as follows.
There is more opportunity to invest in talent, which we do through our Talent Fund, because the smaller companies will find it hard to weather the economic storm and a big company like FremantleMedia can help them.
There are lots of opportunities to find new shows that will work particularly well in recessionary times. One of our producers was joking the other day and said that you always know you’ve got a recession on your hands when the demand for Family Feud goes up, as indeed it has. Broadcasters want strong programming that is very efficient, like Family Feud.
There are certainly going to be new opportunities in the new-media landscape. And although everybody is struggling with how to make money in this area, the economic models are a bit hard to find; advertisers are going to increasingly need to reach those people who use online, for example, as their way of finding entertainment. Not long ago, we announced the first deal of this kind done with YouTube. Our global agreement with YouTube gives us access to a number of branded channels, significant promotion for our content and the ability to monetize that content. It also allows us to protect the rights [for] our partners and rights-holders by managing user-uploaded clips of our content proactively. We see this as a very significant step forward in how we begin to think about creating a business online.
And lastly is that the existing brands, as people watch them more, become more valuable, and that is an opportunity for us, too. The recently opened American Idol attraction at the Disney World theme park is a very good example of great brands that have been around a number of years and still have enormous potential to entertain people. That will go up in a recession, not down.
 
WS: Don’t you offer broadcasters and advertisers the added benefit that people really want to watch a show like American Idol live? While you can time-shift a drama, you want to watch American Idol while it’s happening.
COHEN: That’s right. There are two things happening. There is the cyclical problem, which is the advertising revenue going down, and there is the structural problem in the industry, which is about the onslaught of digital media and PVRs. And that structural change in the industry, where broadcasters find audiences fragmenting away from them, I think is enormously addressed by having big prime-time shows, particularly ones that have a colossal live finale. Certainly, our experience worldwide has been that these shows get audiences, which are not only increasing year on year, but also can still draw audiences that are the same size as they were ten years ago, which is surprising given the amount of fragmentation that has happened. But the truth is, a big show will still bring the whole family together in the living room to watch and vote and enjoy, and they can’t miss it. These are experiences that are true in all the markets we are in.
 
WS: What growth areas do you see in the next 12 to 18 months?
COHEN: There are three areas that we see ready for growth. The first is the geographical network that FremantleMedia operates. We have production operations in 22 countries, and we see new markets emerging. Last year we opened a production company in Brazil, and we have already produced Idols, The Apprentice and Poker Face, and later this year will air Hole in the Wall, All Star Athletics, and Family Feud in Brazil. We’re doing well, and that is going to be a big market in the future.
In China, we have a production of Hole in the Wall, which is already setting records for the Shanghai Media Group. So we see there are opportunities in emerging markets in our geographical spread.
We also think there are a lot of growth areas in the creative arena. We’ve launched more than a dozen new partnerships with producers everywhere, from Germany to the U.K., U.S. and so on. And there are plenty of new formats coming down the line, and we see that as an opportunity, too.
Lastly, there are a whole lot of new initiatives that will give us growth. We just launched FremantleMedia Gaming as a new division, which is taking many of our classic brands and launching them in the gaming space. And in the area of online productions, in Australia we’ve just done the MySpace Road Tour, which was their top
original-content series, an incredible success. It’s already got a second series.
In France, we’ve run a 24/7 series online, on mobile phones and on MTV, which is Non Stop Joe. We’ve got the Pietshow in Germany set in student [housing]. We’ve got a YouTube show called Toyboize on in the U.K., which is a show about an old has-been 1980s band getting back together again, and lastly Atomic Wedgie, which is our comedy series that has its own website and is on MySpace and YouTube.

There are geographical possibilities for FremantleMedia, there are certainly a lot of creative opportunities for working with talent, and there are a lot of new areas that we could move into in the future.