Dramatic Shift

Mansha Daswani surveys leading distributors about the financing and distribution strategies needed to roll out high-end drama across the globe.

Earlier this month, unconfirmed reports indicated that the American drama business was to welcome yet another new player: Apple. The tech giant, long rumored to be prepping a streaming service, is reportedly working with Dr. Dre on its first scripted project. The company—which revolutionized anywhere/anytime viewing with the video iPod and TV shows on the iTunes Store in 2007—sees, like so many others, that compelling scripted content is at a premium right now. But when it comes to drama, especially the serialized kind that requires time and attention, industry watchers are starting to ask themselves, how much is too much?

“I don’t believe that there’s too much out there,” says Carmi Zlotnik, the managing director of Starz, which is delivering almost 90 episodes of original programming a year to its subscriber base. “Choice benefits the consumer and creates competition and differentiation. People have the ability to pick and choose what window they want to invest in watching something. For instance, you can watch a movie in a theater or wait until it’s in home video or comes to pay TV. It’s like a cascade. You’ve got these pools of water that each fills to its own level before it drops down to the next level. Our job is to try to start with those assets as high in that system of cascades as possible and fully fill all the pools, because the way people in media win is to make something once and then sell it multiple times to maximize the yield from the intellectual property.”

The influx of new digital players has indeed radically transformed how distributors go about selling their properties. Any distribution strategy starts with assessing all of your options.

“There are some real opportunities to window content across free, pay and DTT channels, and we’ve got EST and the traditional DVD that is still clinging on!” says Ruth Clarke, the executive VP of global content strategy and investments at ITV Studios Global Entertainment (ITVS GE). “It’s a complicated space. What it’s meant for drama is the life span of these shows is getting longer. There are more windows. It’s not unheard of to sell a show through six or seven-plus windows now. It’s about clever planning and trying to preserve the value through all of those different windows. And then it comes down to carefully managing your rights.”

Stuart Baxter, the president of Entertainment One (eOne) Television International, stresses that it’s certainly no longer a one-size-fits-all approach. “I don’t think there is a generic single windowing strategy. It’s very much on a show-by-show basis. We weigh the various factors, such as the content of the show, the audience and any potential opportunities. You don’t just assume you’re going to go one route first and then wait and hope the second route evolves. Rather, you establish a strategy individually per show up front, with the right partners. Often when you’re an independent like we are, you do that together with the show’s creators, and you decide the best take-to-market strategy.”

Katrina Neylon, the executive VP of sales and marketing at STUDIOCANAL, notes that it’s essential to take a big-picture view of each show as you’re crafting a distribution plan. “Maximizing profits is obviously really important, but we must strategize on a much broader scale. What’s most beneficial to that actual series in terms of branding it? Having the right mix of windowing and reaching the right audience keeps the show in the public eye. That can be really critical in supporting the show [and] getting a renewal for subsequent series is also important. At the same time, we don’t want to overexpose the series. So we manage the rights very carefully.”

Windowing is probably the most “head-scratching” part of the business, observes Keren Shahar, the managing director of distribution at Keshet International. “It’s really a matrix. The ultimate goal is to maximize the long-tail value of your property. There is no one strategy for us because we have a heterogeneous catalogue. We have Israeli series, U.K. series, U.S. dramas and Korean dramas. At the end of the day, there’s a different life cycle and different levels of demand for each title.”

An English-language commercial drama would likely be best suited to a terrestrial deal first, followed by a rapid SVOD second window and then EST, Shahar notes. A foreign-language series might be better served with an exclusive first window on an OTT or pay platform, she adds. Such was the case with Keshet’s Israeli drama False Flag, which is premiering internationally on FOX.

For Alexander Coridass, the president and CEO of ZDF Enterprises (ZDFE), digital platforms have been central to creating new opportunities for distributors of foreign-language drama. “OTT helped us make our breakthrough in the non-European territories,” Coridass says. “The users of VOD platforms are really interested in Scandinavian, German [and other European] programs—if possible in the original language. These are truly entirely new markets and possibilities.”

Liam Keelan, the director of scripted at BBC Worldwide, has also found that OTT platforms are creating windows for shows that in the past may not have found a home in the international market. “It’s the new platforms that want something that is genuinely innovative and fresh, that isn’t the same as [what’s on] some of the networks.”

For Keelan, BBC Worldwide’s current drama slate reflects the diverse needs of the market, ranging from crime series like Undercover and Thirteen to the Victorian ghost story The Living and the Dead.

DOLLARS AND SENSE 
While there may be a proliferating number of buyers and a seemingly endless demand for scripted, platforms don’t necessarily have more money to spend, meaning producers and distributors have to be much more strategic about cobbling together the financing on a show.

“You have to be smarter and more aggressive and more wide thinking as to how you set these things up,” notes Greg Phillips, the president of Content Television & Digital. “If a producer has settled a show in, say, North America, that gives you an opportunity to license it around the world. If they only need a certain type of service from you and they don’t need money, then your distribution fees are lower. If they do need money, then we’re positioned to go not only to the broadcast and pay and cable guys, as we always have done, but we also have excellent relationships with the VOD and digital outlets. We try to weigh up what is the best way to pull the financing together and still leave us the opportunity to distribute a property on a long-term basis.”

ITVS GE’s Clarke reports that financing deals have indeed become more complex. “Film talent is coming over to TV and film financing has always been complex. A film-financing deal is likely to have more parties at the table than TV. As companies have blended across into the TV space, they are often bringing with them the experience they have of film financing. And also, film financiers want to get involved in this booming British TV industry. That’s great news, but they’re used to doing things in a different way. We’re all trying to find what new, more expensive drama financing can look like. There are definitely still the straightforward deals too though. It does vary across [our] portfolio.”

BBC Worldwide’s Keelan states that “there isn’t one set model—there isn’t even a half-dozen set models. It’s constantly changing, so any which way we can cut a deal we’ll do it to get the right kind of show on air. We’re looking at working with European broadcasters more than we were. We’ve got developments with ProSieben in Germany, which is looking for more episodic drama; we’re talking all the time to broadcasters/networks/platforms in the U.S. Although British drama is incredibly important in terms of the portfolio, we’re looking at every different avenue.”

PLANNING AHEAD 
At eOne, too, a mix of financing models are in play, often dependent on the status of a project when the company comes on board. If, for example, a producer approaches eOne about a show that already has a commissioning broadcaster, step one is about “establishing the value of the anchor tenant and their definition of the show and how you finance the balance,” Baxter says. Who the commissioning platform is “will dictate the tone, the content, the budget, the talent, everything else. Then we’ll determine how to finance the balance of that show. Is the gap small enough and we can deficit finance that balance ourselves? Is the gap too big and we need a secondary co-producing partner? Or do we [finance it from] the host broadcaster plus some presales and a global partner such as a Netflix or Amazon for a second window?”

Sometimes, Baxter says, there’s no initial broadcaster committed. “We work with [the producers] to develop a strategy and determine the different ways this show could be produced. The same show could be produced for a different cost, depending on where it’s [made], how much soft money is introduced, what talent is in front of and behind the camera. We always lean toward the higher quality execution, where we don’t compromise the budget and the show to reverse into a finance plan. We keep the integrity of the show as envisaged by its creators and instead provide them with options like a co-production between a U.S. partner and an international partner.”

COMING TO AMERICA 
Having an American platform sign up as a partner on a project—as SundanceTV did on the ABC Australian drama Cleverman—can deliver a boost to a show’s budget, and its international potential.

“The opportunity to get a U.S. partner on board to fill a gap in the finance and retain the [distribution] rights, and also still have the same understanding of the general [vision of the show], is so important,” says Henrik Pabst, the managing director of Red Arrow International, which is repping Cleverman globally. “We still get the question from the buyers: where is the show on in the U.S.?”

Keshet International also landed SundanceTV for its British series The A Word, an adaptation of an Israeli drama. “They came on board before the show wrapped production and this is really a presale,” Shahar says. “That helped us secure the budget, although the show had already been commissioned by the BBC and was in production.”

An American co-producing partner, however, is not the holy grail. “There’s a great opportunity for us to fully finance a show out of Europe and the icing on the cake is a license to the U.S.,” Pabst says.

One U.S. service that is a frequent international co-production partner is Starz. It signed up to the BBC One commission The White Queen, taking U.S. broadcast rights and most global distribution rights from all3media international. This year, Starz announced it was taking the creative lead in the sequel to the period drama, The White Princess. Zlotnik says that there isn’t a British partner yet on the Company Pictures eight-part production, but he does not expect it to be the BBC. “We understand that [The White Queen] didn’t work as well for the BBC. It worked extraordinarily well for us. And it was a great project for us to have international distribution rights on. Properties don’t have to work equally well in all territories. Something can work better for one partner. The baton can then be passed to inherit the lead role in the project.”

International collaboration is one of three sources filling the scripted pipeline at Starz. It also has shows that it fully funds and sells internationally, such as Black Sails, and licensed series, like Outlander. “In my job, first and foremost, I have to think about the U.S. subscription business, because that’s the overwhelming part of our revenue,” Zlotnik explains. “But there’s also an international-distribution division (Starz Worldwide Distribution and Starz Digital) and a home-video division (Anchor Bay Entertainment), and part of my job is to supply them with product. It’s always a balancing act between shows that we license, co-produce and fully own, to make sure I’ve addressed all the different needs within our business system.”

International distributors aligning with American partners on scripted shows acknowledge that it can be a highly complex market. ITVS GE’s Clarke notes that four factors influence how complicated an American deal is: “What the show is, who the partner is, when they come in and how much they’re paying! We have a longstanding relationship with Masterpiece [on PBS] and a good sense of which shows work. There’s a synergy between the audiences on ITV and on PBS. We’re really in sync, so they are good, collaborative deals. The challenges come more when the audiences differ. We’ve had a fantastic experience with Esquire and Beowulf and that’s rating really well for them. They built their own marketing campaign around it and have delivered the show to their audience, which differs from an ITV audience, in a way that works for them. That’s been a really interesting collaborative process.”

The key, Clarke says, is in finding alignment with the broadcaster you’re working with. “We have buyers in mind for a lot of our content. There are new relationships being built as more American broadcasters look to buy British programming, which wasn’t the case a couple of years ago. The standard deal in America is very different to the standard deal in the U.K. The perception of how deals are made, and the business affairs side across the two territories, are really different. Once agreement is reached, [and you’re] understanding each other’s idiosyncrasies, then you’re good. If there’s a misalignment, it’s tricky.”

20/20 VISION 
Whether in the U.S. or elsewhere, a shared creative vision is essential when multiple partners are funding a project.

STUDIOCANAL has developed a steady slate of multi-country co-pros, among them Crossing Lines, which had AXN among its base of partners, and the upcoming Midnight Sun, a CANAL+ and SVT collaboration. When developing these international co-pros, “You go out and look for channels that have a similar ask,” says Neylon. “It’s not always going to be the case. Something like Crossing Lines was an easier transition, if you like, in terms of the partners that came on board. It has aired on free to air, but we also know it sits very well on basic cable and very well on digital.”

If your partner broadcasters have different visions of a project, “you end up with a compromise where the show isn’t really what the creator envisaged it to be,” eOne’s Baxter says.

As producers and distributors work out the complexities of various financing models, they’re also struggling with a talent shortage. The U.K., in the midst of its own scripted boom while its top creators, writers and on-screen talent find more opportunities Stateside, is particularly feeling the squeeze.

“The tax credits have been a fantastic success for the U.K. industry,” ITVS GE’s Clarke says. “They’ve been brilliant in terms of drawing production into the U.K. One of the challenges with that is simply supply and demand. There has been a natural per-unit increase in costs, just based on the fact that there’s not enough space, people or equipment. It’s really competitive to get into the production studios and to get the top talent across the board—writers, actors and directors. Everyone is vying for the next big ambitious show. That’s brought bigger budgets and I’d be lying if I said that wasn’t challenging for a distributor.”

Writers, in particular, are very busy in the U.K., BBC Worldwide’s Keelan says. The key to maintaining your talent pool lies in “relationship management,” he says. “If, for example, Russell T Davies is working on A Midsummer Night’s Dream [for the BBC], you want to be involved in his next project. You’re constantly talking to talent about what they’re up to and what would they like to do next. When we were with Andrew Davies at MIPCOM to launch War and Peace, we were talking to him about the next huge project he wants to adapt. Those conversations are happening all the time.”

TALENT MANAGEMENT 
It’s not just the U.K. though, that is causing some scheduling headaches for talent-seekers.

Content’s Phillips admits that it’s become “increasingly challenging” to find producers who are unaffiliated with distribution outfits. “So many companies have been subsumed into larger organizations. That’s been offset by a larger pool of drama [projects] necessary to feed a growing appetite in the marketplace, and by the bar being raised all the time in quality. We feel we can lend [our expertise] to individuals who want to keep hold of their IP and take the lion’s share of the benefits and have more control, more input, into how their shows are distributed and where they are placed.”

Many distributors are casting a wider net to align themselves with producers with compelling ideas. ZDF Enterprises expanded beyond its German-language scripted slate when it took a lead in representing Scandinavian series. “ZDF and ZDFE were the first to put their faith in Scandinavian series, and invested in them,” Coridass says. “The global recognition of our co-productions confirmed that we were right. Scandinavian series remain a major pillar of our co-production and sales strategy.” However, Coridass adds, ZDF Enterprises is certainly looking elsewhere too to fill its pipeline. “We’re finding many projects in Central Europe, Belgium, the Netherlands, Italy and Spain. And, of course, U.K. fiction always offers great new products.”

Keshet International is also broadening its horizons. “We are doing more and more traditional co-pros in Europe,” Shahar says. “We’ve identified stories that cross borders and that can be set up as co-productions with Keshet Broadcasting and Keshet International. [We’re working on a] Keshet Broadcasting and European channel co-production, produced in Europe and Israel, and Keshet International will be the deficit financier.”

Ultimately, “the best way to compete is by constantly innovating,” BBC Worldwide’s Keelan says, “and by working with talent that have real passion projects where they feel they are given space and the freedom to realize exactly what they want to do.”