TV Drama Festival Explores Evolving Co-Pro Models

The TV Drama Festival featured a panel this morning on how the co-production model has evolved, with insights from ZDF Studios’ Robert Franke, Dynamic Television’s Daniel March and LEONINE Studios’ Caroline Kusser.

The executives took part in a panel discussion moderated by TV Drama’s Kristin Brzoznowski that you can view here.

With production budgets already on the rise before Covid and an increasingly competitive environment, “we as international distributors have to change the model a little bit, and we are becoming co-producers,” said Kusser, executive VP of international co-production and world sales at LEONINE. “We have to jump on board very early if we want to get our hands on a project. We used to write a check for an MG, and the deal was done, or we were deficit financing. And we see a lot more private equity companies coming into the market wanting to be part of the game. That’s a new model to look at in co-financing/co-production.”

March, founder and managing partner at Dynamic Television, agreed and added, “Co-productions fit into one of two buckets: creatively driven or economically driven. The benefit of economic models is often trying to attract an additional broadcaster or another entity. That’s just getting a little bit more challenging. But I think in general, demand for co-productions is very strong.”

Franke, VP of drama at ZDF Studios, added that co-pros are the market’s response to mitigating investment risks. “It’s one way to make sure that you don’t put too much money into one project, and you partner with like-minded people and companies to make sure that you benefit from a joint production. It’s also a reaction to the vertical integration of big media companies. These big conglomerates keep everything to themselves. Production companies now belong to bigger groups. If you’re not part of an idea right from the get-go, you’re not part of it at all. That leads to a situation where we are forced to become co-producers. It’s not an evolution of the co-production model per se. It’s more the evolution of the role of distribution companies in the markets and facilitating our expertise.”

March called the U.S. a challenging market for co-productions. “A U.S. buyer, not a global streamer, coming on board early as a co-producer doesn’t happen that often. The bar is extraordinarily high in the U.S. It is hard to get broadcasters or buyers to come on board early and take that risk because they’re investing so much money in their original shows. The U.S. is one market where you don’t need a partner to crank out $4-million or $5-million episodes year-round. There’s not an inherent need for co-production structures the way there might be in Europe, where you have smaller markets and smaller investments. Can you presell? Yes, you can presell. Will the buyer have a little bit of creative input? They might. But it remains a very English-language-dominant market. Is it doable? It is, often driven by big talent out of the U.K. or big IP. But it’s not easy.”

Franke agreed with March’s assessment of the U.S. market for European drama co-pros. “It’s incredibly hard to find the right topic that ticks the boxes of both partners, a European one and the U.S. one. More often than not, the U.S. partners don’t need the European contribution. They’d rather retain creative freedom than share something. On the other hand, I’m having more conversations about co-productions in the last two years than ever before with U.S. partners. There is more openness in the U.S. market to at least have the conversations because they see more openness in U.S. audiences to look at foreign content. That is the beginning of a fundamental shift.”

The conversation then moved to co-producing with the global streamers and what that means for rights retention. “It’s very hard to retain rights if we work with streamers, especially if they’re operating on a multi-territory or even global scale,” Franke continued. “It changes your business model when you work for somebody like Netflix. It’s more beneficial to get them on board as a partner who will fund the project entirely rather than co-produce. Especially with what’s happening in Europe among the linear broadcasting community, they’re quite skeptical and see the competition from these streaming platforms—they don’t want to have them involved anymore. It’s hard to find meaningful projects that justify co-production between a linear partner and a streaming partner. We’d rather work on the linear side in a co-production model or sell it off to the global streamer entirely simply because the rights are just not that valuable if it is branded by a streamer.”

“It’s a double-edged sword,” March said. “You become a little beholden to the streamer on whether you can continue with the show in subsequent seasons because their investment is so substantial. If the show performs well in the country of origin, where it is produced and where the audience knows the cast the best, and they want a second season, but your global streamer just had OK success with it, you’re stuck. That’s a risk you take that I don’t think you think about early in the process.”

“We all know that the streamers don’t need a co-production, a real one,” Kusser noted. “The result is that we will see more like-minded broadcasters or international parties willing to partner up. As the big streamers commission more out of Europe, the traditional European broadcasters are partnering up with each other.”

On what makes for a good co-pro, March referenced “creative alignment” regarding tone, audience, timelines and the overall ambitions for a series.

Kusser agreed that a creative match is critical. “We all speak the same language. Also, not too many editorial voices. Don’t have five people giving notes on the latest cut. Of course, the financials play the main role, but don’t forget that big creative part.”

Franke mentioned role delegation: “Have a joint understanding about what I am supposed to do and what my partner is supposed to do. Who’s driving the co-production creatively? Who is defining the financing strategy? Who has the last say in how you’re going to put it together? There needs to be a consensus at the end of the day, but you need to be clear about who is doing what in a co-production because otherwise, things can get very messy, especially when people start fighting over creative ownership. You don’t want to be in that spot where you have something financed, and all of a sudden, people are fighting over who is going to have the final say creatively. The same goes for financing as well, especially from our perspective as a distribution company. The financing model determines whether or not we will be able to earn money. If there is a decision taken by your partners in terms of who is being brought on board to close the gap in the financing of a project, you might end up with something that could seriously harm your ability to earn money. Assigning roles is important.”

Authenticity is key, which means local language, but as March noted, financial considerations are in play. “It has to be organic to the story. There are opportunities for non-English-language in the U.S., but it’s limited in value. There are certain parts of the world—Latin America, Asia, parts of Africa, parts of Eastern Europe—where non-English-language content is either harder to place, or you’re selling it at a lower value. You can’t force a show to be in one language or another. But it plays a part in how you ultimately view the potential of the show and your investment.”

The conversation then moved to production incentives that make particular markets well-suited to co-pro opportunities. In Europe, “the number of incentives is becoming mind-boggling,” Franke observed. “There are so many countries offering all sorts of incentives, whether subsidies, soft money, tax deduction schemes. You want to ensure that you tap into as many of these incentives as possible. At the same time, you have to be true to what type of product you are producing. If you have something set in the Mediterranean Sea, and you feel you need to go to Belgium because it offers 37 percent on top of some subsidy, you might want to reconsider if that is the best creative decision. You have to look at your story and where it’s set and then figure out where the best places to shoot are. And just because you get a lot of money from a certain territory doesn’t mean it translates into savings. Sometimes you pay hidden costs.”

“The creative is going to dictate where we’re going to make something,” March added. “And then it becomes, are there ways to optimize the financing?”