Window Watching: Shifting Distribution & Funding Strategies

A+E Media Group’s Alexandra Finlay, All3Media International’s David Swetman and Global Screen’s Ulrike Schröder shared their thoughts on how windowing and financing strategies are evolving in the age after peak TV in the opening session at the TV Drama Festival today.

World Screen’s Kristin Brzoznowski moderated the session featuring Finlay, the VP of international scripted co-productions at A+E Media Group; Swetman, the senior VP of content and commercial strategy at All3Media International; and Schröder, the VP of international acquisitions and co-productions at Global Screen. You can watch the panel here.

At Global Screen, the primary model is “co-financing, co-developing, trying to close any remaining gaps depending on the project via an MG,” Schröder said. “We do co-productions for selected projects via co-development, also investing into the development budget against the emerging rights for world sales and, depending on the project, for the German-speaking territories.”

“We work in the co-production space, so we broker deals between ourselves and broadcasters in the U.S. and outside the home territory,” said Swetman at All3Media International. “We work with a lot of European broadcasters, obviously with global SVOD platforms as well on co-productions. Budgets for dramas are increasing quite dramatically. We’re looking at lots of shows that have multiple partners on board. It’s not just the case that we’re attaching one co-producer, but there may be two or even three on a single project, which comes with a lot of complexity. As a distributor, though, we also look at doing presales. And then we provide distribution advances or MGs towards pretty much all of the dramas that we work on. In many ways, they’re familiar models, but where they are changing is the amounts of money involved are getting higher and also the number of these deals needed on any single project has gone up as well.”

At A+E Media Group, “the most common financing model we’ve used has tended to be a more traditional structure: one or two primary commissioning broadcasters or partners, enlisting tax breaks or incentives from relevant territories, supplying a distribution MG and then one or two other presales that will help to close the financing,” Finlay said.

A+E Media Group, like many in the scripted space today, can come in at any stage in a project’s life cycle. “Increasingly, we’re looking to invest in earlier development,” Finlay said. “It enables us to be very bespoke and curated in terms of sourcing those projects we want to take on. And we can have the earlier creative discussions…so we’re helping to tailor the project for the global space.”

The conversation then moved to what’s changing in financing models. In Europe, they’ve largely stayed the same, Schöder said. “You have the same ingredients every time: the money from the commissioning entity, soft money, tax incentives and an MG from a distributor. It’s not so common but there is also private equity. We can adapt to those models.”

Swetman agreed that the basic structures are still in place, but conversations are happening earlier in the process. “It might have been in the past you would have a commissioning broadcaster and anchor broadcaster on board and then you would be going out and having these conversations. The nature of co-production is that people want to be involved early in the process. We’re actually having those conversations at the development stage. We’re consulting on things like casting, directors and other key creatives to almost package your show. Rather than it being one broadcaster’s vision that then gets sold into the market, it’s a little bit more about bringing those other broadcasters or platforms in early so that you create a shared vision together. To raise the funding now, you need to have people who are aligned and going on the same journey.”

Finlay is of the same opinion and noted there is a desire to “forge new frontiers in relation to funding and financing.”

The session then moved to the biggest challenges in the funding landscape. Swetman reiterated the concern of rising budgets, leading to situations where “either you need your partners to be putting in more money, which is obviously not always the easiest thing to achieve, or you need to have more partners. That’s what we’re finding. Particularly high-end premium dramas, we’re not necessarily looking at two partners now, we’re looking at three or maybe more. Keeping people creatively aligned is hard to do with two partners. If you’ve got three or four, then it becomes even more complex. Those early conversations, making sure that everybody’s on the same page, are really important.”

“Commissioners have been evaluating the scopes of their slates and the level of their expenditure,” Finlay added. “It’s becoming more challenging to get those greenlights. Co-pros themselves are inherently more precarious. You have a range of different partners coming together. The key thing is really figuring out how you can find that jigsaw, bring it together and have that hold so that you can get to the point of greenlight and bringing the show to fruition.”

Brzoznowski asked the panelists to weigh in on the soft-money landscape as more markets open up to tax incentives for production. “The main consideration is always how authentic and accurate the location is to the story,” Swetman said. “Soft money is really important, but we don’t want to locate projects somewhere that’s completely alien just because there’s better soft money there. When we have a project set in a specific location, how can we maximize the soft money that we get from that location? In the U.K., for example, there are various regional funds that are available that might contribute to funding. In Australia, there’s a tax credit at the federal level, but there are also individual states and agencies that can contribute money to funding as well. We want it to feel authentic, but we also want to maximize what we’re getting from soft money. One of the important factors is the threshold where tax credits kick in. Usually there’s a minimum spend that’s required and that varies from territory to territory. We’ve filmed a lot of projects in Ireland where the threshold is a little bit lower than in the U.K. That has allowed us to get tax credits, soft money, on projects that otherwise wouldn’t have qualified in the U.K. So it makes drama production at a slightly lower budget level more viable. Those are the kinds of considerations that we’re weighing up. But it’s all about having the right fit for the project.”

Soft money is always key to any financing plan, Finlay added. “The key thing is figuring out how you can match those relevant incentives and what the criteria are with the creative and the logistics of your project to ensure that you’re maximizing the monies that you can get out of that while not having to necessarily unduly shift the creative integrity of the story that you’re looking to tell. We’re always on the lookout for new incentives that may be coming from different territories, but it’s one step to recognize them and another to find where they can deliver meaningful value.”

On working with streamers today, Schröder said she’s seen “a shift in models of cooperation. For example, Netflix and Amazon are sometimes quite volatile in their needs and how they express what they’re looking for. People change. You have to rebuild the relationships. And they are opening their content for licensing, for giving it to third parties to make a second, third or fourth cycle of exploitation.”

Swetman highlighted a newfound “openness to working not only on a global basis. There are more opportunities to do deals in specific regions or perhaps in individual territories. As a distributor, that gives us a bit more of a role in some of the projects that they’re working on.”

“On the international side, because of the distribution imperative, we haven’t done as many deals with global streamers simply by virtue of the fact that if it is a global deal, there won’t be any distribution rights, at least not immediately, that we can exploit,” Finlay said. “Now, streamers are looking to perhaps go more market-specific in terms of how they commission, that offers up opportunities for the likes of A+E.”