Lionsgate’s Jim Packer Looks at the Changing Distribution Business

PREMIUM: Jim Packer, the president of worldwide television and digital distribution at Lionsgate, talks about digital platforms, changing viewing habits and finding multiple opportunities for monetizing content in the U.S. and internationally.

WS: Is it correct to say that technology and digital platforms have brought the most change to the international distribution business?
PACKER: SVOD and over-the-top services have fundamentally altered the way that shows are distributed. We were a leader in that transformation when we did our Mad Men deal with Netflix. Looking back, it was a moment in time that was critical because it did two things.

First, it showed that Netflix would step up and is forward-looking enough to spend enough money to buy the back end of a show, and Mad Men was the first big one that they did. Second, it showed that serialized shows, which had previously been viewed as not having a lot of back-end value, could actually be incredibly valuable from a back-end perspective. A particular genre that once had a stigma attached to it suddenly became the belle of the ball.

That one deal shifted the way shows were distributed. If you look at AMC or some of the other networks, they got a little bit more comfortable with doing high-quality serialized programming because they knew they now had a back end. It created a bit of a renaissance and, looking at the television landscape from basic cable to what Netflix is doing with product, there is now a lot of really good television available.

WS: What other factors have played a role in changing the nature of the distribution business?
PACKER: The ability to watch several TV episodes in one sitting. So-called “binge viewing” has emboldened Netflix and other SVOD players to spend money to get content and give viewers what they want when they want it.

Another factor is that technology has created new windows for movies. There is day-and-date with VOD. There is pre-theatrical. Several studios and a number of independents bought a lot of product at Sundance. The movie business has been emboldened by technology. Bigger movies are making more money through EST, which is the bread and butter of what we do, but you also have movies like Arbitrage and Margin Call that are taking advantage of new windows and getting into homes they didn’t reach previously.

I like the fact that you can get into a lot more homes a lot more easily on a lot of different platforms. You didn’t have that five or ten years ago. That will ultimately be good for content, whether it’s film or TV.

WS: Lionsgate is known for very distinctive, high-quality shows, which air on cable/pay cable in the U.S. How do you position these shows for international buyers?
PACKER: Each show has to be positioned a little bit differently. If you look at shows like Nashville, Mad Men, Weeds and Anger Management, each one has its own distribution story in terms of how we approach the market. With Mad Men, we first sold to a lot of cable platforms and slowly migrated it to free TV, and it became an international phenomenon. Now, many of the SVOD players are buying the show after it’s already been on the air on cable and broadcast, so in many markets we have three or four different partners for the show. The same thing happened with Weeds.

Nashville is a little bit different. We pre-sold Nashville. It’s a broadcast network show, but because it’s about country music, some people wondered how it would play internationally. So we really focused on the soap nature of the show, since internationally soaps are very popular. And there is a week-to-week story line to Nashville; there is a sexiness to it. The sexiness really plays well internationally and it’s been a very good show for us from that perspective.

This goes back to where technology helps. In one market we couldn’t get a broadcaster to sign upfront so we put Nashville on iTunes as “hot from the U.S.” and that stimulated interest in picking up the show because it was doing well on iTunes. That’s where digital gives you a new model…you can put an episode up in English the day after it airs in the U.S., build a fan base, and then sell the show to the cable and broadcast world.

Anger Management is a different model. We pre-sold the show in almost every territory but it wasn’t like selling season one of a show. Because of the 10:90 model, we had to sell 100 episodes. Think about that from a broadcaster perspective and from a distribution perspective and what my team had to accomplish…. They had to go in and sell 100 episodes. And it has sold really well and generated close to $1 million an episode in international sales.

Many broadcasters bought it before the first batch even went on the air. That demonstrated how much confidence they had in Charlie Sheen, an international star; Bruce Helford, the showrunner; and Kevin Beggs, the president of Lionsgate Television Group, and his team. They had so much confidence in the various elements we put together that we pre-sold Anger Management in about 75 percent of all territories.

Mort Marcus and Ira Bernstein, the co-presidents of Debmar-Mercury, the television distribution and syndication company we own, did a great job in pioneering the 10:90 formula with the Tyler Perry franchise and getting the concept of 10:90 working properly. We really supercharged the concept when we applied it to a global show, Anger Management. We’re doing well with it on iTunes. We’re doing well with it in international TV, including SVOD; we’ve also done deals with Fox for packaged media. It’s a truly global product for us.

WS: How are you dealing with clients in countries that are experiencing economic difficulties?
PACKER: I’m never surprised by either a down market or an up market. They tend to balance themselves out because that’s the way the world economy operates; some territories are always doing better than others.

Latin America, for example, has exploded. Ten years ago, when I was looking at selling new shows, Latin America was ninth or tenth on my radar; today it’s third or fourth. Technological developments also have an impact. Australia had a bit of a downtick, but then digital broadcasting was turned on. A lot of broadcasters launched multiple digital channels and there was a nice little uptick in demand. As new developments emerge in a particular country, my job is to make sure I have a staff in place to take advantage of opportunities as they occur.

WS: What has contributed to the boom in Latin America?
PACKER: There are several factors. Brazil is doing really well. It has a growing middle class. Content consumption is up. There are two established pay networks, and a third competitor recently entered the market. Any time you have new competition, that creates more opportunities, so Netflix coming in helped. Latin America is also a unique market because we sell both regionally and locally. We will make deals with Sony and TNT, whose footprints cover the entire Latin American region, but we also have a deal with Televisa for free TV in Mexico alone. So it’s a very vibrant market for both regional and local.

WS: When you look to build up your sales team, what kind of executive do you look for?
PACKER: I’ve been running distribution operations for 28 years. Ten years ago, I looked for pure sales skills when I hired someone. What was most important was the ability to have all the sales skills at your disposal. Fast-forward to today and sales skills are about half of what I look for. The other half consists of technical skills, knowing how to window product and being comfortable with change. If you’re not comfortable with changing windows, changing client dynamics, then you won’t bring value to the team.

Netflix is a good example of a client today. I found a 25-page presentation they gave me back when I was at MGM. It said, please help us get off the ground with our streaming service. All we need are your old TV shows and movies that you don’t need. Fast-forward to today—not 20 years later but five or six years later—and they’ve completely changed their focus. Netflix is no longer offering only library product, they have an output deal with Disney and an output deal with Warner Bros. for TV shows, and they’re producing new content. Netflix has completely changed.

I recently had a meeting with my team and the meeting wasn’t to lament how Netflix has changed. The meeting was to discuss how we adapt and what we do to maximize the change that is taking place. That is really the key—you have to have an executive team that is really comfortable with change and can come up with strategies on how to attack it.

I was thinking of a basketball analogy. Years ago, you had basketball players who were either three-point shot experts or inside players. Now a basketball team has to be comfortable going from zone to man-to-man to shooting a three-pointer to going inside. That’s exactly what’s happened to our business. You’ve got to be comfortable with the different dynamics that are evolving in real time.