NBCU’s Menendez on Building Brands & Growing International Revenues

PREMIUM: Belinda Menendez, the president of NBCUniversal International Television Distribution and Universal Networks International, talks about expanding NBCU’s portfolio of international channels and selling content in today’s multiplatform digital world.

WS: The international television distribution business is vastly different today from what it was ten to 15 years ago. What factors have caused the greatest changes in the business?
MENENDEZ: The biggest change in the past ten to 15 years has been broadband—high-speed broadband opened the door for new, innovative digital services that not only changed the landscape, but also put the consumer in the driver’s seat. Non-linear viewing overall, which includes everything from time-shifted viewing to OTT [over-the-top] services to pirate sites, has put pressure on our linear clients’ ability to bring in the same audiences compared to ten to 15 years ago; in turn, it has put pressure on our business as well.

Who we sell to and how we sell our content has changed, but equally the quality of content we are selling has also changed. The production quality and budgets of current television series are on a different level from 10 to 15 years ago. Today, television is attracting the best writers, actors and producers who are creating incredible, high-concept series that are attracting global audiences. Television series are also very valuable to new platforms—for example, Netflix is seeing 70 percent of its viewership coming from television series. So television, particularly older library product, is driving a big chunk of their audience.

Additionally, we have seen growth in EST [Electronic Sell Through] and VOD with clients, including iTunes, Amazon, Google, Microsoft and Sony being an important part of our business today, and we continue to see growth in emerging markets such as Central and Eastern Europe, Latin America and Asia.

WS: Are digital platforms providing more challenges or opportunities for a studio with a large output of new shows each year and a huge library?
MENENDEZ: New digital services are an exciting development in our business because more players mean more opportunities to sell our content. We have the ability to reach different audiences with our content in the way they want to watch.

Legal digital services are also an important alternative to piracy, and we are seeing evidence of consumer behavior switching from piracy to legal in markets where services like iTunes, Netflix, Amazon and others have launched.

Digital platforms allow us to implement creative windowing strategies that grow our overall business, and we have found new syndication cycles for our library content. Recent examples of this strategy paying off include Heroes, the U.S. version of The Office, Battlestar Galactica and Warehouse 13. All are bringing in healthy revenues on SVOD services.

WS: Would you give an example of how a show was sold ten years ago, how many windows were there then and how many there are today?
MENENDEZ: Ten years ago, we would license our content in one period for a set amount of transmissions. Today, the landscape is more complex with multiple types of deals and different terms, so we have needed to be more creative with our deals.

Today, we will usually license to a free-to-air or a basic-cable broadcaster in the first window, then possibly agree to an EST or VOD deal, followed by a basic cable or pay-TV window, then SVOD and AVOD (advertising-based VOD). But, there can be various iterations to this and we are constantly evolving to maximize our business.

WS: Tell us about the international portfolio of NBCU channels. What has been your strategy in expanding their footprint, launching new services and producing original programming for them?
MENENDEZ: Universal Networks International is an important, growing part of our business. We have a strong portfolio of channel brands, all of which provide audiences with defined, thematic environments and quality content.

We have invested, and will continue to invest, in the brand health of our channels. Last year our E! channel received a brand refresh, new logo and tagline. E!’s “Pop of Culture” tagline represents the channel’s position as a global destination for all things pop culture, from celebrity news to our enormously popular Kardashian series. This year, we are executing a similar brand refresh for our international Style channels.

We are also investing in top-quality content. April witnessed the launch of Defiance on Syfy channels around the world. Defiance is one of our most ambitious programs to date, as the fantasy world depicted in the television series will also feature in an open-world online game. This is a great example of our innovative approach to storytelling and marks the first-ever convergence of television and online gaming.

Last year, we restructured our TV business to align our Distribution and UNI sales teams. This collaborative structure has streamlined our operations and allowed us to take a more holistic approach to our assets, market by market. We have seen tremendous upside through this approach and our clients have supported us with long-term deals; tremendous evidence that they believe in our ability to create world-class content and deliver strong channel brands.

Expect to see new channel launches on new affiliate platforms in new markets this year.

WS: How have you balanced providing programming to these channels and selling shows to third-party broadcasters?
MENENDEZ: We sell our content to everyone and our UNI channels are another important partner. With our new holistic approach to our business, for any given program, yes, we look at what will drive the show commercially—but we also consider where it is best placed, what will drive the most audience, which channel will support and nurture the series.

For us, it’s important to maximize the longevity of our content whether it be on one of our channels, or with another client.

WS: What have been some of NBCU’s best-selling shows?
MENENDEZ: House, Downton Abbey, the Law & Order franchise and Monk.

WS: In the U.S., NBC has been producing a number of comedies. Internationally, dramas have traditionally sold better than comedies. What success have you had selling comedies?
MENENDEZ: Television comedies can be a success with the right partner to establish an audience, and SVOD has also opened up new opportunities for comedy product.

We also witnessed recent international success with comedy films including Ted, officially the number ones R-rated comedy of all time, and American Reunion finding big theatrical audiences last year.

WS: How are shows produced for U.S. cable networks selling internationally?  Do international buyers or viewers discriminate against shows made for cable?
MENENDEZ: The quality of cable productions is currently witnessing a renaissance with audience favorites such as Mad Men, Walking Dead and Breaking Bad all born out of cable.

Interestingly, cable series have become critical and awards favorites, eclipsing the broadcast networks—something that was unheard of ten years ago.

Internally, we have seen tremendous success through our Universal Cable Productions division beginning with Monk and continuing with Suits, Royal Pains and Covert Affairs.

WS: Years ago, NBCU produced a French version of Law & Order. Have you continued producing local versions of NBCU’s shows? Has that been a good business for you?
MENENDEZ: Our Formats business continues to be a strategic growth area. Top Chef and Real Housewives from Bravo, a cable network in the NBCUniversal family, continue to expand their reach with several local productions aired or in production across international markets.

Additionally, we have high hopes for two new formats recently launched at MIPTV, Ready for Love and Take it All.