{"id":5761,"date":"2014-06-09T00:00:00","date_gmt":"2014-06-09T00:00:00","guid":{"rendered":"http:\/\/worldscreen.com\/tvusa\/2014\/06\/09\/the-rights-stuff\/"},"modified":"2016-01-28T11:22:04","modified_gmt":"2016-01-28T16:22:04","slug":"the-rights-stuff","status":"publish","type":"post","link":"https:\/\/worldscreen.com\/tvusa\/the-rights-stuff\/","title":{"rendered":"The Rights Stuff"},"content":{"rendered":"

\"\"This article originally appeared in the L.A. Screenings 2014 issue of <\/em>World Screen.<\/em><\/p>\n

Anna Carugati talks to a host of buyers about shorter-run series, windows and navigating the ever-more-complex business of rights management.<\/em><\/p>\n

The first paragraph of Charles Dickens\u2019 classic novel A Tale of Two Cities<\/em> starts with the famous sentence, \u201cIt was the best of times, it was the worst of times….\u201d If tweaked slightly, that renowned phrase can be adapted to the international television business: \u201cIt was the best of times, it was the most complex of times.\u201d I will let the reader decide if the rest of Dickens\u2019 sentence, which refers to wisdom, foolishness, belief, incredulity, light, darkness, hope and despair, also pertains to today\u2019s TV business\u2014but best and most complex apply, for sure.<\/p>\n

It\u2019s the best of times because never before has so much high-quality, diverse TV product emanated from the U.S. studios. It\u2019s the most complex of times for a number of reasons, many of which we already know: technology has created\u00a0numerous platforms and devices that consumers use to enjoy content\u2014while also disrupting existing business models. In response to the disruption, licensors have been changing the traditional windowing of product in an effort to draw more value from movies and TV series.<\/p>\n

As a result, windows have collapsed, shortened or been squeezed out by other windows, and the number of rights an acquisition executive has to buy has become seemingly endless: pay TV, free TV, OTT, hold-backs, catch-up, stack-up and on and on.<\/p>\n

\u201cBecause of the newcomers to the content-distribution business, which include Netflix and Amazon, the actual concluding, signing and papering of a deal is incredibly lengthy compared to what it was,\u201d says Herbert Kloiber, the chairman of Tele M\u00fcnchen Gruppe (TMG). \u201cYou think the deal is done and six months later you are still talking about the misunderstanding that was never discussed because, as [the licensees] move along, they are discovering new facets and aspects and overlaps and relative exclusivities, and so are you.\u201d<\/p>\n

The other problem is that it\u2019s hardly possible any more to acquire exclusive rights. \u201cIt\u2019s exclusive against pay, exclusive against this or that; there is no longer any exclusivity in absolute\u2014everything is now in relation to, and the moving parts are infinite. Therefore, there are a lot more layers in the deals and it\u2019s much more complicated to actually put them to bed,\u201d Kloiber continues.<\/p>\n

FUTURE-PROOFING<\/strong>
\nThe deals are complicated because broadcasters want rights for existing platforms, but they also have to be aware of what new ones might open up in the future.<\/p>\n

\u201cWe don\u2019t enter very many new deals at all if they don\u2019t include all screens,\u201d says Phil King, the president of CTV, sports and entertainment programming at Bell Media in Canada. \u201cWe need online rights to show a program in our authenticated CTV GO app. We\u2019ll need rights for mobile, because the lines are starting to blur bet\u00adween tablet and computer\u2014they are kind of all one in the same. You argue about screen size now as opp\u00adosed to device.<\/p>\n

\u201cSo we are pretty insistent on getting rights to things now and in the future,\u201d he continues. \u201cFor the most part, all the studios have been fine; they understand that. What we can\u2019t have is investing in show A and showing it on one screen size and having another company potentially owning the same rights to that show in our country on another screen and monetizing it that way.\u201d<\/p>\n

Negotiating the value of rights and discussing the definition of windows and devices is not new\u2014it\u2019s been the complicated new normal of the business for the last couple of years.<\/p>\n

DARK MATTER<\/strong>
\nA new complication has arisen more recently, and it\u2019s due to the type of shows that are popular now in the U.S. They are the more sophisticated, nuanced, serialized shows, most often featuring flawed characters, which are populating the American cable channels. These shows typically run 10 to 13 episodes per season. While these shows are captivating audiences in the U.S. and garnering critical acclaim and awards, they are not finding homes on mainstream free-TV broadcasters around the world.<\/p>\n

\u201cEveryone is talking about the golden age of television, which is fantastic for the trade TV audience, but the golden age of television has also resulted in a lot of cable shows which aren\u2019t really the right fit for the broad linear audience,\u201d explains Jakob Mejlhede, the senior VP of acquisitions and programming at the Modern Times Group (MTG) and chief content officer of MTGx, the company\u2019s digital services.<\/p>\n

MTG operates a variety of pay-TV, free-TV and OTT services in Scandinavia, Central and Eastern Europe and Africa. They have num\u00aderous deals with the Holly\u00adwood majors, and they are glad to have them. However, if the nature of made-in-Hollywood product starts to change, it may not find as many time slots as it used to.<\/p>\n

\u201cIf we are to commit to major volume deals, which we do at the moment, we need to be able to offer more of those series to a more dedicated audience,\u201d continues Mejlhede. \u201cAnd as we don\u2019t have small cable networks, we need to place those cable shows on our online services.\u201d<\/p>\n

THE BUYING GAME<\/strong>
\nAnd in order to place those shows online, Mejlhede needs the proper rights, and this leads us right back to the complicated deals that must now be hammered out.<\/p>\n

When negotiating a deal for a TV series, Mejlhede first asks for linear rights to broadcast the show on his free-TV channels. \u201cIt would be a number of runs, including reruns, and it would be either with exclusivity or hold-back against anything that could be competing for the show. So I would have the premiere exclusive for my free-TV channels for a number of years and a number of runs.\u201d<\/p>\n

Viewers, with the abundance of programming available to them nowadays, often miss the original broadcast of shows and need to find and watch them at a later time. This has driven the incredible popularity of on-demand and catch-up sites.<\/p>\n

\u201cI would never buy a show without catch-up rights,\u201d Mejlhede says. \u201cA lot of our viewing is moving\u00a0online or to catch-up, so I need catch-up. The other parameters are negotiable, but I try to obtain as long a catch-up period as possible and then hold back as long as possible so I can stagger the episodes behind a catch-up service, an AVOD [advertising video-on-demand] service, or use them on an SVOD [subscription video-on-demand] service.\u201d<\/p>\n

The world of catch-up has introduced a whole new jargon to the industry\u2014most notably stack-up rights. \u201cStack-up\u201d refers to the number of episodes available for a given series on a catch-up service.<\/p>\n

Say a series launches in September. You, the viewer, don\u2019t start watching it, but by November your friends and colleagues are raving about it, piquing your interest. However, by the middle of November about seven episodes have already aired and you don\u2019t want to jump in to the series at that point. You go to the channel\u2019s catch-up service and want to start watching the series from the first episode. But the channel will not always have the right to \u201cstack\u201d all episodes from the beginning of the series and keep them on the catch-up service. The most common catch-up rights are given for seven days. Getting stack-up rights for longer is a common negotiating point, with many broadcasters asking for 30-day catch-up rights. The argument made by distributors is that after seven days, it\u2019s no longer \u201ccatch-up,\u201d it\u2019s video on demand, and therefore requires another set of rights and another fee to be paid<\/p>\n

STACKING UP<\/strong>
\n“Everyone agrees that a seven-day catch-up window is standard,\u201d says J\u00f6rg Graf, the head of program acquisitions for Mediengruppe RTL Deutschland. \u201cTwo or three years ago, we had discussions about whether this was an additional exploitation or not. I think we agree with all our licensors that at least for the first runs, as a part of our free-TV license, we have the right to show catch-up. The problem is if you discuss new distribution platforms. Is it really a new platform if you use an OTT platform to distribute your simulcast signal and offer seven\u2013day catch-up that way? We think in most cases the rights remain the same. It doesn\u2019t matter whether I distribute my signal through a cable provider or over an OTT platform, but sometimes licensors see it in a different way because they see the potential to slice and dice the rights a little bit more.\u201d<\/p>\n

While the definition of catch-up, stack-up and other types of rights will eventually be resolved\u2014in the end it\u2019s a matter of price\u2014what may be more difficult to resolve for some free-TV broadcasters is whether or not what Hollywood is offering these days can garner large audience shares.<\/p>\n

\u201cThe fragility of acquired programming in performance is something that is really quite worrying,\u201d says TMG\u2019s Kloiber. \u201cIf you talk to Anke Sch\u00e4ferkordt [co-CEO of the RTL Group] or to R\u00fcdiger B\u00f6ss [the senior VP of group programming acquisitions at ProSiebenSat.1] and you look at how much mileage they get out of how much product they have to absorb in these volume deals, it is becoming quite frightening. Most of the series get put on for three episodes. If they don\u2019t get the audience share that their network should do at that time period, the series goes right down to RTL Nitro or ProSieben MAXX, networks whose average audience share is 1 percent. That means that they get a 10-percent amortization rate and the rest is write-off. Very few U.S. hits from the last two seasons have actually been hits on German TV.\u201d<\/p>\n

Well, we have talked to R\u00fcdiger B\u00f6ss and to J\u00f6rg Graf, who works for Anke Sch\u00e4ferkordt, and they are struggling with much of Hollywood\u2019s current output. The U.S. shows that have been working well in prime time on the ProSiebenSat.1 stations are NCIS<\/em>, The Mentalist<\/em>, Criminal Minds<\/em> and Hannibal<\/em>. More serialized shows, like Homeland<\/em> and Sons of Anarchy<\/em>, air at 11 p.m. and later. On the RTL stations, Bones<\/em> and CSI<\/em> are the top-rated imported series and Revenge<\/em>, a more serialized show, is doing well on VOX.<\/p>\n

\u201cMy hope is that with more and more serialized series, maybe the trend will shift and come back to family dramas, easier-to-watch dramas\u2014like a procedural that can air once a week,\u201d says ProSiebenSat.1\u2019s B\u00f6ss. \u201cI think both serialized shows and procedurals will live on, but I hope procedurals will come back because this is our bread and butter. They are easier to repeat.\u201d<\/p>\n

And repeatability is key. \u201cIt\u2019s great to have an event series, but an event is a one-run wonder,\u201d says B\u00f6ss. \u201cAnd with one run we are not making money. We have to air series again, in other time slots, on other channels, in order to make money out of them. This will be the challenge in the future\u2014we have to have a mix of different types of series, otherwise it will become very difficult.\u201d<\/p>\n

RTL\u2019s Graf agrees. \u201cYes, it\u2019s a complex story because it\u2019s not just about finding the right audience, but about having the potential to repeat the episodes of these serialized shows. Our financial calculation is still based on the fact that a scripted show has to air three times. What we see is that it is more difficult to air an episode of a serialized show and the first repeat successfully. We never had a dogma saying never to put a serialized show on air. But if I could choose between a classic procedural cop show and a serialized show, I would always take a procedural because it\u2019s easier to schedule.\u201d<\/p>\n

POSITIVE PROCEDURES<\/strong>
\nThe desire for procedurals is not unique to the German market. The Blacklist<\/em>\u2014which many consider a hybrid between a broadcast network and cable show, because each episode solves a case, \u00e0 la procedurals, but there are ongoing story lines\u2014is working well for MTG. So are NCIS<\/em>, Bones<\/em> and The Mentalist<\/em>.<\/p>\n

In Norway, at the commercial broadcaster TV 2, procedurals like NCIS <\/em>and CSI<\/em> perform well. NCIS <\/em>is also a top performer on M6 in France. The buyers in Italy and Spain have been keeping a low profile as of late because of the economic difficulties in those countries, but procedurals are valid investments for broadcasters who are strapped for cash.<\/p>\n

As Dermot Horan, the director of production and acquisitions at RT\u00c9 in Ireland, points out, broadcasters want a combination of shows.<\/p>\n

\u201cIf you get a serialized drama that is six, eight or ten episodes, you can make an event of it\u2014it freshens the schedule, it doesn\u2019t go on forever. Some of the procedurals are 22 episodes. They are very useful. If you miss one, because they are self-contained, you haven\u2019t lost the plot. But they tend to have a sameness about them, so in terms of promoting your schedule, having an event like Homeland<\/em> actually creates a talking point and a watercooler moment that perhaps the crime procedurals don\u2019t have. You need both.\u201d<\/p>\n

BSkyB in the U.K. can easily accommodate both. \u201cWe always pick a show from the heart, thinking of what our customers love,\u201d says Sarah Wright, the controller of acquisitions at Sky. \u201cThey love a serialized show like Game of Thrones<\/em> that builds momentum season after season. Equally, they absolutely love Modern Family<\/em>, which still has a series arc, but each episode is slightly closed. Or you can go to a procedural like Criminal Minds<\/em> that has a crime of the week, which is wonderfully compelling.\u201d<\/p>\n

And as BSkyB operates both linear channels and on-demand services, they have many ways of delivering a show to customers.<\/p>\n

\u201cUsually we will preview a show on-demand just to get the buzz going,\u201d Wright says. \u201cAnd then we\u2019ll air the show on linear. Just before that new season launches, we will have a box set of previous seasons on our on-demand service. That gives the customer a real chance to join a show. During the course of a linear run, we\u2019ll have catch-up for viewers to watch the episodes they missed. When a series finishes, we will probably release the DVD, then you go into a new season and another box set. That is the pattern we offer our customers\u2014you can catch up any time; there are no barriers to entry.\u201d<\/p>\n

ALL-ACCESS PASS<\/strong>
\nBut to assure viewers have no barriers to entry, a broadcaster needs access to all rights. And new players in the business have been snatching up rights not only in individual countries but also across territories.<\/p>\n

\u201cThe vast amounts of money that are being made available for pan-European or pan-Scandinavian, or even global in the case of Amazon or Netflix, has meant that the traditional buyers can\u2019t compete\u2014it\u2019s just impossible,\u201d says John Ranelagh, the head of acquisitions at TV 2 Norway.<\/p>\n

\u201cNetflix is definitely in talks with everyone, including the studios and us,\u201d says TMG\u2019s Kloiber. \u201cI think the prime concern of the free-TV players is that Netflix may ask for two-year exclusivities, which blocks the interesting life period of any product.\u201d<\/p>\n

MTG\u2019s Mejlhede has not yet seen pan-regional deals done in the territories where MTG operates. Should that happen, he says, \u201cMy response to that is very simple: if anyone starts doing deals that stretch across bigger regions, I will not be interested in doing volume deals with them. They will lose the business they already have if they start doing tricks like that.\u201d<\/p>\n

As buyers flock to Los Angeles to view the new shows that will premiere in the fall, they will be pleased with one new trend in American programming: the move toward straight-to-series orders rather than producing pilots.<\/p>\n

\u201cPilots were always made to minimize risk, but if you look at the failure rate of new series, you can\u2019t really argue that it reduces or removes the risk of premiering a new show,\u201d says MTG\u2019s Mejlhede. \u201cSo I don\u2019t necessarily think that going straight to series with 10 or 12 episodes is going to be more risky than the pilot business. It\u2019s going to put the development money where it should be: on the creative development of scripts, on the writers and the actors and all the stuff that really matters. The pilot business is damn expensive.\u201d<\/p>\n

SENSE OF SECURITY<\/strong>
\nTMG\u2019s Kloiber has preferred the straight-to-series model for years. \u201cWhen 13 episodes get ordered, at least you know that there is product for your client to air. And if the series turns out to be not a great hit for free TV, it may well be the hot item for a first pay window.\u201d<\/p>\n

For TV 2 Norway\u2019s Ranelagh, whether or not to bet on a straight-to-series show depends on the talent involved in the project. \u201cTwenty odd years ago, if Steven Bochco [Hill Street Blues<\/em>, NYPD Blue<\/em>] was going straight to series, we would have said yes; and then he made Cop Rock<\/em>!\u201d quips Ranelagh about Bochco\u2019s legendary series flop. \u201cBut with Jerry Bruckheimer or J.J. Abrams\u00a0 or whomever, it may be you can close your eyes and safely say, I\u2019ll go for broke and not worry about it.\u201d<\/p>\n

So in these best of times and most complex of times, distributors and buyers have much to grapple with. And while discussing the sequencing of windows, definition of rights and terms of contracts, in the end, what matters is the quality of the show and the people seated at the negotiating table.<\/p>\n

\u201cWhen all is said and done, despite the fact that the square-briefcase brigade is taking over the world and we are infected by McKinsey-itis, nevertheless, in our game it\u2019s still the truth that the relationships between people are key,\u201d says Ranelagh. \u201cWe all move around from different companies, so the companies don\u2019t really matter, the brand doesn\u2019t really matter\u2014the program does, the person does.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

This article originally appeared in the L.A. Screenings 2014 issue of World Screen. Anna Carugati talks to a host of buyers about shorter-run series, windows and navigating the ever-more-complex business of rights management. The first paragraph of Charles Dickens\u2019 classic novel A Tale of Two Cities starts with the famous sentence, \u201cIt was the best …<\/p>\n","protected":false},"author":1,"featured_media":5762,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[76],"tags":[],"class_list":["post-5761","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-features"],"yoast_head":"\nThe Rights Stuff<\/title>\n<meta name=\"description\" content=\"The Rights Stuff. Anna Carugati talks to a host of buyers about shorter-run series, windows and navigating the ever-more-complex business of rights management.. 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