Video Interview: Channel Group Chiefs Weigh in on State of Pay TV

MIAMI: FOX International Channels' Hernan Lopez, Viacom's Bob Bakish and Sony Pictures Television's Andy Kaplan said that the global pay-TV channels business is as healthy as ever in a NATPE session today moderated by World Screen's Anna Carugati.

 

The session, Global Navigators: The Continued Vibrancy of the World's Leading Channel Groups: What it Means to You, featured Lopez, the president and CEO of FOX International Channels (FIC); Bakish, the president and CEO of Viacom International Media Networks; and Kaplan, the president of worldwide networks at Sony Pictures Television (SPT), discussing the challenges of operating a global pay-TV channels business today.

While the landscape has dramatically changed since these groups first began operating in the global market, what pay-TV operators want hasn't changed much, Lopez said—they're seeking out "a combination of content, brands and consumer experiences that let them get new subscribers, retain existing ones and increase ARPU."

Bakish supported that view, adding that platforms want to "showcase the value of the capital expenditures they've made in their [systems]. So it's incumbent on us as programming and content suppliers to provide brands that people know about, make sure programming reinforces those brands and give people a reason to watch. Clearly they don't only want it on linear anymore, so we're providing product on catch up VOD, TV Everywhere, maybe bundling with a mobile service. We're working with them to drive their businesses."

Kaplan added, "They're also looking at the value for money proposition in a much more surgical way than they did in the past. They're being much more circumspect about which channels are working for them and which aren't."

The opportunities for growth exist around the world, the panelists noted. Bakish stated that there are less mature markets, like Brazil, India and Indonesia, where the pay-TV bases are still growing at healthy rates. In more mature markets like the U.K. or Spain, there are opportunities to launch new services.

Stated Lopez: "In 2014 we actually added subscribers faster than we did in 2013. It was a really good year for pay television around the world."

Carugati then moved the conversation onto the importance of having a strong channel brand, in addition to popular programming.

"Content is king, but brands are the castle," said Lopez. "Content does rule, but even the mightiest, most powerful king can go away. The brand—the castle the king lives in—if you build it right, if you continue to maintain it and associate it with great kings, the castle, the brand, has the potential to be around for a long, long time." It was this thinking that led to the global rebrand of the FOX channels announced by FIC yesterday.

Bakish added, "In this sea of ever expanding choice, the brands are the beacon you can follow. Now once they get there, of course you have to have great content."

Kaplan agreed, noting, "The consumer needs some help and focus in trying to figure out where they want to go. Brand affinity is a leg up."

In terms of programming, the three panelists all spoke to the importance of having a good mix of local and imported product. At SPT, some markets it operates in are entirely local—notably India—while others are using a mix of U.S. titles, locally developed fare and format adaptations.

Bakish discussed Viacom's "glocal" strategy, with titles from the U.S. channels being complemented by locally relevant content. He used Comedy Central as an example, mentioning local stand-up specials for some markets around the world and a British adaptation of the American hit Drunk History. MTV has also been formatting U.S. titles, with versions of Jersey Shore on air in a number of markets. He also pointed to the success of the Nick Latin America hit Grachi, which spawned an English-language version, Every Witch Way, that is airing on Nick in the U.S. and around the world.

FIC has been in the local content business for a long time, Lopez said, first with National Geographic Channel and now with sports. It is also expanding its scripted and unscripted entertainment originals. Original drama is now being produced in Spanish, Mandarin, Turkish and soon Italian, with "budgets between $200,000 and $4 million. They all have to measure up to the expectation of quality viewers have of the FOX brand," Lopez said.

The panelists were then asked about how their businesses have adapted to a multiplatform era.

"We are still primarily a linear television business," said Bakish. "That said, the other platforms are growing at a rapid clip." As such, VIMN is supplying content to OTT systems and working with its traditional partners on brand extensions like the MyNickJr. app.

"Only the minority of homes in the world have pay television," Bakish said. "These [digital] platforms provide an opportunity to serve everybody else. Sometimes that will be in partnership with an existing operator, sometimes it will be with another entrant, but it's an extraordinary opportunity and one we're very focused on serving."

"You need to be able to offer your consumer and the operator a multitude of rights and different products," Kaplan added. He referenced the Plus-branded VOD services that SPT offers in Japan as extensions of its channel brands. AXN Plus is also available in Central Europe, where it has been "very attractive to the operators in terms of a value-add as well as other ways to attract the consumer." Offering content on multiple platforms comes with its own set of challenges—notably securing those rights, which, Kaplan said, can be "hard to get or expensive…. That's another reason the original and local production conversation is so important. Those are situations where you can control all of those rights and all of those offerings. It gives you a more powerful seat at the table with your operators."

Lopez added that "viewership is migrating from linear, so we need to be where the viewership is. Most of the viewership today is in linear, so that's where we are. Some is on demand, and that's where we are as well. Our job is not to defend at all costs the linear business model, but it is to increase the relevance of our own brands and our own content. What matters, at the end of the day, is that we have the best shows that consumers watch on our brands first, that they associate them with our brands, and that we make them available to as many platforms as possible in as many devices as possible."

Advertisers are following viewers to nonlinear platforms, making the need for reliable ratings from those services even more important.

"One of our responsibilities as an industry is to fight for measurement," said Bakish. "The reality is, in the nonlinear world there is a tremendous amount of consumption that is going unmeasured and therefore is effectively being given away for free…. We need a better view of aggregate consumption."

On how channels are working with marketers outside of the linear channel, Bakish referenced the work Viacom is doing around its live events and social media, while Kaplan discussed the opportunities presented by Crackle.

The discussion ended with the panelists speaking about the continued importance of live events and global premieres.

"Live cuts through clutter and gets people to corral around something and associate it with your brand," said Lopez. "We've done several day-and-date premieres with the U.S. We want people to always remember they watched a great show on FOX first, ideally as close as possible to the U.S. air date."

"We're all trying to cut through the clutter," said Bakish. Events like MTV's Video Music Awards and Nick's Kids Choice Awards help that effort. "You've got to get people to pay attention. In this crazy digital interconnected world, there's no substitute for live."