The latest installment of TBI’s coverage of the Covid-19 pandemic and its impact on the content business comes from Siobhan Crawford, head of sales & acquisitions at Belgian distributor Primitives, who reveals the “immense challenges” facing European format distributors and how they’re facing up to them.
Like the various governments’ economic packages being introduced, there is no ‘one size fits all’ solution during these troubling times for this vast sector of our industry. Without putting too fine a point on it, this is because there are two sides to international distribution and one is suffering more than the other: format sales.
On reading the MIPTV launch reports and industry news, you might imagine distributors are making a lot of money in this climate with sales of tape: gaps in schedules, additional re-runs, topical programming, re-mastered programmes.
There is a reason why tape sales are considered the easy money of distribution. And maybe I just broke the taboo by saying this out loud. But consider the alternative for distributors of non-scripted formats: requiring commissioners to commit when most productions are on hold due to government measures and ad revenue is falling… exactly.
Covid-19 is cementing our view of formats as the poor relation to tape sales. So, let’s look from the perspective of the small-to-mid-sized format distributors, who cannot rely on a catalogue of tape to create a financial buffer, who proudly refuse to alter their business model simply for the love of the content they distribute – but who must now adjust to the new normal we have entered into.
From a European perspective, the problems we face are immense
An 85% ad revenue reduction in Israel. Over 50% ad revenue reduction in Southern European territories, with the request by many clients to extend contracts without fee due to periods of inactivity. Cancelled, postponed and paused productions due to protective government measures. Every industry event cancelled or moved to online.
Come MIPCOM, pipelines are expected to be dry in the non-scripted format genre as production simply will not have moved forward since February – and even MIPCOM will be uncertain. This is our pipeline – our arena for sales and our ability to forecast – all in disarray. And what is the silver lining in all this? Netflix and its competitors announce acquisitions as normal. So, who is everybody trying to target, and in-so-doing giving the platforms plenty of choice and power to drive down commercial terms? The same platforms. This is just realism at work. It will of course provide a lifeline for some.
But what is the new normal that we, in the non-scripted format community, must adjust to?
Greater reliance on recommissions of existing titles
The most protected revenue any format distributor has is returning series. All distributors will be ensuring recommissions happen even if they need to incentivise with amended commercial terms. At Primitives, this equates to around one third of revenue. We can see in the broadcast schedules that productions for some larger entertainment formats can proceed with limited disruption, without audiences – because they are the centrepieces of the schedule. For how long we don’t know. With smaller formats there is less certainty, however – with very few new launches from MIPTV, many derivatives of the same idea in the market and adversity to risk, it seems broadcasters will be attempting to play safe and stable with existing titles with known forecastable costs.
Quiet utterings of ‘furlough’ and ‘economic unemployment’
For the smaller distributors working from home, visibility on workloads will be under closer watch with reduced sales forecasts. Management will be looking at reducing costs and with so many announcements by government it is clear salaries can be covered by these economic measures. For junior members of the team, this is most likely to be the case by the end of April, however the benefit of being a small-to-mid-sized distributor is that teams are lean. We work more effectively with less resources meaning it is unlikely our teams can be trimmed down in times like this, but also we feel the human story more keenly – so we can individually make adjustments to work commitments for the sake of the team.
Redevelop, relaunch, revisit
Many of the big groups are now ‘putting out fires’ locally – they are the words one client used this week in relation to finalising productions before lockdown starts in Sweden. Another side effect is that original development is of secondary importance. And this is the wider picture for our producer clients – de-centralised teams focusing on saving productions now, not adding to R&D budgets. For the format distributors, with no new pipeline expected, this is the perfect time to dig into content that is in the catalogue, find strategic relationships and incentivise partnerships. The popularity for revivals is widely known: Survivor, Big Brother, Temptation Island, Wheel Of Fortune, Who Wants To Be A Millionaire. However, with catalogues of 40-80 formats, these distributors only need one title reformatted and you can achieve what Primitives did in October 2019 with 99 To Beat – partnering with Talpa and granting rights in 12 countries. A strategic review of catalogues will be happening by all distributors – it is why the likes of Keshet advertise Deal With It as part of the MIPTV 2020 line-up, despite being 10 years old – it is still immensely sellable.
Fast turnaround content & commercial competition
The most recent demand has been for fast turnaround content – programming that requires minimal research and pre-production, studio-based with requests to re-use set, graphics and databases from original commissions. This will mean unspectacular, broadly appealing and high-volume content, which can be found in most distributors’ catalogues. It is just pairing the content with the broadcaster in need that requires some effort and days sat in front of Zoom or Teams for targeted pitches. The possibility of back-to-back production between countries, like Belgium and Netherlands, are also likely to increase with cost-conscious broadcasters. At this challenging time, with few format commissions – and those that do succeed will feel downward pressure on fees, long recommission windows and unlimited rights – there’s very little point in asking for an ancillary split.
Do we fear this new normal? Of course, but we format distributors are not averse to hard work. After all, it sometimes takes us years to close format sales in a normal climate. We are the persistent ones.
Siobhan Crawford is head of sales and acquisitions at Belgian distributor Primitives, which represents two thirds of Belgian content with a focus on European sales. She has worked in the format distribution industry for 16 years at companies including DRG, Zodiak and Banijay.