LONDON — The U.K. has finally recognized that indie producers get a raw deal from broadcasters. For many years they’ve had to give up secondary rights in exchange for funding, and then must sit back and watch network distribs get fat exploiting their programs.
But the balance of power is about to shift. The recently passed Communications Act gives indies more rights to their intellectual property — and the opportunity to build up portfolios that should increase company value.
The prospect comes at a time when TV producers are aware of the potential to generate revs from interactivity, notably through text messaging and premium-rate phone lines. In its first season, Channel 4’s “Big Brother,” produced by Endemol U.K., generated more than £1.9 million ($3.2 million) in revenue from audience voting.
Industry estimates put the primary (firstrun and repeats) market at $4 billion a year, with other rights (books, DVDs, toys, etc.) adding $1.1 billion.
Investors are starting to sit up and take notice. In July, venture capital firm Kleinwort Capital paid $37 million for a 45% stake in Hat Trick Prods., makers of “Whose Line Is It Anyway” and “Have I Got News for You.”
The sale of Chrysalis TV at the end of July for $81.3 million exceeded market expectations of between $48 million and $64 million.
John McVay, CEO of U.K. film-TV producers trade body Pact, believes that over the next five years, “We will see producers able to improve their earnings from different revenue sources. But it’s down to producers to look at how they are going to exploit their rights effectively.”
Brit producers believe the balance of power between U.S. networks and producers is far healthier. Christoph Fey, managing director of format rights protection group FRAPA, says a producer’s negotiation power is greatly enhanced by having access to the syndication market.
“That was the U.S. solution to allow the indies to grow a little bigger,” Fey says. “Now producers are more powerful and the balance of power is not as bad.”
Pact is working with sister trade associations in Europe through CEPI to report on its progress in the U.K. and help lobby for change.
France is already ahead of the game. Last year it introduced rules that mean channels can retain broadcast rights for just three years (3½ years for animation), they must negotiate secondary rights separately and they cannot take a share of profits.
“The change came at a critical time,” says Xilam’s Marc du Pontavice. “The domestic market has compensated for the weak international market.”
He is skeptical about a similar system being introduced in other European markets.
“Because of the regulations in Germany, it’s unlikely to happen there,” he explains.
“Germany is determined to support money invested in German programming, but they don’t care about who owns or controls rights to a program. Spain has done a lot to help indie film producers, but not television producers. And as for Italy, forget about it. It’s ruled by the broadcasters.”