TV ad revs rebounding from the dot-com collapse
NEW YORK — In 2000, according to an American Film Marketing Assn. survey, Western European TV deals contributed a vital 30% chunk to international revenues for indie pic sellers. That business has been down drastically, but things are slowly turning around — if you look at trends in ad spending.
For the first time in three years, TV ad revenue for Western Europe’s terrestrial TV channels is on the rise, a belated rebound from the dot-com-induced bust. London-based media services agency Zenith Optimedia forecasts an aggregate 2.4% ad hike (excluding inflation) in 2004 for 16 territories on the Continent.
Euro TV advertising tumbled 8.5% since 2000, based on “constant 2002” prices that eliminate distortions of currency inflation. Observers predict that while that uptick hasn’t yet translated into meaningful buying sprees, it could augur that a rebound is around the corner.
But several indie film sellers scoff at the notion that the buying freeze in European TV is thawing. “What recovery?” grumbles Los Angeles-based Avi Lerner, who heads up production and sales shingle Nu Image/Millennium. “It’s still impossible.”
Top European broadcasters RTL and ProSiebenSat. 1 in Germany, and ITV and Five in the U.K. say they are holding steady on independent film acquisitions right now.
“While we have bought a lot in the U.S. and from other international producers, we cannot state an increasing amount of independent productions for our house,” confirms a ProSiebenSat.1 exec. Fast-forwarding several months, media analysts argue that if TV ad spend grows as expected, it should lead to more film buying and inventory building, which typically occur in the later stages of a broad economic recovery.
“Because so many of the European TV buyers overpaid and overbought films in the late 1990s, they are still limiting themselves right now to the big film suppliers — the major studios,” says Dave Davis, head of the eponymous entertainment finance advisory firm in Los Angeles. “Eventually, they will start buying more from the independents. You’re already seeing a little of that now.”
A likely scenario going forward is that European free-TV pic acquisitions will pick up in terms of volume, but prices per film will be below the boom-era peak in 2000, notes Adam Smith, Zenith Optimedia head of publications. Western European TV ad spend isn’t forecast to top its 2000 high of $24.1 billion until 2007, requiring four consecutive up years at constant 2002 prices.
The big TV revenue for new indie films traditionally has come from the terrestrial broadcast sector, although the trend to low-cost reality series has gobbled up time periods in Western Europe that in past years might have gone to film. However, Eastern European terrestrial TV remains movie oriented.
“If you take the Czech Republic, Poland, Hungary as a bloc and then throw in Russia, which is a strong emerging market, it is significant,” says Dan March, head of international sales at Echo Bridge Entertainment, the newly formed indie pic distributor. Showing confidence in a biz rebound, Echo Bridge recently acquired seven Showtime movies, and also bought film libraries from Cinetel (94 titles) and PM Entertainment (130 titles).
European pay TV — for which revenue grew steadily through the recession, according to Zenith Optimedia — also suffers a hangover from the late 1990s when startup pay platforms were desperate to secure major studio films to launch digital TV platforms. The rich film deals from that launch period are expiring, which should eventually give pay TV operators more flexibility in their film spending.
“The TV platform consolidations in Germany, France, Italy and Spain have run their course and film buyers now have more confidence in assessing prices,” says Shirin Drost, managing director of foreign sales outfit Andrea Intl. “Relative stability prevails and there are more channels to fill.”
In another boost to movie dealmaking on the Continent, Zenith Optimedia’s Smith sees an eventual move to joint buys of films by free and pay-TV outlets in the same territory, a trend that has taken hold Stateside.
New outlets also offer openings for nonstudio films, such as Italian video-on-demand platform FastWeb, a 4,500-title VOD service that sources 75% of its film lineup from independents. FastWeb reports strong VOD sales in Italy for indie offerings such as “Monsoon Wedding” and “Traffic.” FastWeb has seen a trend that suggests films with moderate or weak box office often perform much better on VOD service because consumers choose to see the blockbusters in theaters and then catch up on other films of interest when they hit TV.
A unit of startup fiber-optics outfit e.Biscom, FastWeb had 330,000 subscribers at the end of 2003 equipped with super-high-speed home connections.