Shifting tastes imperil TV sales

International market dwindling for U.S. exports

Hollywood’s oasis in these troubled times has been its overseas TV biz, but there are ominous signs the U.S. companies won’t be able to depend on the annual $7 billion in revenue from international markets.

Europe’s broadcasters are being battered by a meltdown in ad sales, and they also have doubts about the future viability of importing American shows. There’s been a dearth of scripted hits as the U.S. networks move toward reality shows and, in the case of NBC, five nights of Jay Leno in primetime. Also, there’s a growing appetite among European auds for local fare.

“Over the past two or three seasons, we haven’t seen any phenomenally outstanding U.S. shows,” says Guido Barbieri, Mediaset general manager, rights and drama.

Many foreign webheads complain about recent U.S. production.

“The (100-day WGA) strike has had a catastrophic impact on the quality and production of American series,” TF1’s acquisitions director Remi Jacquelin says.

“This isn’t just about the U.K. or international market,” says Jeff Ford, managing director of acquisitions and digital at U.K. net Five. “Just look at the changes NBC has done by bringing in Jay Leno at 10 p.m. There’s a different feel about their schedule now. This year there seem to be a lot of nonscripted U.S. shows around.”

Europe hasn’t seen a real U.S. water-cooler show since “Heroes” in fall 2007. Of new dramas, only “The Mentalist” has gained traction, giving Britain’s Five its biggest U.S. drama debut ever in its March 26 bow.

The BBC also is trying to reduce its budget as cost-savings kick in, while troubled commercial net ITV announced April 8 that Jay Kandola, its director of acquisitions, would be ankling in June. That has been taken by many as an indication of ITV’s plans to scale back its dealings with the U.S. studios, with speculation the net will close its stand-alone acquisitions department.

“It will send shockwaves through Hollywood to hear that ITV, one of the major players in acquisitions, is not going to be so active,” says Ford. “There will always be a demand for strong U.S. drama, but as the polar caps melt, that island of revenue is going to get smaller.”

The good news is that there’s still robust growth abroad in pay TV and multichannel distributors, and the U.S. networks hold output or volume deals with the big overseas nets.

Recently, WB announced a multiyear series and movie deal with Germany’s RTL, while Sony and Paramount reupped with ProSieben, and MGM inked a multiyear accord with pan-Euro broadcaster SBS.

The net effect of the output deals is that, even as the market contracts, the nets’ international business is not immediately affected.

Some key broadcasters in Europe continue to display an appetite for buying U.S. series. Neither RTL or ProSieben are cutting acquisitions budgets. Some Spanish nets are actually increasing acquisitions. Startup La Sexta, for instance, needs series to grow its market share at an affordable level.

Yet Euro broadcasters are signaling a shift. Some of the general-interest channels fear they may never get back to recent ad levels as the market continues to fragment. TF1, for instance, will be “aggressive” and “elective” at next month’s L.A. screenings, says Jacquelin, summing up many broadcasters’ trading tactics.

The real tough negotiations with some broadcasters — M6, TF1, Mediaset, RAI — may come over Hollywood movies.

At France’s M6 channel, acquisitions director Bernard Majani says: “Big movies’ ratings have dropped but not the prices. There’s a real problem of cost efficiency.”

RAI’s next two years of acquisition cuts will probably impact movie buys but not U.S. series, says RAI Cinema general director Paolo Del Brocco.

But “as long as shows like ‘House’ and ‘CSI’ are that successful,” there will be an appetite for U.S. drama, says Dirk Schweitzer, of RTL program acquisitions and sales.

U.S. studios are doing something they may not have considered in years past: international co-financing.

Under prexy Emiliano Calemzuk, Fox TV Studios has financed three series as international co-productions: “Mental” with Fox Intl. Studios; “Persons Unknown,” a Christopher McQuarrie exec-produced mystery drama with Mexico’s Televisa and RAI; and James Parriott space thriller “Defying Gravity,” starring Ron Livingston, with Canada’s Omni Film Prods. and CTV, Germany’s ProSieben and BBC. All three were financed before the downturn.

“It will make sense for everybody to look at mechanisms for hedging risk, producing high quality at a lower cost,” Calemzuk argues.

At the recent Mip TV mart, Craig Cegielski, Lionsgate exec VP of programming and sales for international TV, said he was in discussions with Spanish and U.K. companies to co-produce an epic miniseries. ShineReveille is discussing international co-financing or co-production on several Kudos scripted projects, added ShineReveille Intl. prexy Chris Grant.

“Two, three years ago, the networks weren’t really interested in international. That’s now changed,” confides a studio honcho.

In immediate terms, the recession may well slow trading on series available on the open market. But it is set to accelerate a truly more global U.S. TV industry.

Ali Jaafar, Ed Meza, Nick Vivarelli, Nick Holdsworth, Elsa Keslassy, John Nadler and Will Tizard contributed to this report.

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