Spanish Film Industry Gets a Boost From TV Nets, Movistar Plus

For Spain’s top movie players, TV production could prove their salvation.

When Spain’s largest telco, Telefonica, bought total control of its biggest pay TV operator, Canal Plus Spain, in May 2014, it was an unprecedented move for Europe’s “big five” movie territories.

The positive consequences of that telco-content convergence, compounded by Netflix’s launch in Spain last October and HBO promising a Spanish streaming service by this year-end, are now playing out all over Spain’s content industry.

Co-producing and promoting 10-15 titles a year, Spain’s biggest broadcast networks Mediaset España and Atresmedia have helped fire up Spanish films’ domestic market shares to 25.5% in 2014 and 19% last year — both modern highs.

Led by “Julieta,” Pedro Almodóvar’s fifth competition entry, Spain boasts its biggest festival presence at Cannes for years with four features. But all the other films — Catalan Albert Serra’s “The Death of Louis XIV,” a Special Screening; Oliver Laxe’s adventure-Western “Mimosas,” a Critics’ Week entry; and Chilean Pablo Larrain’s “Neruda” in Directors’ Fortnight — were financed via international co-production.

Telefonica’s content drive comes as central government subsidy coin and regional TV finance plummeted during a double-dip 2009-12 recession. Spanish producers association Fapae says average Spanish movie budgets dropped from €3 million in 2009 to €1.8 million in 2015.

Reign in Spain
Budgets have shrunk, but film business is rebounding.
$25.5% 2014 domestic market share for Spanish pics
€1.8m Average Spanish film budget in 2015
38 Titles acquired by Telefonica’s Movistar Plus in 2015

In such a context, Telefonica’s investment, now in premium series as well as movies, has been a welcome blue sky.

Spain’s Canal Plus, now folded into pay TV/SVOD service Movistar Plus under Telefonica, acquired 38 titles in 2015 and 24 so far this year, per Telefonica film production head Gabriel Arias-Salgado. The commitment is expected to hold firm.

“We continue to acquire films. It’s where most of our movie investment will go,” says Domingo Corral, Movistar Plus original production director.

Telefonica has also broadened its content mandate. Bowing September 2013, Telefonica Studios took minority equity positions in 10 films in 2015 and seven this year. These include five of Spain’s Top 10 Spanish B.O. releases so far this year.

Telefonica Studios’ co-productions include Agustín Diaz-Yanes’ conquistador epic “Oro,” Carlos Saura’s dance film “Jota,” spy thriller “Smoke & Mirrors” and animated sequel “Tadeo Jones 2.”

Whether Telefonica will continue taking minority equity in so many movies is less clear. To date, Spain’s broadcast networks were obliged by law to invest 3% of annual revenues in Spanish film production. New film regs will “significantly” reduce Telefonica’s commitment via IPTV service Movistar TV, though they don’t have as much of an affect on Canal Plus’ quota obligation as a DTH service, says Arias-Salgado.

“If we decide to continue producing films we will focus on big Spanish directors and new talent. As with original series we would like these films to be exclusive and unique to our offer, including exclusive first window for Movistar Plus,” Corral adds.

In January, Movistar Plus made waves by confirming it will fully finance a slew of premium TV series, aimed for both domestic auds and export. Currently, it has nearly 20 in development and plans to put into production “at least eight series a year, though we’d like to get to 10,” Corral says. Half will be comedic half-hours, the rest one-hour dramas, including one high-end international co-production.

Telefonica Studios co-produced Kike Maillo’s action thriller “Toro,” one of Spain’s biggest B.O. hits of the year so far.

Telefonica has already driven up its pay TV subs in Spain from 730,000 in March 2014 to 3.7 million in March 2016 by bundling Movistar Plus’ Yomvi VOD service in triple- and quad-play telephony-Internet offers.

Forced by Spain’s anti-trust authorities to offer purchased premium soccer and first-run Hollywood movies to rivals, Telefonica has all the more reason to drive into original production, which it can air in exclusivity.

So far, Movistar Plus has turned to Spain’s film industry to power its first premium TV dramas. The first into production, “Shame,” is produced by Enrique Lopez Lavigne at Apaches, the company behind Juan Antonio Bayona’s feature “The Impossible,” which grossed over $180 million worldwide.

Spain’s last three Goya best picture winners are all on board for projects as well. Skedded to shoot by year-end, “La Peste,” produced by Atipica, is a procedural-thriller set in a bustling 16th century Seville, from Alberto Rodriguez, whose film noir “Marshland” sold worldwide. David Trueba (“Living Is Easy With Eyes Closed”) is writing a multi-generation relationship dramedy and Cesc Gay (“Truman”) is penning a thriller.

Analysts see capturing high-value pay TV clients as a growth driver for Telefonica, while Spain’s film production sector is warming to the idea of series production.
“More than classic free-to-air series, which are about plot, Movistar Plus is looking for character-driven series — far more interesting for directors, writers and producers,” says producer Juan Gordon.

“Movistar’s arrival is helping to boost the production sector, allowing producers to develop projects that otherwise they’d never have been able to take on,” says “La Peste” producer Jose Antonio Felez.

Most screenwriters have traditionally written on spec, but Telefonica invests in screenplays and development.

While Movistar Plus cannot compete with Netflix on the scale of its original productions, it can on volume. By March, Netflix’s total Spanish service catalog (movies and TV series) was 5.2% Spanish origin content, while the Yomvi SVOD service catalog was 17.5% Spanish, per Ampere Analysis’ Ed Border.

“I can’t believe that these [U.S. OTT] services’ production plans for Spain equal ours,” Corral says.

As Mod Producciones’ Fernando Bovaira, producer of Alejandro Gonzalez Iñarritu’s “Biutiful,” says, “It doesn’t make much sense this century to talk about [pure play] film companies.”

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