Movistar Series Galvanizes U.S. TV Buys in Spain

Multi-title deals with CBS Studios Intl. and HBO will not be the last as parent Telefonica drives into content

Movistar Series Galvanizes U.S. TV Buys

MADRID –Giant Spanish telco Telefonica’s pay TV operator Movistar TV is making one of Spain’s highest-profile drives into U.S. TV content in the last 20 years, creaming dozens of high-quality TV series for its nre SVOD service Movistar Series.

Latest announced deals take in CBS, HBOSony Pictures TV and ABC. More will follow. Launching Dec. 10, MS currently offers 45 series. It aims to raise that number to 70 at least.

Telefonica launched a pay TV operator, IPTV service Imagenio, in Madrid and Barcelona in 2004. But it traditionally played second fiddle to the dominant pricey premium pay TV service Canal Plus Spain.

That has now changed. From 2013, Telefonica begun to load up on premium contents: the Roland Garros tennis tourney, Formula One, the Road Racing World Championship and then bought Canal Plus Spain outright in a $1.0 billion May 2014 deal which still has to be cleared by Spain’s anti-trust authorities.

As it rolls out its fiber optic networks, Offering premium content at eye-catchingly accessible prices – Movistar Series costs a €7 ($7.5) uptick on cell-fixed telephony-Internet packages starting at €60 ($65) per month – Telefonica is aiming to drive up quad-play subs by the millions, using pay TV as a hook in Spain, which has comparatively low pay TV penetration: Just 22% of households.

It is indeed not just a TV offer but a lifestyle package, combing two factors highly valued by Spaniards: High-speed internet, near immediate access to must-see shows, without the hassle of piracy.

The time is right, Telefonica president Cesar Alierta suggested presenting full-year 2014 results to analysts Feb. 25. In 2014, average revenue/access returned to growth (0.3%) for the first time in many years, “demonstrating the demand for high quality services and speed connectivity,” he pointed out.

Over the last two years, Telefonica has sought to focus on three core “macro-markets,” as Alierta put it: Germany, Brazil and Spain: Spain emerged late summer 2013 from recession and saw 1.4% GDP growth 2014 as consumer spending rebounded, exceeding analysts’ expectations.

In Spain, “trends look positive, increasing the appetite for higher value services,” Alierta argued. Telefonica’s infrastructure in fiber, TV, and Long Term Evolution (high-speed mobile data communication( “will continue to increase our differentiation with rivals,” he added.

Also, Movistar Series’ lift-off comes after various industry sources report that Netflix is negotiating studio deals to launch in Spain late summer/fall 2015. It may only be a matter of time before Vodafone-ONO drives further into content to pump up up-selling opportunities in Spain where it has been migrating TV clients as quickly as possible to TiVo, bought by 57% of its 784,000 TV subs year-end 2014.

In such a context, Movistar Series has fast been zeroing in on some of the best U.S. series money can buy. Maybe Movistar Series should be re-monikered Moviestar Series:

*In its biggest multi-title deal to date, eight CBS Studios International-sold series, some already playing on MS. Pact takes in infidelity drama ”The Affair,” a critics’ fave, which launched Jan. 3 on Movistar Series, and Victorian horror drama “Penny Dreadful,” created by John Logan, with Sam Mendes (“Skyfall”) as a producer, both from Showtime, as well as CBS political drama “Madam Secretary,” with Tea Leoni, created by Barbara Hall (“Joan of Arcadia”). Accord also includes CBS’ small-town sci-fi drama “Under the Dome,” from Amblin Ent., “The Good Wife,” “Twin Peaks,” “The Medium” and Showtime’s “Ray Donovan”;

*Graphic novel-sourced “Powers,” a homicide division series super-heroes and super-villains, helmed by David Slade, from Sony Pictures Television, with Sharlto Copley and Susan Heyward;

*ABC-broadcast crime drama “American Crime,” created by John Ridley (“12 Years a Slave”), with Felicity Huffman and Timothy Hutton, launched March 6;

*Early seasons of three signature HBO series – “Game of Thrones,” ”Boardwalk Empire” and “Girls” –and all “In Treatment.”

Further early Movistar Star deals take in AMC “Breaking Bad” spin-off “Better Call Saul,” another critically lauded skein, which launched Feb. 9; Starz’s historical fantasy “Outlander” and Amazon TV’s cult drama “Transparent,” plus complete series of cop drama “Boss,” “Weeds” and “Lost” and all seasons to date of “Mad Men,” “Downton Abbey,” “Grey’s Anatomy” and ABC’s Kerry Washington-starrer “Scandal.”

Deals on new series are exclusive. The SVOD service is no linear channel catch-up. “With first-run series, it’s an advantage to have total exclusivity,” said Telefonica head of content Domingo Corral.

He added: “The most important thing for viewing series isn’t having a linear channel but being able to see them when you want, that they’re complete and aired at the same time as in the U.S.”

“American Crime,” for instance, bowed March 5 on ABC, March 6 on Movistar Series. Most series are U.S. premium or basic cable plays. Acquisitions are made on the basis of “solid, good screenplays and casts, absolute quality, not large audiences,” said Corral.

That said, Movistar Series has also bought ABC-aired “American Crime”: “It’s a solid screenplay, character-driven,” he added.

With little opposition from Spanish broadcast networks Mediaset España and Atresmedia, which focus on increasingly select event Spanish drama for their core commercial channel, Movistar Series as well as Canal Plus Spain’s Yombi have been able to pick up some of the most talked-up new series out. Of CBS Studios International titles, for instance, “The Affair” was a Golden Globe drama series winner, CBS’ “The Dome” last summer’s top U.S. scripted series, with 11 million viewers. “Madam Secretary” proved one of the 2014-15 season’s biggest newbie hits. “Penny Dreadful” has the added viewer incentive in Spain of featuring Juan Antonio Bayona’s first work – its opening two segs – after “The Impossible.”

The last time a company made so many high-profile U.S. acquisition announcements was from 1995 when, as managing director of Sogecable, Ele Juarez loaded up on studio output deals to feed Canal Satelite Digital (CSD), Spain’s first direct-to-home digital service in Spain.

But Sogecable pacts were film/TV output deals; Movistar Series buys single titles or strikes multi-title deals. “With so many high-quality series coming on to the market, output deals may not be necessary,” Corral commented.

Movistar Series has announced its first two original series productions, by Spain’s 2015 and 2014 Goya winners: a relationship dramedy from David Trueba (“Living Is Easy With Eyes Closed”), and a historical thriller from Alberto Rodriguez (“Marshlands”).

The launch of Movistar Series is part of a far more ample bet on content at Movistar TV, and indeed Telefonica in Brazil. In a deal with Viacom Intl. Media Networks (VICM), announced Feb. 18, Movistar TV added MTV and Nick Jr. to its basic service and will offer upgraded HD versions of broadcast network channels Antena 3 and La Sexta.

On Feb. 19, Telefonica confirmed it had scored 2015-16 rights to Barcelona soccer club La Liga matches, paying €140 million ($150.5 million) and a further €40 million ($43.0 million) in sponsorship.

Adding a dramatic 1.2 million customers over 2014, Movistar TV clients now stand at 1.9 million, making it Spain’s pay TV market leader with a 35% share. But it will not stop there.

Telefonica’s aim is to move from selling minutes to selling Gigabytes aiming for broadband and services over connectivity to rep 33% and 14% of its business mix in 2016, vs. 28% and 10% in 2014, Telefonica execs said at its 2014 results presentation.

Transforming its portfolio, and pumping up larger local scale, Telefonica would like Spain, Brazil and Germany to rep two-thirds of revenue next year, as opposed to 57% in 2014, execs added, predicting Spanish revenues will return to positive growth some time over 2015.

Airing in select free-to-air primetime slots in Spain in the 1990s, over the last 10 years U.S. series have been bought for new niche DTT channels. They may well become the near-exclusive lure of Spanish pay TV, and energetic SVOD services, in the none too distant future.