While the Euros cut back, Hollywood takes the wait-and-see approachAs such powerful Euro broadcasters as ProSieben and ITV -- big customers for American TV exports -- gamely try and find new ways to navigate the global economic crisis, the Hollywood studios by and large appear to be taking a wait-and-see approach to the crisis.
While most acknowledge that the cost of blue ribbon U.S. shows -- some of which have earned as much as $2 million per episode -- ultimately might be forced down, they also fear that the entire $7 billion-plus tab being paid by TV outlets worldwide for studio shows could soften significantly.
But nobody sees the sky falling just yet.
"People need programming," says Armando Nunez, president of CBS Paramount International Television. "I'm generalizing because it differs territory by territory. But it's more cost efficient to acquire content than to make drama on your own."
Nunez's reasoning -- and that of all the studios -- is that because of their global reach and potentially huge back-end syndication earnings, Hollywood giants can make quality dramas that look like mini-movies to the viewer. They can then sell them on to foreign broadcasters for far less than the broadcasters could afford to spend on their own high-end series.
But don't accuse Nunez, who is responsible for successfully exporting such major hits as the "CSI" franchise, of whistling past the graveyard just yet. "I am not being either cavalier or foolishly optimistic about the market," he says. "There are a lot of moving pieces right now in international, but I still go back to the point that a broadcaster cannot put color bars up on the air and still have ratings to sell to the advertiser. As a programmer you still have to do the same things you were doing a year ago and, yes maybe with a different budget, but you still have to program your network."
That theme is shared by Ben Pyne, president of Global Distribution at Disney Media Networks. "No one is immune from the current economic situation," he says. "Our clients are being fiscally responsible and more selective. However, we believe top series and content brands will cut through and remain in demand -- now more than ever, channels need proven hits."
Studio executives across the board hope that this logic bears out. The continued fiscal health of the international market is crucial to the studio production model, with income from foreign figures for around 50% of most TV production budgets.
Marion Edwards, president of international television at 20th Century Fox Television Distribution, says that in the face of declining ad revenue and fragmenting audiences, the continued pressure to spend more for better dramas that look like "little movies" is definitely a concern.
One thing is certain: There'll be no fire sale of U.S. shows to international broadcasters, despite their pleas of financial ruin. Nunez puts it bluntly: "We export a commodity and sometimes those (shows) are very successful and make a huge amount of money and that's the upside for the broadcaster. We don't go in there and say to the broadcaster we want to renegotiate because you are successful. Now the ad dollars are down for some of our clients but that is not to say they are still not making money or are not profitable."