Shine's Murdoch has indie warning

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LONDON -- Studios and networks face losing a significant chunk of their international distribution revenue to independents, Shine CEO Elisabeth Murdoch warned Wednesday. The former British Sky Broadcasting executive and elder daughter of News Corp. CEO Rupert Murdoch also urged U.K. legislators to embrace product placement as "a very powerful source of new money for U.K. production."

Murdoch, whose independent production shingle Shine is close to completing the acquisition of international format hit factory Reveille Prods., said that talented reality producers will take control of their own rights operations and exploit them more effectively than the studios.

"The majors are struggling to prove their value to increasingly strong reality producers, who are turning to different independent distribution options," she said, speaking at the Broadcast Media Summit. "If strong creative people don't get paid or are undervalued, they will go elsewhere."

"The U.S. is going through a period of change," Murdoch said in a question and answer session after her speech. "Some of this is at the heart of the writers strike, I have to say."

Murdoch said the deal to acquire Reveille will likely be completed next month, giving Shine, the U.K.'s fourth-largest independent production company after just seven years in operation, a strong position as a global producer-distributor.

Murdoch said that Shine product "where not otherwise obliged" will be distributed under the new Reveille Shine International banner. Reveille currently distributes such shows as "American Gladiators" and formats from Mark Burnett Prods. including "Are You Smarter than A Fifth Grader?"

Sony Pictures Television International, a minority shareholder in Shine, currently acts as Shine's international distributor for key drama shows.

Citing the example of the U.K. market, where independent producers have become powerful players following the passing of legislation that banned broadcasters from taking rights in exchange for commissions, Murdoch said that the same issue was "coming home to roost" in the U.S., where format producers routinely give up control of their rights at the point of commission.

"We need to consider our distribution management carefully and ask if it is it right or sage to sell all of our future earnings away in return for short-term advances, never to see any further returns," she said.

Murdoch added that non-scripted and reality formats differ from drama because they do not require deficit financing, and said that leading producers were increasingly able to call their own shots.

"It's all about leverage in the market place," she said. "Mark Burnett is able to take his formats and have Reveille distribute them because if a network wants to work with him and have shows from him he will have certain demands."

In order to build thriving production businesses at a time when advertisers are moving spending online and network budgets are coming under attack, Murdoch said that producers "must be allowed to deepen our relationships with advertisers" and called on the U.K. government to allow product placement on U.K. screens by January 2009.

"This revenue (source) is set to double in the U.S by 2011," she said. "Those who say that producers will end up working for advertisers are once again underestimating the power of audiences. Anything that damages the real integrity of programming simply won't last very well."
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