Broadcast Blues

Euro broadcasters are turning to radical new programming strategies to weather the storm

COLOGNE, Germany -- One of the cold comforts of globalization is that when it's bad at home, you can be sure it's bad everywhere.

That's certainly true of the European television business, where misery has plenty of company. Ad revenues are down across the continent, with some of the biggest territories -- Spain, Germany, France, the U.K. -- looking at double-digit drops for the first quarter. Add to that the one-two punch of digital fragmentation and the migration of advertising to online, not to mention the trends continuing apace regardless of the economic downturn, and you see why European broadcasters are returning to the three Rs: reduce, restructure, redundancies. Companies all around are tightening their belts, but strategies from London to Lisbon are as varied as the accents at a MIPTV opening-night bash.

While British channels, staring down the barrel of the worst TV ad climate in 20 years, are cutting back to the bone and desperately seeking new funding solutions, German and Italian networks have adopted a "same old, same old" strategy that might, in hindsight, look like fiddling while Rome and Munich burn. Far on the other side of the scale are CME Enterprises, the largest broadcaster in Central and Eastern Europe, and Scandinavian powerhouse Modern Time Group, both of which are confident -- despite the economic crisis -- that they will be able to restructure fast enough to maintain and expand in their respective territories.

One strategy everyone agrees on is multiplatforming. No longer content with a single terrestrial network, Euro broadcasters are pushing their programming onto new digital channels, posting it on the Internet on VOD and ad-backed services and making it available to download to mobile phones.

"Antena 3 is wherever the viewer is. That's our goal," says a spokesman for the Spanish commercial network, which has been following a multimedia strategy for years. "We offer streaming on cell phones through our agreement with Vodafone and we've premiered content on the Internet or mobile phones before the debut on TV, something that's been very successful."

Hans-Holger Albrecht, the president and CEO of MTG, sees the company's multichannel, multiterritory approach as the key to success in uncertain times.

"The market environment is considerably more challenging now ... due to the impact of the broad economic slowdown and credit crisis on media buying budgets and consumer behavior -- these factors are adversely impacting our businesses," Albrecht told investors last month after announcing another record year for profits and revenue at MTG. "But they do not change the long-term potential of the markets that we are operating in."

MTG has put its money where its mouth is, rolling out a new VOD service across Scandinavia.

While new revenue from VOD, Internet or mobile are nice, no one is pretending they can make up for the off-the-cliff plunge in bread-and-butter TV advertising.

A recent report by Screen Digest forecasts that the European market won't see "decent long-term growth" before 2011-12. By then, the report estimates, the European market will be worth 15% less than it was in 2007. So the pie is getting smaller even as multiple platforms are slicing it up into ever-smaller pieces.

Faced with that reality, broadcasters are being forced to explore radical new ideas.

Nowhere more than in the U.K., where the dire situation at both commercial giant ITV and publicly owned Channel 4 has led ITV executive chairman Michael Grade to float the nearly inconceivable concept of a three-way merger between ITV, Channel 4 and RTL-controlled Five, a mega-deal that would require U.K. regulators to tear up the country's antitrust rulebook.

Such a merger is highly unlikely but it illustrates the sense among Britain's top networks that new business models are desperately needed to ride out the storm.

At Channel 4, CEO Andy Duncan is seeking to meet its estimated €100 million ($140 million) a year deficit through a range of new partnerships with BBC Worldwide that could lead to joint program sales and licensing activities and shared digital costs.

At ITV, global head of production Lee Bartlett, a former Fox exec, says the channel has to start thinking more globally. In a business environment where the returns on drama investment are fraught with risk, the broadcaster, home to such shows as "X-Factor" and "Britain's Got Talent," is trying to capitalize on the ratings successes it has seen with nonscripted shows.

Bartlett recently has signed a range of exclusive deals with production companies including Simon Fuller's 19 Entertainment to produce and distribute what he hopes will be the next generation of global nonscripted formats.

"The idea is to put together our own hugely talented production capabilities alongside Simon's incredible expertise creating and selling worldwide hits, to produce a range of new successful programming that can work not only in their home country but internationally as well," Bartlett said at a recent lunch with journalists.

ITV this year announced a similar deal with Elisabeth Murdoch's Shine Prods.

"I am willing to work with anyone who will provide us with worldwide hits. All we need is a couple of worldwide hits to boost our balance sheet," Bartlett added. "It is not rocket science to figure that out. If we don't focus on that, it isn't going to happen."

ITV's shift toward lower-risk reality mirrors a development at Italy's Mediaset, which has been increasingly emphasizing nonscripted programming since the company's acquisition of reality giant Endemol in 2007. It's a similar story at Germany's No. 1 channel. RTL Television, which continues to make room on its schedule for reality shows such as "Raus aus den Schulden" and the upcoming "Hotel Inspector." Or at French giant TF1, which, having announced plans to cut $75 million from its budget this year, also is looking to more cost-effective reality programming, most recently with the new daily format "Hotel VIP" produced by Adventure Line Prods.

Another trend, more common among European public broadcasters, is a shift toward fewer U.S. acquisitions and more in-house production. Italian state broadcaster RAI has been following this tract for almost a year now. In France, a new advertising ban on public broadcasters has freed up more space on the programming grids of France 2 and 3 but they too will most likely shy away from U.S. programming to focus mostly on national fare thanks to a production budget of €375 million ($472 million) from the state.

But commercial broadcasters are also increasingly trying their hand at high-end drama. With splashy miniseries like "48 Hours," Spain's Antena 3 is finding an audience for a format that has traditionally been a hard sell in the territory. And CME Enterprises has announced plans to restructure its production setup in a bid to make it the largest production entity in Europe.

Even Canal Plus, which, as a subscription-based service, has emerged relatively unscathed from the collapse in ad sales, has been shying away from U.S. fare and choosing to invest more in homegrown fiction.

The Paris-based pay player recently struck a deal with France's Lagardere Entertainment and British indie Helion Pictures that is being watched closely by programrs looking for alternative production/financing models. The deal will see the three companies co-produce a new one-hour drama series, "The Borgias," with "Oz" creator Tom Fontana on board for the pilot.

So far, the European shift toward reality and homemade series hasn't significantly chiseled away at U.S. acquisitions, but that could come as budgets tighten. While Canal Plus, RTL, Pro7 and many of the other big players insist their buying strategy heading into MIPTV this year is unchanged, fiscal realities will force tough choices.

Given the cloudy forecasts for the near future, expect risk adverse behavior. Established hits -- the "Desperate Housewives," "CSI: Miamis" and "Law & Orders" -- will continue to sell. New U.S. titles will have a tougher time.

"I prefer old shows that work to new ones that don't," says CEO Nonce Paolini, echoing many European acquisitions execs on their way to the Croisette.

Mimi Turner in London, Rebecca Leffler in Paris, Pamela Rolfe in Madrid and Eric Lyman in Rome contributed to this report.