Business slow but steady at MIPTV
EmptyCANNES -- Torrential rain over Cannes has mirrored an unsettled marketplace as execs at MIPTV focused on cutting their cost base, re-engineering production models and reshaping the genre mix to keep the television business afloat.
As the market began winding down Wednesday, attendees said business has been slow but steady despite overall delegate numbers being down about 15% at about 11,500, according to Reed Midem organizers.
"The market hasn't been as bad as everyone thought it would be, there is still a core of programming that needs to be bought," said Gary Marenzi, MGM president of worldwide television. Marenzi added that while markets like Hungary and Russia are "hurting," other Eastern European markets are doing better and that Australia, Italy and India are proving to be a growth markets.
"In a macro sense it does look like everything is down, but to get an accurate picture you have to look market to market," he said.
Marenzi said that where tough times call for it, MGM is offering "short term relief in exchange for long-term commitment," but said that such incidences were still rare. "If you're in a market where the currency is down and the advertising market is shattered then yes, you are going to pay less and buy less, but that is only happening in a few places," he said.
Said CBS Paramount International Television president Armando Nunez, "Some buyers are trying to put pressure on us to lower prices. Well, they can try. But we aren't seeing any drop in sales. The cuts, at the moment at least, are coming from local production."
With ad revenue slumping at least through the end of the year, cuts in production spending have come to the fore, and producers are looking strategically at their processes in a bid to find savings.
"It's not about doing the production differently as much as it is about taking costs out of production management," said Lee Bartlett, managing director of ITV Global, who said that ITV's production division has been able to eliminate 10%-15% of production costs of by consolidating its back office and reducing paperwork.
"If you structure is right, you can save a lot of money. The successful companies of the future will have the lowest possible permanent overhead," he said, but warns that cost-cutting cannot continue indefinitely. "If this kind of pressure continues it will start to come off the screen."
In the current economic climate, currency fluctuations are hitting countries such as Korea, Russia and the U.K. especially hard, and pay TV platforms are seeing the costs of channels and movie packages escalate. Operators are looking to recoup losses by cutting back their third-party channel costs, according to Paul Robinson, global managing director of international kids channel KidsCo, part-owned by NBC Universal. Robinson says that lower-cost options like KidsCo were proving more cost-effective to platform operators.
"Currencies like the Korean won are down 40%, (so) if your deal is in dollars then you are looking at a big increase in costs. All platforms are looking to reduce third-party costs," he said, citing digital playout as another big cost-saver.
Martin Sorrell, chief executive of global advertising agency WPP Group, told the industry earlier in the week that it must wake up to very changed times. "Production cost has got out of control and it will have to come down," he said, during a blunt keynote Tuesday.
"If you're in the car industry and the cost of steel keeps going up, you'd either have to use less of it or find an alternative to make your cars," he said. "It will be the same with the TV business. There have to be new models."
One trend noticeable at MIPTV was the emerging power of producers and financers from developing economies.
FremantleMedia Enterprises set up a joint venture with China's Asian Union to distribute and co-produce nonfiction programming for the Chinese market; Germany's ZDF joined forces with DQ Entertainment from India on a $12 million animated series of Rudyard Kipling's "The Jungle Book" and the U.K.'s 3Line Prods. hooked up with Abu Dhabi's Twofour54 to co-produce preschool series "Driver Dan's Story Train," in both English and Arabic versions.
"We are going to see the growth and increasing power of Asia, Latin America, Africa and Central and Eastern Europe in all areas, including content," Sorrell said. "It is incredibly arrogant to think that among the billions of people in these countries there won't be a similar number of creative talents that can produce incredible, successful content."