Economic woes changing MIP model

Industry 'revolution' could lead to new opportunities

LONDON -- Amid plunging advertising revenue, pink slips by the thousands and an ever-worsening economic outlook, it's little wonder that buyers and sellers heading to MIPTV at month's end expect to do business in a radically changed world.

"The credit crunch has forced a revolution in the industry," said James Burstall, CEO of London-based Leopard Films. "The establishment is breaking up, fat cats are being thrown out of their ivory towers. We are having to rethink how we restructure television companies and how we make programming."

Still, he contends that however painful the changes might be, they also promise huge creative and commercial opportunities.

Longer runs of returnable series and cleverly structured commissions can offer broadcasters a better economic equation, Burstall said, citing Leopard's "Missing Live," a 20-part live interactive daytime show on BBC1 that tracks missing persons. It was coupled with the five-part procedural drama series "Missing," which explored issues raised by the factual show in a fictional way.

For high-end dramas, co-productions and tax breaks likely will become part of the landscape, he said, offering the John Hurt starrer "An Englishman in New York" as an example. The co-production with Logo Channel picks up where the iconic Quentin Crisp biopic "The Naked Civil Servant" left off, and partners used tax breaks to film in New York.

Similarly, Germany's Bavaria Film tapped European channels WDR, ARTE and ORF as well as German film subsidies to bankroll the period epic "Buddenbrooks," based on Thomas Mann's classic novel and starring Armin Mueller-Stahl.

"This is a permanent change," Burstall said. "People are going to find they can't pay the bills by working the way they've always worked. It is a huge creative challenge but very exciting. Success needs clever people executing clever ideas and working as a team."

The credit crunch and the high cost of production mean that strong drama is one genre that will command a premium at the market, DCD Rights CEO Nicky Davies Williams said.

"Less production means more acquisitions," she said. "Drama is more difficult to fund because a lot less is being made. There is a lot of factual about, but not all of it is good."

As financing becomes tighter, DCD Rights hopes to step in with its new £10 million ($14 million) rights fund and will look to fund deficits and put up advances in exchange for key international rights across a range of genres.

Distributors likely will to have to work their product harder to make the same types of returns, which means shorter license periods if fees start to drop, said Davies Williams, who remains confident business will get done despite the tough times.

"Everyone needs a bit of glitter for their schedules," she said. "You can't just keep on showing repeats."

That's precisely the message from U.S. international TV studio executives, who say that it's still far more cost effective for foreign broadcasters to acquire top-notch dramas that look like mini movies rather than produce their own -- no matter how creative the deal-making gets.

And that's a key factor for the studios that depend on international income to make the swelling budgets for scripted TV work. Foreign sales input varies but at one point ranged from 50%-70% of overall budget.

"Irrespective of the percentages, the revenue we generate from international is a very important part of the overall financing under which content gets made," said Armando Nunez, president of CBS Paramount Television. "It's very important to the overall studio model."

As with foreign broadcast operations, those basic production models constantly are being re-examined in the U.S. for new ways of doing business, said Marion Edwards, president of international television at 20th Century Fox Television Distribution. "Producers are looking at a variety of different models that go beyond just what (international) distribution brings in. For example, (the upcoming Fox drama) 'Mental' was financed out of international."

Another example of creative production financing in the U.S. using international monetary input from preproduction through completion came with the upcoming NBC drama "The Listener," which was produced with NBC, Fox International and Shaftesbury Films in Canada. It had its international launch on the Fox International channels two weeks ago.

But these examples remain the exception rather than the rule, and production costs continue to rise at home amid sliding ad revenue and audience fragmentation. So while the studios expect to hear demands for wide-ranging changes in the deals surrounding sales overseas, they have little wiggle room to give foreign buyers what they ask for. Asked if he would consider altering significantly any existing deals with foreign broadcasters or discussing radical new ways of doing business overseas, one studio international president said succinctly, "No!"

Steve Brennan in Los Angeles contributed to this report.