European Public Broadcasters' Crisis: German Scandals and Cutbacks

Germany's public broadcast networks have been strong backers of European features, such as Michael Haneke's Oscar-winning "Amour."

In an ongoing series on the crisis at Europe's public broadcast networks, THR looks at the corruption and mismanagement plaguing Germany's state-backed networks ARD and ZDF.

COLOGNE – Public broadcasters across Europe have been hit by the continuing economic crisis on the continent and austerity-minded governments cutting their tax-funded budgets.

That's been the case in Spain, France, Italy and, most dramatically, in Greece.

In Germany, it's a different story. Here, the country's two national public networks ARD and ZDF, along with regional public operators, can't point to macroeconomic problems (Germany's economy is, and remains, strong) or a belt-tightening government. In Germany, all the problems are homemade.

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A series of scandals and chronic mismanagement at Germany's public networks have led to a noticeable drop in the number of films, both U.S. and German, they acquire for broadcast.

The most dramatic of the scandals that have rocked Germany's state-backed channels involved a former executive at Kika, the kids channel jointly run by ARD and ZDF. The executive stole millions from the channel to finance a gambling addiction. It ended with a six-year prison sentence for the exec and a $1 million annual budget cut for Kika.

The most significant German crisis for Hollywood originated at ARD -- specifically its commercial arm, Degeto -- which both acquires feature films for the channel and co-finances projects itself. Financial mismanagement, such as overspending on in-house productions, led to a moratorium for Degeto on new acquisitions through 2014.

"ARD was really the primary [German] buyer of drama features outside the action genre, and now they are out of the market completely," says Lisa Wilson of U.S. sales and production group The Solution.

"There are far fewer feature film slots, and the few left are reserved for commercial, mainstream fare," agrees Helge Sasse, head of Berlin-based distributor Senator, a major buyer of indie U.S. features for the German market.

Germany's public broadcast networks have been a key financier of recent European features, such as Michael Haneke's Oscar-winning Amour and Hannah Arendt from Margarethe von Trotta. But they have also slashed their budgets for German and European productions, alarming the local industry.

ARD has reduced the number of German films it shows in primetime, arguing there are few local titles that can attract the ratings demanded of Germany's leading public broadcaster. It is a similar story at regional public channels WDR and BR, also major financiers for German film.

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Around 60 percent of all German features rely on TV backing to complete their budgets, so the impact of the cuts will be broad and deep.

The German association of television and film producers has called on local broadcasters to show a clear commitment to German film by installing regular primetime slots for national feature films and ensuring the continued financing of local-language titles.

But compared with the crises faced by their southern neighbors, Germany's problems seem both temporary and manageable.

While sellers of independent films are feeling the pinch, ARD and ZDF continue to shell out for big mainstream titles. Herbert Kloiber's Tele-Munchen Group recently signed a major package deal with ZDF for the MGM catalog, which included all 23 James Bond films, including recent blockbuster Skyfall.

Overall, Germany remains by far the biggest buyer of feature films for TV in Europe, accounting for nearly a quarter of the total market.

Despite their problems, Germany's public broadcasters continue to make up a big portion of that. And with their budgets actually increasing -- the combined spending power of ARD and ZDF will top $10.5 billion (€8 billion) this year -- many expect German public broadcasters to bounce back from their current crisis and return to their big-spending ways of the past.