How European Public Broadcasters' Cash Crunch Affects Hollywood

Greek State Television ERT Building Protest 2013 H

The fate of Greek's ERT is still uncertain, while state-backed networks across Europe are slashing budgets and cutting back on Hollywood fare.

Athens is a long way from Hollywood, so when the cash-strapped Greek government decided to shut down its national public broadcaster, the Hellenic Broadcasting Corporation or ERT, it sparked huge local protests, while the news barely registered in Tinseltown. However, anyone doing business in Europe – and that includes all the studios – should pay attention given the ripple effects.

While the Greek crisis is extreme – no European democracy before has ever shut down its public broadcaster, across the continent, the ongoing economic crisis is pushing public broadcasters to tighten their belts. More often than not, that means shifting spending from U.S. movies to local news or home-grown productions. Since European public broadcasters are major buyers of U.S. dramas – particularly high-end, or non-tentpole, fare – when they cut their budgets, it is Hollywood that feels the pinch.

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The situation at ERT is still uncertain. A Greek court earlier this week ordered the government to allow the public broadcaster back on air while the coalition headed by Prime Minister Antonis Samaras finalizes details of a restructuring program that will see the country relaunch ERT in a smaller, leaner form. Samaras is so far standing firm on his decision to pull the plug on the network, saying it was necessary as a cost-cutting measure to meet austerity targets set by Greek's European and international creditors.

In Spain, after Greece one of the hardest hit Euro economies, public broadcaster RTVE has sliced nearly $30 million out of its already strained annual budget, putting the future of its program deals with Universal, Sony and Paramount in doubt. RTVE's deal for half of Universal's first-run and library films expires this month. The network is believed to be negotiating sponsorship deals to cover part of the cost of its Sony agreement for new and library films. Meanwhile, the network's Paramount deal, so far at least, does not appear under threat.

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In France, the country's new austerity plans cut some $260 million in funding for France Television - reductions that come on top of a projected $88 million shortfall in advertising for French channels this year. The result? French public broadcast networks are trying to renegotiate programming contracts with U.S. sellers, as well as looking to cut back on pricey sports programming, such as the Tour de France, replacing costly feature films with cheaper options, such as local-language game and talk shows.

Italy's RAI network was hard hit in 2011-2012 by the country's economic crisis and even issued a moratorium on buying new content last year. RAI has apparently hit bottom after shedding staff and rescinding the acquisitions moratorium. In Cannes this year, it even had a (small) acquisitions budget. But the days of wine and roses are long gone.

Even in Germany, Europe's economic powerhouse that has so far been spared any austerity measures, acquisition budgets have been cut. Home-grown problems at ARD/Degeto, Germany's main public broadcast buyer, have forced a temporary moratorium on major licensing deals. 

As Europe's economic crisis continues, tax revenues, the basis for public broadcast funding, could dwindle further, according to observers.

“It's clear cuts are coming at most public broadcasters in Europe - whether its now or in a year's time,” says one industry analyst. “Politically, it is easier [for a publicly-funded broadcaster] to drop expensive imported Hollywood content than to fire people.”

Pamela Rolfe in Madrid, Rhonda Richford in Paris and Eric J. Lyman in Rome contributed to this report.