Russian Networks to Cut Content Acquisition by 40 Percent in 2015

Moscow Russia Aerial View - H 2013
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Moscow Russia Aerial View - H 2013

Production companies may be offered more favorable conditions, though.

Against the backdrop of a sweeping economic crisis, Russian networks are to cut content acquisition by 40 percent in 2015. However, they may offer production companies more favorable conditions in a bid to compensate for the decline in acquisitions.

Russia's association of television and movie producers has issued a memorandum based on its members' meeting with officials from the country's largest free-to-air federal networks, in which the 40 percent figure was announced for the first time.

The projected decline in acquisitions is primarily triggered by an overall economic meltdown in Russia. The country's economy is expected to shrink by three percent in 2015, according to the Russian government, while less conservative forecasts put a possible decline at up to five percent.

The TV advertisement industry is likely to decline by 20 to 30 percent this year, compared with 2014, said Goldman Sachs.

However, networks are not going to entirely pass their problems onto content producers. They are considering more favorable conditions for production companies, under which the latter would be able to retain some rights to the content, such as online distribution rights and international rights, as opposed to the current situation when networks obtain all the rights to content they acquire.

"When a production company retains a considerable part of the rights, they will be more interested in the quality of the product and may be okay with initially only breaking-even or even incurring losses," Vladislav Ryashin, general producer of the production company Star Media, was quoted as saying by the business daily Vedomosti. "So, production companies will have an incentive to make content that generates profits in the longer term."

Earlier, the producers' association said it will introduce a salary cap for TV actors.