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PERSPECTIVE

Adjusting cable

By Clive Whittingham 26-01-2018

This month’s RealScreen Summit in Washington marks a year since John Ford, general manager of the Non-Fiction Producers’ Association, painted a bleak future for the factual production business in the US.

Declines in cable subscriptions, skinny bundling and lower ad rates had seen cablenets erode the 10% profit margin in production budgets to the point of sending some companies to the wall, he said, and something had to give.

Well, a year on and cable subscriptions are still declining, skinny bundles are getting skinnier and ad dollars are still heading elsewhere. Not only that, but the likes of Netflix and Apple are throwing big money and/or industry names into their content game, while 21st Century Fox is selling its stake in Hulu to the mighty Disney.

Competition for eyeballs has never been stiffer and the quality of content – and the money spent on it – has never been higher. The imperative is for US cable to find a way to do more with less just to keep skin in the game, and you don’t do that by squeezing the producers who come up with the ideas in the first place.

Hammering their already slim profit margins diminishes the money they have to develop your next big, returnable series.

Dan Goodman

Dan Goodman

At the time of Ford’s doomsday scenario, Critical Content CEO Tom Forman proposed a new system whereby producers were rewarded handsomely for success but punished for shows that didn’t work out. He did admit that his company was well financed and that his own chief financial officer would probably baulk at the idea.

There is a far simpler way to start solving this quandary, one that has been working well in the UK and seen production companies grow, succeed and proliferate since the UK Terms of Trade were passed in 2003: leave programme rights with the producers, allowing them to sell back-end and deficit-finance their own projects.

This has never been the US way, particularly for the likes of Discovery and A+E Networks, which want the content they’ve commissioned and paid for to air on their channels around the world.

But if that content is inferior to the shows being shopped by streamers, what’s the point? A moneyed show you picked up in some territories for 30% of the budget is surely better than a mediocre one of your own in 192 territories.

And, it seems, the industry might finally agree.

We’re hearing from producers that cablenets are increasingly flexible about deal making. Dan Goodman, at Believe Entertainment, told me: “That pressure on the linear TV side is creating a totally new and very refreshing open-minded perspective on how content comes to market. We like to say ‘no deal too weird.’

Dawn McCarthy-Simpson

“There’s a real receptivity to do things differently so everybody wins. Sometimes that means us retaining international rights and only licensing domestic. It also sometimes means us assisting in brand sales and trying to bring brand integration and dollars into our projects.”

Dawn McCarthy-Simpson, director of international development at UK indies trade body Pact, adds: “Broadcasters will have to go down the deficit-financing route and trade with rights. They’ll have to give up something; you can’t squeeze the budget and keep all the rights.

“The last few deals I’ve heard about with British companies and Netflix have used a coproduction model. If even the likes of Netflix are saying they can’t sustain this big-budget programming and trading with rights, then everybody will have to come up with a different structure.”

Perhaps 2018 will be the year that power – and rights – start to trickle back to the US indie community.

today's correspondent

Clive Whittingham News editor C21Media

Clive Whittingham is news editor at C21 Media and also edits C21's Factual Weekly newsletter.

Prior to joining the company as senior reporter in 2011, he worked for several regional newspapers in the UK, including the Northants Evening Telegraph. He has also worked for The Daily Telegraph.