Foreign Aid

Foreign Aid/Building a television show is fast becoming an unavoidably international effort.

by Susan Hornik



With escalating production costs and the levelling off of license fees from the U.S. networks, the international television marketplace is now an inherent component in financing production. At NATPE '98, domestic and overseas programmers -- who have learned that the key to success is partnership -- will come together to discuss the changing face of co-production and co-financing opportunities. And more than ever, they are coming to the market not as customers but as partners.

"The true co-production has really only been born recently, out of financial need," says Bruce Johansen, chairman of NATPE. "Over the last 18 months, there has been a real shift in international co-productions. The American programmers are now saying to their overseas partners, 'We need your money and your creative input. Let's do this together.'"

"The big trend now is for co-financing," agrees Jim McNamara, president of Universal Television Enterprises, "as opposed to the old co-production where the person says, 'OK, I will put up part of the money, but you have to use one of my actors, my set designer, etc.' Those days tend to be over. Now it is really about the money."

"There is more of a willingness to hear the partners' needs. I remember a time when listening was not even an issue," observes Rola Zayed, senior vp of series and international co-productions for ProSieben Media. "When you co-produce, you are reducing your risk and bringing in elements that will make your audience and your networks' needs more viable and realistic. This is a new business for us. Our first point is to go toward the partners that we are traditionally used to, and then we will see what happens in the future."

What was very much a co-development business when it started, where everyone was in the business of compromising creatively in order to meet everyone's needs, has become much more sophisticated.

"It is now, first and foremost, a co-financing business. Even though there is development input from all the partners, there is very clearly one company that takes the creative leadership of a property," says Charles Falzon, co-chairman of Gullane Pictures, and CEO of Catalyst Entertainment. "The international market is more adaptable to dividing up the work according to the project and not jeopardizing the creative needs. That kind of sophistication, combined with financing deals, has made co-productions much less risky than in the past."

Still, with the creative and economic needs of overseas broadcasters, there are daunting hurdles in international production agreements. Companies are often unwilling to put up money without being intimately involved in the production.

"It's very hard to marry egos together and keep the most important goal in mind which is to produce a good program on a budget on time," says Catherine Malatesta, senior vp of Warner Bros. International Television Production. "Many times, when you put too many personalities and cultures together, the end result becomes the least important aspect of it." Malatesta spends an a lot of time running interference and relationship-building. "And making sure everybody has their input and comfort zones."

"Co-production is your financing mechanism of last resort because it is very difficult to do," says Marla Ginsburg, executive producer and head of international co-productions at Gaumont TV, who has stitched together "Highlander" amid a myriad of international entities. "It's very hard to get people who see the world

differently -- who have cultural bias, language differences, not to mention the time difference -- to work together. When you are dealing with co-financing, you are maximizing the revenues available out of any single market and in order to get those higher license fees or subsidies, tax shelters etc., you have got to make certain creative concessions that you might not otherwise do if you were working purely a domestic product. But you do it, so that you can create something that has hopefully a greater upside and a very strong library value."

"For broadcasters considering co-production, what will work best for them is if they can find a property that will have the appearance of a local production," says Stan Golden, president of Saban International, which maintains co-production arrangements with a range of European companies, including Germany's ARD. "Co-production serves a balance between homegrown and acquired product. With the caveat being it is less expensive for a European broadcaster to co-produce than to finance completely home- grown product."

"When you enter into a co-production arrangement, one of the things you are faced with is how you keep a U.S. end user who brings substantial financing in the boat, but at the same time accommodate the very valid requirements of a significantly financing foreign end user," says Todd Leavitt, chairman of Alliance Television Group.

Challenges like these are magnified by the reality that the best primetime slots for programming are still taken mostly by local productions.

"There are the issues of quotas now in Italy that are rearing their head just like they already are in France. We have to really fight to get our shows positioned properly," observes Gary Marenzi, president of Paramount Intl. Television. "We generally get our shows sold, but getting them in the prime viewership time periods, so that they can stay on the air and be successful, is a tougher and tougher battle because of all the local productions being done. There is expansion with digital platforms, but the kind of money that the digital operators can pay for non-pay TV window product is minimal at this stage until the platforms mature." Like many of their competitors, Paramount's strategy is "to get closer to the customer and produce more local projects as well as try to do the best job we can in positioning our U.S. made product overseas."

"It is our hope that in the next year to two years we actually get overseas broadcasters interested enough in our programming so that they come in as a financial partner versus a buyer," says Rob Kenneally, president, Rysher Entertainment, which is extending its relationship with Gaumont -- begun with "Highlander" -- to the show's spin-off, "Raven." "We are also evaluating our ability to find a strategic partner right now that gives us leverage. We are sort of the last major independent. Our ability to leverage the pricing of our programming internationally and even domestically is affected by the fact that we are not one of these vertically-integrated corporations. In the coming months, we are probably going to find a way to put one foot in the door of one of these companies that brings us value."

According to Jim Griffiths, president of international television distribution, MGM Networks, the company is expanding their co-production initiative, and will be announcing an agreement at NATPE '98. "We are always looking for interesting opportunities. But with the co-production arena so deal-driven, we have to be comfortable with the creative elements, otherwise the show falls apart. If we can strike the right deal that makes sense for us, both from a financing and creative point of view, we will do it, but it must be right."

Seeing the potential in European partnerships will send a number of independent producers into the throes of co-production activity, but some wonder at what cost.

"There is an intense need for independent players to forge into the market, but many lack experience in dealing with tremendous creative, fiscal, legal and regulatory hurdles," observes Janet Scardino, senior vp of international sales and co-production for animation house Sunbow Entertainment, whose recent offerings include "Brothers Flub." Scardino suspects that "there will be a bit of a learning curve that is going to result in much more careful selection of co-production partners in the future," to selectively find the right partner rather than saying, "'Oh great, I found someone who will put up 50% of the money, let's go.'"

Although the U.S. market remains a tough nut to crack for any European fiction proposal, the documentary genre -- long a staple of public television and traditionally a less expensive product that doesn't bring the "foreign-ness" of other genres -- remains one exception that has generated co-production activity in advance of work in other genres.

"The profusion of new and hungry niche channels on U.S. cable, coupled with the BBC's ambitious plans for a BBC-branded channel in cooperation with Discovery, has created a willingness among Ameri-can companies to at least look at what else is being produced out there, beyond the English-speaking world," says Effi Mueller, director of international programming for ZDF Enterprises. "And apparently they like what they see." ZDF was able to interest a number of U.S. cable channels in coming in as co-producers/co-financers on a number of their series, such as "Legends of History," "Terra X," "When the Century

Was Young" and "Hitler's Henchmen" among others.

"Being part of a multinational group, we not only know the needs of the European broadcasters from several territories but also the key factors for success of American

programs," says Heinz Thym, head of international acquisitions and sales, CLT-UFA International. "We are therefore in an ideal position to bring together the different market players. Our new project 'Largo Winch,' co-developed with Mediatoon, is a good example of how to use these synergies; although this one-hour action series will be mainly shot in Europe with the participation of major European broadcasters, the series will have a very American look."

Eastern Europe, too, wants to get into the international co-production game.

"My hope is that people will find Central and Eastern Europe to be the next emerging market," says Arthur Goldblatt, managing director of Central European Media Enterprises (CEME). With "trained professionals that do not have the same commerical sense but are gaining that experience," CEME is creating programming for their own stations. "I want to co-produce shows that would be suitable for broadcasters outside of our territory."The last few years have seen more U.S. companies coming to Europe not only for co-financing, but also to tap into the European talent pool that exists, according to Antoni D'Ocon, president, D'Ocon Films Prods. The boom in the number of projects has the company in negotiation on 20 co-production projects, including various contracts with U.S. companies.

Down the road, Jeffrey Hayes, president and executive producer, Village Roadshow Pictures Television, believes there will be more co-production being done than ever before. "Not just from a co-financing basis, but also from a true co-production partnership. I think the U.K. is probably going to be looking at being involved earlier on in projects and possibly co-financing projects that have some U.K. element in them." Hayes adds that "the European market will do more local programming, which will make it difficult for U.S. companies who are relying on a lot of foreign money to do strictly U.S. type of productions." Village Roadshow is a partner with Atlantis and Tribune Entertainment on the "NightMan" action hour.

So far, international financing is what has kept, to a certain extent, some of the legs under the table. But what happens if the table breaks?

"The fear is, what happens when we hit the wall internationally, when we tap out on the volume of revenue available when the international marketplace fills up on shows, when it too fragments because of the growing international channels?" asks Peter Sussman, president of Atlantis Films Los Angeles. "Do we get to a point in time when the boomerang finds its way coming right back at us, where we then gaze out over the environment and see 'high cost fragmentation worldwide?' How do you really now make a show? I don't know if that will happen but if you think ahead, it is not an

unrealistic prediction within the next five to 10 years."



NATPE is hosting a slate of international seminars this year at its "NATPE International Sessions" on Monday, Jan. 19, 1:15-4:45 p.m. In-depth on genre prospects in three key overseas territories: "Francly Factual" (documentaries in France), "On Your Marks in Germany" (drama) and "Sterling Opportunities" (children's programming in the U.K.)



SIDEBAR: Market Matters/NATPE agenda notes from some international attendees.



"Besides the chance to take a look at what the syndication business will be offering in terms of first-run series," the company is on the lookout for interesting programs that might fit the editorial plans of various departments at the network. "But primarily, we are there to meet with partners, with whom we are already in discussions about either our co-financing and/or co-producing their projects."

-- Effi Mueller, director of international programming, ZDF Enterprises



"As the dynamics of the market change and Granada actively seeks to expand its production business outside the U.K., international dealmaking is becoming more important. We will be using NATPE this year to concentrate on developing our co-production relationships in conjunction with Granada Entertainment USA and Granada International Drama." Executives from Granada's animation division will also be attending the market in order to talk to key syndicators about preschool animation projects.

-- Suzie Giblin, director of sales, British Independent Television Enterprises



"NATPE is an especially good place to meet the American partners. We have started to strengthen our direct relationship with some of the majors and with smaller distributors."

-- Dr. Elfriede Hufnagl, head of sales and purchases, Austrian Broadcasting Corp.



"NATPE is a place for us to find co-financiers and co-producers so that we can produce not only for the Japanese but also for the international market. As one of the major animation production companies in Japan, with more than 2,500 hours, what we do at NATPE is sell our programs in the North American market."

-- Yasuhiko Matsuoka, manager of intl. sales and production, Nippon Animation



"There are several program formats which have been very successful for Telefe during the past couple of years. It is our objective to take these formats and develop tailor-made productions for other markets or develop international versions."

-- Cesar Diaz, general manager, Telefe Intl.



"NATPE has become a must for many European companies that want to do business with Latin American clients. We attend NATPE to sell our library of programs as well as to begin and continue discussions with co-producers. We also study new trends and formats."

-- Ignacio Orive, director of new business development, B.R.B. Internacional



"As worldwide distributors of predominantly Hispanic programmming, NAPTE is one of the most important markets of the year for us." At NATPE '98, the company is launching approximately 700 new hours. "Of this the major part is telenovelas and continuing episodes of our nature documentaries and humor series. We will also be featuring a

teen magazine show called 'World Youth News.'"

-- Antonio Paez, executive vp and general manager, Coral Pictures