Sunrise, Sunset Sunrise, Sunset / Business Rises In Energetic Eastern Europe And Sets In Anxious...

Despite an overall expansion of the worldwide television business fueled by channel proliferation, the pull of the changeable economic moon causes tides to rise in one part of the planet and fall in another. Currently, it is high, rising tide in Eastern Europe and neap tide throughout much of Asia.

Asian buyers, who were making their presence felt at MIP-TV in recent years and who represented major new opportunities for program providers prior to the region's recent economic collapse, are hard-pressed to pay for programming that they acquired prior to the crisis. But Hollywood appears to be taking a stoical approach to the economic privations and is "working through the crisis" with its Asian customers, according to studio executives. For those Asian broadcasters who do make it to MIP-TV this year, the status of existing deals will be top of the agenda.

So severe are the region's woes that economists have reduced their estimates for global economic growth this year by one percentage point. "Remedies have to be worked out, so a lot of people are working to help out troubled companies in this region, because they are long-term customers," says Michael Grindon, president of Columbia TriStar International Television. "Anyone involved in the international sector views this as a temporary setback, not a permanent change of fortune," adds Marion Edwards, executive vp, Twentieth Century Fox International Television.

"If you make an output arrangement with a Hollywood studio in U.S. dollars and your country's currency is devalued to 20 cents on the dollar, there's not much you or your supplier can do about it," declares David Davis, a leading entertainment financial analyst at investment bankers Houlihan, Lokey, Howard & Zukin. "Eventually the product rights will revert back to the studios, which could then relicense them [in the Asian market], but who do you relicense your programming to when everybody in the territory is in the same economic situation?" he wonders.

Many Asian broadcasters have built up sufficient inventory of U.S. product to play it out over the next few years, so it may be 20 to 40 months before we see prices in the region return to normal levels, Davis prognosticates. "When your clients don't have any money, you have to stay with them, because this is a business about long-term relationships," notes Chris Fager, senior vp, international development at E! Entertainment Television. "If you look at Indonesia, Thailand and the Philippines, their economies are hanging by a thread, and they were just emerging as buyers and players before this." Grindon and Edwards are confident that the goodwill generated during these lean years will not be forgotten during the forthcoming fat years in the potentially highly lucrative Asian market.

The situation couldn't be more different on the opposite site of the globe. "When Eastern Europe was behind the 'iron curtain,' there were no programs being sold from here," recalls Chuck Larsen, the former head of MTM Television's worldwide program distribution operations, who now heads L.A.-based programming consultancy October Moon. "It was frustrating to see this potentially enormous market just sitting out there -- but that's all changed dramatically." Eastern European markets including Hungary, Poland and Yugoslavia are now wide open and paying big bucks for a wide variety of American programs, thanks to the explosion of new independent broadcast outfits throughout the region.

Some program distributors reported that prices paid by Eastern European buyers tripled or quadrupled at January's annual NATPE convention in New Orleans. Martin Lindskog, president of the European TV broadcast group SBS, which has a hot new independent station in Hungary, finds those estimates too enthusiastic and sees price rises running about 50% to 60%. Nonetheless, observers anticipate lively and hectic sales activity with the burgeoning Eastern European markets during MIP-TV.

The recent launch of three new independent TV operations in Hungary, for instance, has created a need for programming that can only be realistically provided by American suppliers. Nearly 80% of SBS's programming in Hungary is American. "You now have three new buyers in a market where prior to this there was only the government station," notes Lindskog, who believes that Eastern European buyers will be looking for feature films, sitcoms and dramas at MIP. Moreover, an increasing number of advertisers want to spend money in the region, according to Marion Edwards, executive vp, Twentieth Television International.

Brian Frons, senior vp, programming for SBS's European stations, sounds a caution, however. "We found in Hungary that we could produce multiple local programs for the cost of acquiring one American feature film," he reports. "Prices have escalated in Europe generally, and there are Hollywood deals that we have passed on because we found it cheaper to take locally produced programming. German and Italian programming are also working well in Hungary for us."