Is There a Future for Program Syndication?

By Bob Jenkins

Is there a future for international program syndication in view of VoD and other digital marvels? That might seem like a peculiar question, but it is not as outlandish as it might first appear.

Increasingly, major content producers are vertically integrating by owning their own channels and video-on-demand sites. In a few years the world will have gone completely digital, and this will, to a much greater extent than is currently the case, bring equality between channels. When this happens, the question bound to be asked is: Why am I selling my content to a rival? Or, why do I need a middleman, when I can reach viewers directly?

And if content producers find they have a smaller appetite for selling, there is growing evidence that broadcasters have an equally diminishing appetite for buying. The cost differential between production and acquisition is shrinking, and shrinking to such an extent that even in drama broadcasters are looking to do scripted format deals rather than straight pick-ups. And this makes sense. Television is a parochial business. Audiences always prefer local shows. And not only does local production deliver higher ratings, it also leaves the broadcaster with an asset — not a license that is about to expire.

If anyone doubts that this is a valid point, he need look no further than last year’s announcement by the U.K.’s Channel 4 that it would cut £10 million (U.S.$20 million) from its annual acquisitions budget because, per head of Programs Julian Bellamy, “they no longer deliver value for money.” Director of Television and Content, Kevin Lygo added: “Every small digital channel has one or two U.S. shows, making American programs in general, less special.”

Gary Marenzi, co-president, Worldwide Television Distribution at MGM, is prepared to accept that “there will be fragmentation, and, as this continues, there will be shrinkage between the cost of production and acquisition. And,” he acknowledged, “if local broadcasters step up their local production, then it would seem logical to assume that the demand for acquired programming would fall, and that the price it demands would also drop accordingly.”

He then continued: “Five years or so ago a lot of international broadcasters thought they could make a lot of studio/reality shows that were much cheaper, and, for a while, popular. But then they fell off and broadcasters realized that shows of the quality of Stargate, Lost, CSI and Desperate Housewives were the real ratings winners, and they are still a lot cheaper to buy than they are to make.”

“As a content seller, we are,” he insisted, “very much up for the game of selling our content to other platforms, and, right now, with the dollar so weak, and demand so buoyant, there are some pretty decent prices to be had. Also, many of the companies that own these platforms are large companies that have invested millions, if not billions, in these outlets and they are not going to just get up and walk away. It will be incumbent on existing broadcasters and cabsat operators to stake their claim to be major distributors of product.”

Finally, if somewhat prosaically, Marenzi asserted that “it would be a mistake to underestimate the laziness of the viewer,” going on to reveal that, “when I get home I like to flip through the dozen or so channels I know I like and pick something that’s on. I really don’t want to have to remember the name of that hip new sci-fi series and hunt down the website that has it.”

While all of the above are strong arguments for believing that distribution as we have come to know it will be around for the foreseeable future, Marenzi did end sounding one note of caution. “Certainly,” he conceded, “it is the case that, if you are in the content business you have to be good at it. There is now very little room for anything less than A-rated content. But,” he concluded, “there will always be a place for top content.”

One company that sits in an interesting position in this debate is New York-based VOOM HD Networks, and this is true for two key reasons. First, the company is only four years old, and so it could be said to be a child of the new era. Second, it works exclusively in high definition, of which, as senior vice president Glenn Oakley observed, “there is a global void.” This means that VOOM must produce, or co-produce, the bulk of its programming. In fact, about two-thirds is sourced in this way to feed the 15 HD channels it operates in the U.S. under the VOOM brand, as well as its international channels available in China, South Korea, England, India, Japan, Romania, Hungary, Thailand, Australia, Sweden, Norway, Finland, Denmark and throughout the Middle East.

So many might be relieved to hear Oakley’s blunt assertion that he “does not see the distribution business dying.” Instead, Oakley believes that, “the creation and distribution of content is now progressing to the next stage.” And while he accepted that “vertical integration is altering the landscape,” Oakley also concurred with MGM’s Marenzi that “there is a need for proven and high quality content for broadcasters everywhere.”

Much has been made over the last few years of the impact of new media such as mobile and VoD. However, when considering the future of distribution, it seems clear that the technologies that are having the biggest impact on this particular business are those that are reducing the cost of production, and thereby narrowing the gap between it and the cost of acquisition. Of course broadcasters will always need to acquire content they could never make for themselves, such as movies and sport. But what the future holds for purveyors of other television genres is much less clear.