Water Cooler

By Leah Hochbaum Rosner

Although it seems like NATPE was only yesterday and the Berlinale ended today, MIP-TV is right around the corner, set to take place earlier than usual — March 30-April 3 in Cannes, France. As such, TV executives the world over are readying their slates for a buying and selling extravaganza unlike any other. VideoAge probed Jene Elzie, vp, International Sales and Strategic Planning, for Los Angeles-based Comcast International Media Group (CIMG), to give us a glimpse of the type of programming she’s bringing to the Palais, how her company plans to be mindful of the world’s economic crisis and whether, despite the recession, MIP-TV continues to be a must-attend market for Comcast.

VideoAge International: What product are you bringing to this year’s MIP-TV?

Jene Elzie: We have an exciting and varied line-up of programming this year. First up, from the Style Network is Running in Heels, a docu-series focusing on the real-life drama behind the scenes at Marie Claire magazine. From E!, we have Candy Girls, which spotlights the often seen but never heard “video vixens” of the hip hop world. From Versus network, we have Sports Soup, which takes the hit E! channel series The Soup and adapts it for the wild and weird world of sports. And finally, from the Golf Channel, we have The Haney Project: Charles Barkley, a comedic makeover of sorts featuring outspoken NBA Hall-of-Famer Charles Barkley, the man with the ugliest swing in all of golf.

VAI: Is Comcast doing anything special for the market, i.e., a party, a cocktail or a press conference?

JE: We are being mindful of the economic climate like everyone else. This year is just not the time for a big, splashy event in our view.

VAI: Why does MIP-TV continue to be such an important market for Comcast?

JE: MIP gives us the opportunity, twice a year, to reach out to all of our clients and have that all-important personal interaction. With our offices as far away as Los Angeles, London and Hong Kong, it is important that we are all able to gather in one place to tend to our business. In today’s world of blackberries, laptops and text messaging, the art of human interaction can sometimes be lost, so it helps to have an event like MIP to bring it back into focus.

VAI: Are you focusing on any specific territories?

JE: I would not say that we are targeting specific territories at the expense of others, but we are always looking for growth opportunities in the markets. Certainly, territories like Central and Eastern Europe, India and Russia are proving to be key markets in our overall growth strategy. We also continue to rely on our traditionally strong markets like the U.K., France, Scandinavia and the Philippines.

VAI: How will the state of the economy affect the market?

JE: While the situation is bleak across the board, we, in television, are uniquely positioned to find the silver lining in the clouds. CIMG is particularly well positioned because of what we represent: a wide variety of high quality product of good economic value. As budgets grow tighter and profit margins decrease, buyers are under increased pressure to maintain those margins. Our content is top quality, but without the astronomical price tags to create it. That makes us a little less vulnerable to the volatility of today’s marketplace. We do not take this for granted by any stretch of the imagination, but we do recognize the value of the opportunities before us.

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By Leah Hochbaum Rosner

The RAI Trade sponsored Cartoons on the Bay will hold its 13th annual animation-centric event just after MIP-TV, April 2-5, in Rapallo, Santa Margherita Ligure and Portofino, Italy. All three towns are a three-hour car ride from Cannes.

The festival will offer up its prestigious Pulcinella Awards for the best that the cartoon world has to offer. Following the recent appointment of Roberto Genovesi as the new artistic director for the festival, VideoAge checked in with Cartoons on the Bay’s newest head honcho to determine his vision for the event, what he expects from the 2009 edition and why he believes animation will continue to flourish worldwide for years to come.

To underscore the significance of this improved event “under new management,” VideoAge will be focusing on Cartoons on the Bay in the Day Four edition of its MIP-TV Daily.

VideoAge International: Describe Cartoons on the Bay and what the event has come to mean to the international animation industry.

Roberto Genovesi: Cartoons on the Bay is one of the most important international festivals dedicated to television animation, and this edition will open the gates to multimedia and interactive animation. Nowadays, it is impossible to be close-minded anymore since animation is a most versatile means of communication, as it can be developed on different platforms — interactive, digital terrestrial television, mobile phones and videogames.

VAI: Since you only just recently joined the organization, what changes will you bring to Cartoons on the Bay?

RG: The most important changes have been made to the Pulcinella Awards, with the introduction of two new categories: interactive animation and cross-media projects. These are clear examples of the new vision of the festival, to create connections between comics, animation and multimedia. We’ll also take a special look at other aspects of animation, with exhibitions dedicated to comics and case histories on videogames.

VAI: Describe the status of animation around the globe.

RG: After a look at the works submitted to the competition this year — which are more than 400 coming from over 40 countries — we’ve noticed the growth of small and independent productions, especially from developing countries. A clear example comes from Cuba, guest country of this year’s edition, where, despite the global economic crisis, resources have been invested in both animation and kids. Italy is an example of a country with a long tradition of animation. And it keeps developing its creativity — not only in animation, but also in cross-media projects. Italians have long understood the potential of the latter, which is why the majority of programs submitted to the Pulcinella Awards in the new cross-media projects category have come from Italy.

VAI: Describe some of the highlights of Cartoons on the Bay 2009.

RG: A major highlight of the event will be the presence of Yoshiyuki Tomino, creator of Gundam, who will be in Italy to celebrate the 30th birthday of his most acclaimed work. Another highlight will be Pink Day, an entire day dedicated to entertainment for girls. It is extremely important to understand the language and the approach producers take towards a female public.

VAI: What is Cartoons on the Bay’s relationship to RAI Trade?

RG: RAI Trade is the organizer of the festival. And this year — more than ever before — RAI is putting in its greatest effort to launch Cartoons on the Bay even higher in the international panorama. Posted by watercooler at 10:49 AM | Permalink | TrackBacks (0)

By Dom Serafini

It is hoped that the failed Media Rights Capital (MRC) experiment with the Sunday night block on New York-based The CW TV network serves as solid proof to the U.S. and the international entertainment industry that the upfronts and the pilot process are necessary evils for the U.S. television sector.

Let’s hope that both of The CW’s parent companies, CBS and Warner Bros., took notice. The CW was formed in 2006 when The WB and UPN networks merged. MRC is a film and TV production company founded in 2003 with offices in New York City and Los Angeles.

To recap the events, last spring, MRC acquired a block of Sunday primetime on The CW for an estimated $15 million a year, to showcase its content during the 2008-2009 TV season. The 6:30 p.m. to 10 p.m. block featured a drama (Easy Money), a dramedy (Valentine, Inc.), a comedy (Surviving Suburbia) and a reality show (In Harm’s Way).

By the beginning of last month, The CW re-took possession of the MRC block due to dismal rating and, reportedly, late payments. Indeed, the MRC block was averaging little more than one million viewers, down over 40 percent from the same period last year, which was already low.

Although the MRC block was born with some genetic defects, the therapy used aggravated its condition, especially considering that its launch, originally set for September 14, 2008 was pushed forward to October 5.

The first wrong therapy was that, by rushing its programming on air, MRC wasn’t able to get in on the upfronts time auctions — when marketers buy ad time in advance of the new fall season — thus losing millions of guaranteed ad dollars. This left MRC completely reliant on the scatter market, which, with the financial crisis, dried up.

Usually at the upfronts, networks sell 80 percent of their inventory, leaving the remainder for the scatter market, which, under normal circumstances, could even demand higher rates. Today, however, demand for television ad time sold closer to the actual air date — which is known in the industry as the scatter market — is plummeting. A year ago, the scatter market was so hot that prices were 30 percent more than those set during the upfronts. Today, with advertisers struggling to keep the space already committed, the scatter market has collapsed.

The second wrong therapy, possibly because of the little time, or simply because it was trying to reinvent the wheel, was for MRC to bypass the pilot process. At that time an MRC-TV representative said, “Unless you have the luxury of looking at lots of pilots, I’m not sure producing these as pilots would gain us a significant advantage. The piloting process can tell you a lot, but at the same time, I think you have to look at other ways to do things in the current environment.”

I’m sure that, if the shows were tested in their pilot forms, some of their kinks could have been hammered out.

In order to picture what kind of challenge MRC was facing, without the aforementioned two worsening factors, let’s throw a few figures around.

The block of 210 minutes per week on The CW would have provided MRC a total of 63 minutes of commercial time. At the cost-per-thousand viewers of $28.88 commanded by the 18-49 targeted group, MRC should have sold each minute at $110,000 on the average just to cover expenses (with the profits coming from the programming back-end), but that implied an audience of close to four million viewers — four times what it actually got.

Under normal conditions and proper strategy and implementation, the MRC plan would have been a success especially with its proven barter model. After all, the “real” money for content providers is with reruns and international sales. But, in this case the game had to be played in the traditional forms: either under the upfronts business model or under the syndicated approach, where avails were to be sold in advance after the clients screened the pilots. Usually this happened before NATPE, while at NATPE the producer cleared the various markets.

Actually, today, the syndicated business model is somewhat simpler than in the past, due to the reduced number of TV station groups and the possibility of buying time blocks on a TV network, as in the case of MRC with The CW. Nowadays, content providers that opt for a syndication business model to feed their distribution pipelines with cost-free programming can better concentrate on selling air time, instead of stretching their resources thin, with market-by-market clearances.

So, in conclusion, if the moral of this story has to be repeated or spelled out in plain English: Before producers and TV networks decide to do away with pilots, they better think twice.

Posted by watercooler at 09:57 AM | Permalink | TrackBacks (0)

By Dom Serafini

This page gives me an opportunity to do something that I cannot even attempt in other parts of our publication: be biased and lose objectivity. So please bear with me. I ask you: How can an industry that survives on advertising promote the fact that they’re cutting advertising? What’s the message here?

We know that during every economic downturn the first thing to be cut is a company’s advertising and marketing budget. Everyone knows that this doesn’t make any sense, but the people on the front line cannot argue with the bean-counters who, to work, only need pencils, erasers and paper. We know how the system operates. When the bean-counters start cutting, they look first for those costs that are variable, i.e., promotion, marketing and advertising. This is also because cutting fixed costs is more troublesome.

So, we have a situation, when, during fat years — where there aren’t any real compelling reasons for advertising — companies tend to splurge (often with ego-driven campaigns). When sales are down and more push is needed, they retreat.

Now, instead of me going on a tangent to explain how important advertising is, let’s instead analyze what is at stake, plus the losses to entertainment companies that depend on advertising and are planning to cut their advertising budgets.

Let’s say that a TV network decides to cut 10 percent of their advertising and promotions budget, something like $5 million, out of a $50 million budget. Let’s also say that that a TV network generates $1 billion a year in advertising revenue. By publicizing its ad budget cuts, in order to make the suits’ job easier, the TV network is, in effect, promoting the fact that 10 percent can be easily cut, plus it is saying to all that:

• By cutting advertising there will be no marketing consequences.

• Generating revenues through cuts, instead of sales, is the way to go.

• Advertising will not increase the number of its viewers.

The problem, however, is that while the TV network is cutting just $5 million a year, it risks losing $100 million by encouraging its clients to do the same and, inevitably, by also losing viewers.

Let’s now move to the international program distribution business. Here we have companies that are taking orders (such as the U.S. studios) and those that have to sell each and every show (such as the indies). According to the MIP-TV 2008 directory, there are over 4,500 companies selling TV programs worldwide, and, it is estimated, about 2,000 international clients among TV networks, home video outlets, ancillary rights buyers and Internet services.

It is expected that the major U.S. and international studios are feeding at least 60 percent of the buyers’ needs, leaving what remains to be divided among some 4,450 companies, of which “only” 2,500 are really viable.

Now, to survive, the independent distributor has to do two things: First, wrangle some sales out of the studios’ grip and, second, compete for sales with the other 2,500 independents. All this is considering that prices will be cut and payments will be stretched, thus adding more money to the cost of doing business by compounding bank interests.

For an international program distributor, the average cost of distribution is 10 percent, meaning that, for a company that generates $50 million per year, the cost of doing business is $5 million. Of this, less than two percent is for advertising.

By cutting the customary 10 percent, the distributor will be saving $500,000 a year. Since it is a tradition, in this case, to cut mostly advertising and marketing costs, which could amount to 50 percent, the company is saving $50,000 or about $12,500 per TV trade show, representing less than 10 percent of the cost of participating with a booth.

One could assume that, at those TV trade shows, some 80 percent of the total yearly sales are originated or finalized ($40 million). So now the bean-counters, in the midst of fearsome competition, are demanding that:

• Sales revenues are to be kept at the same levels — even with lower prices.

• Volume is, therefore, to be increased in order to compensate for lower prices.

• Profits are to be guaranteed by cuttings those tools that generate more sales.

Unfortunately, lower advertising investments decrease visibility, traffic and can’t properly position new properties. Plus, the legendary Alan Howden, a former buyer for the BBC, used to give me a left-handed compliment commenting how he “read VideoAge only to see who doesn’t advertise” because with those companies presumably in trouble he could have slashed prices.

Any person who works in television should know that sales are, one way or another, related to advertising. And, if you don’t believe me, I’ll put you in touch with another legendary TV executive, Doug Friedman, who can tell you that when he was at New World in Los Angeles, he was able to sell a seemingly unsellable TV show internationally purely by the power of advertising.

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