Water Cooler

By Leah Hochbaum Rosner

With less than a month to go before the L.A. Screenings, it isn’t just the studios gearing up for wheeling and dealing. The Latin contingent is also getting in on the action, getting ready for a week’s worth of buying, selling and showing what they have to offer. VideoAge spoke with Miami-based Jose “Pepe” Echegaray, vp of International Sales, Latin America for the U.K.’s Power (to find out why the Screenings are especially essential for Latins, whether the economy will affect this year’s business deals and which is more important to Latin Americans: NATPE or the L.A. Screenings.

VideoAge International: What product are you bringing to the L.A. Screenings?

Pepe Echegaray: We’re bringing a whole bunch of stuff, including 15-20 brand new titles, which is surprising given the financial crisis around the world. We have our own productions, and we also represent RHI for Latin America. Power’s productions include The Catch, a 13-episode action-driven series about the narcotics world; and miniseries The Day of The Triffids and The Devil’s Mistress. From the RHI slate, we have The Phantom, River World and an all-new version of Alice in Wonderland, among other titles.

VAI: In years past, it seemed as if NATPE was the premier market for the Latin contingent. Is that still true or are the L.A. Screenings catching up in terms of importance?

PE: Both are important markets. If I haven’t sold a series in January, then I can still sell it at the Screenings. I’m always booked solid in both Vegas and L.A. Or I might have introduced a title in January and not had any footage to show at the time. Come L.A. Screenings, I’ll probably have something for buyers to see. People want to see something before they buy it, especially if it’s expensive.

VAI: Speaking of expenses, how will the state of the economy affect L.A. Screenings 2009?

PE: What we will see is that there won’t be any bulk buying. Buyers will cherry-pick and be very title-specific. A lot of people are experiencing massive budget cuts, as well as the devaluation of currency. This translates into ad dollars not coming into stations. This situation makes things extremely difficult for independents because in a tight budget year, many buyers will go to the studios first and end up with little to nothing left for the indies.

VAI: Did the longer than usual time gap between MIP-TV and the L.A. Screenings help or hurt?

PE: Honestly, I skipped MIP-TV this year because our Latin clients simply weren’t going. I said to myself, why spend all that money when we’ll see them in a few weeks in L.A. anyway? It simply didn’t make financial sense. I don’t think the time gap will have any effect.

VAI: Which territories are most important for you? Why?

PE: Every country is important, but in order to get a production dubbed into Spanish, you need to sell it first to Argentina and Mexico. Luckily, we’ve been successful in both countries. This year, we’re also focusing on Brazil in order to expand our footprint. There are a lot of stations there and much of our inventory has not been licensed there yet. Those are the three primary markets, though we of course sell into markets like Venezuela, Colombia and Peru as well as a slew of Central American countries.

Posted by watercooler at 11:35 AM | Permalink | TrackBacks (0)

By Dom Serafini

One could easily say that the sun never sets on Rupert Murdoch’s media empire. His grip on the media world is so vast that daylight overlaps in a way that no part of his empire is ever in the dark. Except one place: Canada. Murdoch is sorely absent in Canada, except for a small direct mail operation and the right-wing Fox News, which, after political pressures from conservatives, was reluctantly approved by the Canadian Radio-television and Telecommunications Commission (CRTC) in 2004 to enter digital cable bouquets. Canada doesn’t have a Murdoch paper, a Murdoch film-TV production company or a Murdoch-owned television network.

The frustration could require aspirin pill-popping for Murdoch, considering that the country lies just a few hundred kilometers north of his New York City headquarters; it is a rich market and it speaks English and French, the latter of which could come in handy one day to gain entrance into France. Currently Murdoch has only a minor (13 percent) stake in TV Breizh (Breton), France, with little chance of expanding any further — even under the conservative government of President Nicolas Sarkozy. As the French president told both George W. Bush and Tony Blair, “one needs to listen to the people’s voice and the people don’t like controlling multinationals.”

However, for Murdoch, this could be a good opportunity to enter Canada. With the country now governed by a conservative (yet minority) government, Murdoch could well have a field day in Canadian media if not for the troublesome CRTC and other typically Canadian honest business practices and strict journalistic standards. Even if a CRTC decision can be appealed in Cabinet (the executive committee of the Canadian government), it rarely challenges a CRTC decision.

Canada has seven major media groups*, all of them public (although these are mostly controlled by the founding families). The exception is CTV Globe Media, a private company owned by the Kenneth R. Thomson family. But for Murdoch, the natural fit could be the Winnipeg, Manitoba-based Canwest Global Communications. It is one of the country’s largest publicly traded media groups, and has become almost a penny stock (trading at about 50 Canadian cents). Plus, it carries Fox Sports as a category two specialty channel and owns 56.4 percent of the TEN TV network in Australia. In Canada, Canwest owns 14 dailies (including the national newspaper, National Post) and 21 weeklies, as well as the Global TV network and several specialty channels. Founded by the late Izzy Asper, Canwest is now controlled by his sons Leonard and David and daughter Gail. Since only 11.05 percent of the group is traded, the family can decide things with little public interference.

An Asper-Murdoch plan would first have to persuade the conservative government of Prime Minister Stephen Harper to change the law and allow a foreign takeover of one of Canada’s largest television companies. The Aspers have been lobbying various governments to change the Canadian ownership rules to allow for such foreign media ownership for years to no avail. This could be an easier task now since Harper, a basher of “liberal” media, would most likely welcome Murdoch. But then, the Canadian government would also have to change the rules on newspaper ownership to allow Canadian companies to write off advertising in foreign-owned publications on the same basis as they do with advertising costs in Canadian-owned publications. This would conflict with the other media groups, who will surely object. Plus, the CRTC would have to change the rules that protect existing Canadian English and French-language channels.

In the past, Murdoch has been successful in entering markets such as Italy, the U.K. and the U.S. mostly due to political actions leveraging those countries’ weaknesses. This is something that would be more difficult to pull off in Canada. The U.S. has the distinction of being a country where politicians can be legally “paid off” as long it is a matter of public record. In the U.K., Murdoch managed to intimidate politicians from all parties into submission, while in Italy he leveraged a mix of ineptitude and press manipulation.

It is not surprising then, when various press watchdog organizations such as the Washington D.C.-based Freedom House (that monitors the level of press freedom around the world) ranked Italy at 65 in 2008 –– below South Africa and Papua New Guinea. Canada, on the other hand, is ranked 25, on par with the U.K. and below the U.S. In terms of corruption, in 2008, Transparency International listed Canada as the least affected by corruption (ranked as number one), the U.K. ranked fifth, the U.S. ninth and Italy 17, on par with Brazil.

Finally, the CRTC is considered fiercely independent with public servants who tend to be guided by such principles as to “increase the diversity of media ownership,” for the good of the nation. Conversely, the FCC, the U.S. telecommunications authority, tends to be motivated by special interests.

*Astral Media, Canwest Global, CTV Globe Media, Newcap Broadcasting, Rogers Communications, Shaw Communications, Quebecor.

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By Dom Serafini

Years ago –– before vertical integration, consolidation, M&A and globalization were all the rage among industrialists, investors, speculators and financial experts everywhere –– executives were compensated for their ability to make money.

Today, in view of the enormous financial losses that many entertainment and other companies are experiencing, it looks as if U.S. executives are paid based on their ability to lose money.

Warner Bros. made a fortune with The Dark Knight but fortunately for the top executives, its corporate parent, Time Warner, lost $24.2 billion. Others, like News Corp., only lost $6.4 billion and Sony lost a pittance of $2.89 billion.

Better managerial skills are found elsewhere. Earlier, the insurance giant AIG reported losses of $25 billion and Citigroup lost $24 billion. And what about losses accumulated by the car industry, like Ford ($18.9 billion) and GM ($42 billion)?

We have reached a point that — when financial institutions like Goldman Sachs declared losses of only $2.1 billion, and entertainment conglomerates, like Disney, announced losses of just $900 million — corporate leaders call their peers incompetent for losing so little. Considering the general corporate aversion toward profits, last year, when Intel announced record sales of $10.7 billion and profits of $2.27 billion, its stock was immediately penalized with shares losing 12.5 percent.

Examples of CEOs rewarded for having generated huge losses are: Maurice R. Greenberg, former head of AIG; Sanford I. Wells, former chief of Citigroup and Henry M. Paulson, Jr., former head of Goldman Sachs to name a few. This latter one, despite the low losses recorded by his company –– which place him among the least competent at generating losses –– was nonetheless rewarded with the appointment of Secretary of the Treasury in the Bush-Cheney administration.

Last September, The New York Times published an abridged list of 16 CEOs whose companies lost between $2 billion and $25 billion and yet were compensated with salaries and bonuses ranging from $4 billion to a mere $3.2 million. One can consult the website of Equilar for a complete list.

Today, in America, in order to reach top corporate levels it is not sufficient to have the ability to lose money. It is also necessary to know how to receive subsidies from the federal government.

When the “Troubled Asset Relief Program” of the U.S. Treasury Department handed over the first $254 billion in taxpayer money to nine banks in October 2008, they were supposed to lend that money to small businesses and home buyers in order to keep the real economy going. That money, however, wasn’t contingent to any strings attached, so the banks used the money for other things — like covering their losses and paying executives bonuses.

Recently, Barack Obama’s administration allocated $700 billion to rescue financial companies on the brink of bankruptcy, but only after the top executives of one of them, AIG, came back from a vacation that cost the failing company $442,000.

Most likely due to the stress caused by the need to generate losses, top managers of financial bank Lehman Brothers turned to the services of high-paid call girls who were then billed to the failed company. One executive managed to bill a reported $41,600 for such services.

When the ABC TV network asked executives from 16 U.S. federally subsidized banks if any of that money went to executive bonuses, many refused to answer. Earlier, the Financial Times (FT) wrote that bonuses paid to executives of failing banks were drawn from healthy funds. Puzzlingly, FT did not bother to explain why, if the banks had money to pay bonuses to their executives, they needed taxpayer money to make them solvent.

Then, there is the Detroit problem –– meaning the U.S. automobile industry which was deliberately pushed into a ravine by the notoriously competent managers in generating losses –– where top executives went to Washington, D.C. to ask for government handouts in their private jets. Those managers knew perfectly well what Wall Street was looking for (i.e., losing money), but they were oblivious to what their consumers wanted.

Therefore the message to those young aspiring CEOs, CFOs, COOs, CIOs and other C-types of titles is loud and clear: If they don’t master the ability to lose money big time, fugettabout getting a plum job! So, if you’re one of those aspiring Cs, get ready to rewrite your resume, bearing in mind that any losses below $1 billion are considered amateurish. After accurate analysis, we at VideoAge have determined that today’s compensation scale with which new executives have to measure is:

• Ability to generate losses from $1 billion to $10 billion — average managerial skill.

• For losses from $10 billion to $25 billion –– median managerial talent.

• Losses from $25 billion and above –– top-notch executives, highly in demand at studios, financial institutions and automobile manufacturers.

Posted by watercooler at 11:16 AM | Permalink | TrackBacks (0)

By Dom Serafini

Last October, London’s daily The Guardian headlined, “2025: The End of U.S. Dominance.” This followed the release of the U.S. government’s National Intelligence Council’s (NIC) fourth unclassified 120-page report titled: “Global Trends 2025: A Transformed World.” NIC’s previous report was issued in 2004, in the midst of the Bush-Cheney administration, and projected continued U.S. dominance through 2020.

Twenty days after The Guardian’s article, Singapore’s The Straits Times featured an extensive piece putting the NIC report into historical perspective. The author, Ho Kwon Ping, chairman of Singapore Management University, explained that world empires were created by urbanization: the massive rural-to-urban migration. This urbanization paralleled the Roman, Spanish, French, British and American empires. And this is what awaits China, India and Brazil, if only at different paces and after a period of a power vacuum.

And, while those emerging economies will grow in world influence at America’s expense, according to NIC, the same cannot be said of the European Union (EU). Indeed, NIC indicated that the EU will be “losing clout” by 2025 due to disconnection between Brussels (EU’s central government) and European voters.

By 2015, more than half of China will be urban (the trend started with the Communists taking power in 1949). India will reach the urban tipping point around 2050. But, The Straits Times argued, the loss of American dominance will not be sudden. There will be a period when the world will not be dominated by any single power. That is something that happened in the 17th century, 100 years before England emerged as an empire and 200 years before it reached its peak.

So let’s analyze additional trends as indicated by the NIC report and marry them with the predictions made by The Straits Times. The following ideas emerge:

• Wealth and power will be concentrated under state control (like China and Russia). This is called state capitalism in a post-democratic marketplace.

• The U.N. seems ill prepared to fill the vacuum left by receding American influence.

• Europe will remain heavily dependent on Russia for energy.

• Russia is a potential problem for the world.

• Globalization is at risk. It created imbalances.

• A world without the West.

• A two-tier Muslim world.

Now let’s speculate how the U.S. political leadership could change NIC’s predictions within the 2025 framework by instituting a program that would gradually reinforce the U.S. leadership during the “power vacuum” period. The key here is a U.S. communication and entertainment sector responsive to the new challenges. Why? Because entertainment, for one, promotes and sells lifestyles, culture, ideals (both social and political), consumer products and fashion, among others.

In addition, the U.S. can implement measures in the entertainment industry that Europe and other emerging powers cannot possibly do, such as:

1. Dismantle media and entertainment conglomerates. They take financial and human resources from their subsidiaries, and create meddling bureaucracies that stifle creativity.

2. Separate content ownership from data/signal distribution. This will make the whole system more agile and responsive not only to U.S. needs, but to international needs as well. In addition, it will detach such companies from parasitical financial players, relying instead on the sectors’ real economy.

3. Stimulate the creation of domestic and international content distribution companies. The more, the merrier. A large number of such companies will be more attentive to audiences’ needs, rather than to corporate requirements.

4. Prevent predatory practices between various sectors. Investors should not have control over content and distribution.

5. Establish regulatory practices that protect the viewers and consumers, and free the political process. This will also give a strong leadership signal to other nations. Naturally, these five seemingly simple points require strong political leadership, since it goes against the will of current powerful, if aging, media moguls. But time could be on our side.

The task to start implementing those changes will be left to current leaders in the entertainment industry who will have, at the most, 10 years to create the base for continued, strong Western dominance. Future entertainment leaders will have 15 additional years to build on those changes which will bring us to 2034, the start of what Singapore’s Ho Kwon Ping calls the “power vacuum” years, which, in this case could be called: “back to the future.”

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