How are Europe’s broadcasters adapting their film acquisition policies in the face of changing consumer patterns and economic crisis?
The UK acquisitions market has evolved rapidly in recent years due to changing patterns of film consumption and audience fragmentation. Meanwhile, the emergence of online services such as LoveFilm and Netflix was recently described by one leading distributor as “the single biggest economic change in the UK distribution environment in the past 10 years”.
According to the government’s Film Policy Review, there were 3.7 billion viewings of feature films across all television platforms in 2010 (excluding pay-per-view), which is more than 20 times the number of cinema admissions.
While the four primary public service broadcasters (PSBs) — BBC, ITV, Channel 4 and Five — do not pay as much for films today as 10 years ago, they are still important sources of revenue for local distributors.
“The PSB market is better than a few years ago,” says Xavier Marchand, MD of Momentum Pictures. “It’s a question of the advertising market improving and factors such as reality TV shows having peaked. Film seems to be a robust programming option again. In terms of cost per hour, it is a favourable option for them.”
The BBC’s budget for feature acquisitions is currently $66m-$70m (£42m-£45m) per annum, with film filling between 800 and 900 slots per year. The broadcaster’s six most-viewed films in 2011 were family titles, mostly products of the broadcaster’s output deals with Disney and DreamWorks. Channel 4 (and Film4), traditionally a bastion of arthouse, foreign and UK films, has also seen strong demand for its family-oriented product, with Ice Age: Dawn of the Dinosaurs (4.4 million viewers) its top film last year. Acquisitions head Gill Hay says the channel will target more family films going forward.
‘Film seems to be a robust programming option again’
Xavier Marchand, Momentum Pictures
But the strength of event mini-series, formats such as The X Factor and Strictly Come Dancing and a plethora or TV-on-demand and subscription video-on-demand outfits have contributed to lower PSB acquisition rates (which are around 40% down from the mid-2000s, according to one distribution executive) and a delayed free-TV window.
“Putting a Saturday night premiere on one of the PSB broadcasters is not the event it used to be. By that stage, viewers have either rented it, bought it on DVD, seen it on pay-per-view or bought it on iTunes. There are so many opportunities to see films earlier now,” says one distribution expert.
Sky Movies, with subscription numbers running at close to half of the 10.5 million total Sky base, remains the dominant power in the pay-TV market, largely thanks to output deals with the six major Hollywood studios as well as Entertainment Film Distributors.
“In the seven years I’ve worked at Sky the market has never been as intense and exciting as now,” says Sky Movies controller of acquisitions Simon Rexworthy.
That intensity is partly due to SVoD services LoveFilm and Netflix, who have been aggressively locking up content deals in the past 12 months, offering distributors without Sky output deals impressive rates for exclusive contracts.
This summer, the UK’s Competition Commission will publish the results of an investigation into a perceived lack of competition in the pay-TV sector, while January’s Film Policy Review urged an increase in the quota of UK films on all UK television platforms.
Eastern European broadcasters are coy about just how much they spend on film, although many acknowledge that the figure is less than it used to be. “The situation has changed a lot in the last six or seven years. Previously, this was a very film-driven market,” says Tibor Forizs, head of acquisitions and scheduling at RTL Klub, Hungary’s leading commercial free-to-air TV channel (he also buys for an additional seven local cable channels owned by Hungary’s RTL Group). “With a new Hollywood production or evergreen movie hits, you could easily achieve a share of at least 40% among 18- to 49-year-olds. The last couple of years, this has decreased considerably.”
Five years ago, RTL had four multi-year deals in place with US studios. That figure is now down to two (Warner Bros and Fox.) At the same time, the company is investing less in local film production, although it had co-produced several commercially successful theatrical projects in the last 12 years.
So what has changed? The emphasis — if RTL is taken as the example — is now on locally produced entertainment and quiz shows.
Action comedies still have traction with audiences in Eastern Europe. Repeats of old favourites (for example, The Lord Of The Rings trilogy) also work. Forizs says that the top-rated film broadcast by RTL and its main rival TV2 in 2011 was The Princess Diaries 2: Royal Engagement with a 37% share in the 18- to 49-year-old target group. Other popular offerings include Rush Hour 3, Gone In 60 Seconds and National Security.
RTL Klub has around 10 movie slots per week. Many of the films it screens are second runs or repeats, partially because the broadcaster can’t afford to programme the same amount of first-run features it once did.
Nonetheless, RTL is continuing to strike deals with US indies such as Nu Image, Voltage and Lionsgate as well as deals with regional distributors such as MediaPro Distribution. “We do a decent amount of feature films for all rights and if there is a theatrical opportunity, then we team up with the local theatrical distributor,” says Forizs.
‘Film is an essential part of HBO programming in Central Europe, but we see the growing importance of more specific production’
Ondrej Zach, HBO Central Europe
With more than 100 Hungarian-language cable channels (among them ratings winners Cool TV, Film+ and Viasat), the market is nothing if not fractured. Many of the channels show films and some even have package deals with studios for library titles. What they don’t have access to is original programming, mainly due to its costs — one reason why RTL and other bigger players have moved their emphasis away from film acquisition and toward local fare.
When it comes to pay-TV, the leading player is HBO Central Europe, which provides basic and premium channels to Hungary, the Czech Republic, Slovakia, Poland, Romania, Bulgaria, Moldova, Slovenia, Croatia, Serbia, Kosovo, Montenegro, Macedonia and Bosnia and Herzegovina.
Prague-based Ondrej Zach, senior VP programming and acquisitions for HBO Central Europe, who is responsible for acquiring and scheduling in those 14 territories, says: “Film is an essential part of HBO programming in Central Europe but we see the growing importance of more specific production. We see the growing attention of the audience toward original HBO US productions. We also see the growing attention of the audience toward local production.”
HBO recently began its own foray into local production in Central Europe. For example, in Romania, Poland and the Czech Republic the company has made its own versions of In Treatment and in Hungary it produced When Shall We Kiss?. “We are looking at having at least one show in our key markets in Central Europe each year,” says Zach.
Nevertheless, he adds that HBO Central Europe retains a voracious appetite for film. The company is understood to have output deals with all the US studios and major content suppliers. It also buys from US and European independent distributors, among them Pathé, TrustNordisk, TF1, BBC Worldwide and others.
While HBO tries to buy films across all the countries under its umbrella, it will, on occasion, acquire for individual territories. “In territories where competition is higher, such as Poland, we are able to buy Polish rights only.” HBO also picks up Eastern and Central European movies that will be shown in their country or origin but are unlikely to travel.
Local theatrical distributors in Benelux say that selling films to TV is now tougher than it ever has been.
“It’s not easy at all. It is one of the more complicated windows at the moment,” says Frank Peijnenburg of leading Dutch indie distributor A-Film. “There are just too many films, too many good films… and not enough stations and slots.”
Peijnenburg notes that the public broadcasters have decreasing space for movies in their schedules, their budgets for film are limited and they are too wary about ratings to take risks on arthouse titles. Meanwhile, consumers can download films easily and local TV stations haven’t always been quick to embrace the on-demand world. The focus of the TV audience is changing as well. Spectators go for local programming and entertainment but they no longer see free TV as a place to watch cinema.
Key commercial players such as RTL and SBS in the Netherlands or PRIME/Telenet in Belgium continue to invest in films. However, whereas these companies pick up more mainstream fare (for example, A-Film’s Relativity titles Dear John and Season Of The Witch), they are not as interested in niche arthouse items.
‘I will always be on the lookout for films with a potential for a large audience’
Katrine Vogelsang, TV2
Siegfried Moens, who oversees film acquisition for Belgium’s pay-TV channel PRIME/Telenet, points out that “the acquisition budget has slightly increased compared to 2011”. Big US titles such as Rango, Bad Teacher and Cars 2 are among the most popular films with PRIME’s subscribers. However, around 25% of the titles the station acquires are non-US and PRIME will pick up six or seven Flemish titles every year. While Moens acknowledges more attention is now paid to TV series such as Game Of Thrones and Spartacus, he insists there is “no significant change in the total number of movies acquired”.
Catherine Wilmes, who heads up film acquisitions at Flemish public broadcaster VRT, also says that movies are still an important part of the overall programming equation. Expectations may be lower for films, however. Five or six years ago, when VRT screened Pirates Of The Caribbean, it achieved an audience share of around 40%. Now, a film on VRT’s main channel Eén will be considered to have performed satisfactorily if it posts a 20% to 25% market share .
Public service broadcasters in Benelux continue to invest in local films. For example, VRT was a partner in Geoffrey Enthoven’s Come As You Are (Hasta La Vista) and Nic Balthazar’s Time Of My Life while VTM, the main commercial channel in Flanders, was an investor in the Oscar-nominated Bullhead.
Even with changing viewing habits and on-demand culture rising, “a good movie is still not a bad card to draw,” says senior acquisitions executive Anders Leifer of Danish commercial public broadcaster TV2.
”We spend a great deal of money on films — for an annual 1,300 slots on TV2 and specialist channels Zulu and Charlie, added to 5,100 airings of 550-600 titles on TV2 Film. Our Sunday window, A Good Film Without Breaks, registers strong ratings,” Leifer adds.
Through head of fiction Katrine Vogelsang, TV2 will participate in the production of around 10 Danish features annually. Leifer has signed output deals with CBS, Warner Bros and Swedish major, Svensk Filmindustri, but adds: “At MIPTV I will always be on the lookout for films with the potential for a large primetime audience.”
Swedish public broadcaster SVT has reduced its budget for feature films in recent years. Head of feature film acquisitions and co-production executive Agneta Perman says: “It’s not because of other programming but because they get later slots, and more money is allocated for primetime.”
“Local films are still strong. Last year, the Millennium trilogy was top, but Patrik 1,5 pulled in 1.2 million viewers on New Year’s Day. The best foreign film was Robin Hood: Prince of Thieves, from 1990, with 685,000 — new Hollywood product is not always the most attractive from a ratings perspective.”
SVT shares an NBCUniversal output deal with another station and, adding in package and single pick-ups, Perman buys 80-100 titles per year. Through co-production agreements and pre-buys, the broadcaster gets access to about 20 local features annually.
In Norway, head of acquisitions at Norwegian public broadcaster NRK Fredrik Luihn says: “NRK’s interest in feature films has been declining in recent years, not because of reality series and other programming, but because the consumption of film through more channels and illegal downloads has increased. The growing VoD market is likely to reduce it further.” The company has output deals with Nordisk Film and NBCUniversal, and screens about 10-15 local features per year.
Ahead of MIPTV, Viaplay, the online pay-TV service operated by Stockholm-based Modern Times Group (Viasat), has closed contracts with Sony Pictures Television and The Walt Disney Company Nordic for more than 500 feature films, available to subscribers in Denmark, Finland, Norway and Sweden. This follows a four-year deal with Fox.
Jorn Rossing Jensen
With Italy feeling the full impact of the European economic crisis, film-buying executives say they find themselves in unfamiliar territory. Chief of acquisitions for Mediaset Francesco Mozzetti says, “At the beginning of the year we had a theoretical budget that has been cut twice already and I don’t know where it is now. We have a short-term attitude for the time being.”
He estimates the total cut in acquisitions is at 30%, saying: “The acquisition of films is a detail we have not even entered into. We are trying to rethink our offer and business model, and have to adapt not just our acquisitions, but our programming schedule.”
Currently, Mediaset has output deals with Universal and Warner but Mozzetti says these models are largely a thing of the past, with the company buying on a “project-by-project basis”.
‘At the beginning of the year we had a theoretical budget that has been cut twice already’
Francesco Mozzetti, Mediaset
State-run RAI’s chief film-buying executive Guido Pugnetti calculates the total sum of the decrease in the acquisition budget year-on-year, since 2006 comes to an astonishing $328m (€250m). He describes the growing need for acquired product alongside a constantly decreasing ability to buy as a “deadly combination”.
“There is a little economic crisis out there which has impacted heavily on all markets, not just RAI. There is plenty of product unsold that we are unable to catch because of the lack of budget. We can build opportunities but economically, we cannot pursue them.”
Pugnetti says much of 2012’s budget is already promised in pre-sales and defines this a “dead year” on the acquisitions front.
For a while, companies can rely on their expansive libraries, but both executives also acknowledge paying less for product as they realise there is a limit to how low prices can go.
Mozzetti adds that structural changes are slow to be introduced to the Italian market. A big on-demand player such as Netflix, for example, currently has no plans to come to Italy.
Low audience share is also a concern. “We are unable to revive film on free-to-air TV — sometimes we can on RAI 2, but it is not a core programme,” says Pugnetti. An eight-week series of Oscar winners (leading up to Oscar season) on culturally oriented RAI 3 was a particular disappointment. “With some exceptions, it was quite unsuccessful,” he says.
Mozzetti says Mediaset also often sees low audience shares for film, but, that local blockbusters airing on Mediaset’s Canale 5 are “precious”. The ratio of US to Italian films is still about 5:1 for Mediaset, with acquisitions including franchises such as Iron Man, Transformers and Harry Potter.
French state legislation introduced in the early 1990s imposing programming and production obligations on broadcasters has kept budgets for film acquisition relatively stable in France.
Free-to-air channels must allocate 3.2% of their revenue from the previous year to the production of European films, and within this, 2.4% must be ploughed into French productions.
Pay-TV channels are obliged to devote at least 12% of their resources to acquiring broadcast rights of European films with 9% devoted to French films. 80% of the French obligation is committed as pre-buys.
“On the basis of last year’s turnover, our acquisition budget for European films is $56m (€43m), about the same as last year,” says director of foreign film acquisition Laurent Hassid at France’s pay-TV leader Canal Plus. “We have a similar budget for non-European films.”
“Last year, we bought about 80 European films, 20 of which were pre-buys bought on the basis of non-French scripts and with a French co-producer attached,” he continues.
‘Our acquisition budget for European films is $56m (€43m), about the same as last year’
Laurent Hassid, Canal Plus
For 2012, Hassid has signed on for Cristian Mungiu’s upcoming Beyond The Hills. Acquisitions in 2011 included Cosmopolis, The Iron Lady and Taken 2.
State broadcasting group France Télévisions, which controls six channels including France 2 and France 3 — both important investors in French cinema — invested $83m (€63m) into cinema in 2011 out of an overall production budget of $630m (€480m). The group plans to invest the same figure this year.
European titles it invested in over the last year include The Kid With A Bike, We Have A Pope (Habemus Papam) and more than 50 French films including The Artist and A Monster In Paris.
According to a CNC study, the group broadcast 539 films in 2010, against 557 in 2009, but up from 509 in 2008. In 2010, 275 of the films were French, 195 were US and 61 were European. Figures for 2011 are yet to be released.
The same CNC study revealed that rival private channels TF1 and M6, subject to the same obligations as France 2 and France 3, reduced their film titles by nearly 10% in 2010.
TF1, France’s top channel in terms of audience, broadcast 143 films in 2010, 43 less than 2009. Favouring mainstream family fare and big US pictures, the channel has used its budget on fewer, costlier films. TF1 has an output deal with Warner Bros, negotiated away from France Télévisions in 2005, and announced an output pact with Sony last July, which brought in films such as The Social Network and The Amazing Spider-Man.
France’s third channel, M6, focuses on French family-oriented comedies but has signed an output deal for the series and films of CBS Studio International. M6 also has a deal with Disney.
The Spanish TV market is mainly in the hands of three companies: Mediaset, which owns Tele5 and Cuatro; Planeta, which owns Antena 3, La Sexta; and the public broadcaster RTVE, the audience leader with La1 (14.2% market share). Canal Plus remains as the top pay-TV operator with 1.7 million subscribers and 40% of the market — it broadcast 6,704 films in 2010.
Other providers include Telefonica’s Imagenio (18.5% market share) and Ono (21.5%).
The addition of channels and fragmentation of the audience that followed the 2010 analogue switch-off has increased film offerings on TV. According to TV EuroStat data, films were 14.2% of the total broadcasting properties in Spain in 2011, up from 11% in 2010. More than 70% of those films were from the US. Still, the rise of digital broadcasters has been good for local films as well, with producers’ association Egeda reporting that the number of Spanish films shown on free TV was 14,542 in 2008, 15,229 in 2009 and 15,406 in 2010.
TVE leads the pack, showing a total of 1,220 films in 2010; Antena 3 follows with 676; Cuatro with 436, La Sexta with 190; and Telecinco with 153. Regional broadcasters, such as TeleMadrid, are also strong buyers of films.
TVE, with a cinema budget of $52m, broadcast 280 Spanish movies last year, 92% of all the Spanish cinema broadcast generally. Its major hit was Angel De Budapest, a TV movie about a Spanish hero of the Holocaust. “We have had great results with Spanish movies, such as four million viewers for Volver. For us, cinema is worth a lot in terms of audience,” says head of film Eva Cebrian.
‘We have had great results with Spanish movies, such as four million viewers for Volver’
Eva Cebrian, TVE
TVE outside acquisitions manager Juan Ignacio Jiménez adds: “We have to mix quality with good audience ratings. There are more US films because they are usually the most successful in cinemas.” In 2010, TVE broadcast 498 US films, 160 Spanish, 50 European and 57 from other countries. Distributors complain that La 2, while a booster of independent cinema, offers a smaller audience (2.6% market share) and lower deal prices.
Antena 3 head of cinema Mercedes Gamero notes: “We think a channel such as ours must have some cinema in its offering. It’s part of our philosophy as a company.” In 2010, Antena 3 screened more than 600 movies — the majority from the US — and it has a regular primetime slot for films. Due to the law that obliges Spanish broadcasters to spend a 3% of their income on films, Antena 3 is one of the top cinema producers in the country.
“When we produce a film, a very important factor is if it’s suitable for being programmed in primetime,” adds Gamero. Antena 3 has output deals with Universal, Disney and Sony as well as pacts with Aurum, DeaPlaneta and TriPictures. “I think we are seeing a revival of cinema on TV thanks to the new digital channels [including Nitro, Neox and Nova],” she says.
At Telecinco (which has 14.2% of the audience), content manager Gillain Barrois says: “We have always have a love/hate relationship with cinema. Piracy has hit the value of films for the audience hard and their price is very high.” Telecinco’s reality show-heavy schedule doesn’t even squeeze in films that the company produces, such as Agora or The Orphanage. “We use cinema as a resource when we have a blank in the programming,” Barrois adds.
Yet Telecinco has recently acquired the channel Cuatro, which has seen the likes of 2.17 million viewers for Cell 211 in January 2012.
La Sexta (7.7% of the audience) has launched a new film channel, La Sexta 3, which has attracted 1.4% of the audience. Head of contents Kike Lozano notes the channel’s library includes 1,000 titles. It has output deals with MGM and Warner.
Theatrical windows and rampant piracy in the country make it a struggle for broadcasters to justify high-priced film acquisition. Barrois notes: “In this very fast world, it makes no sense that we have to wait more than a year since the premiere to show a film”.
Lozano of La Sexta adds that rights holders need to have manageable expectations: “They want to keep the same privileges and prices from an era very different from now.”
Feature films from Hollywood and from the major international film markets such as France play an important role for the main television channels in Germany — despite an ongoing boom of docu-soaps and formats.
Buyers say budgets had been holding steady in recent years, with one exception: Degeto, the buying organisation of the public broadcasting network ARD, has seen its budget all but disappear for the next two years in the wake of overspending under former managing director Hans-Wolfgang Jurgan. Degeto had spent about $92m (€70m) annually for film licences but now the budgets for 2012 and 2013 are largely exhausted. Currently, the entire Degeto company is subject to auditing and reorganisation.
The major commercial broadcasters, including RTL and ProSiebenSat.1 secure their supply of Hollywood movies with output deals. RTL has signed long-term contracts with Disney, StudioCanal, Universal and Warner while ProSiebenSat.1 is supplied by Fox, CBS, Paramount, Warner and Sony. Sky Deutschland, the country’s largest pay-TV platform, has secured all the studios.
Market leader RTL searches for features that have a broad primetime audience appeal, explains head of programme acquisition Joerg Graf: “These are products that have already proven relevance and success at the cinema.” Last year’s most successful feature film for the RTL group was Ice Age: Dawn Of The Dinosaurs with more than eight million viewers.
‘Productions that have already started in the cinema are much preferred’
Frank Dietz, Super RTL
ProSieben shows most of the US feature films on German free TV. In 2010, the station aired more than 1,200 hours of its Made in Hollywood strand, in comparison to 128 hours of German movie programming. Only 5% of all film feature licences purchased by the group for its TV channels are produced in Germany. “We are looking for US blockbusters which fit our profile and which are suitable for primetime,” says Ruediger Boess, senior vice-president, group programming acquisitions. The Will Smith superhero story Hancock was the group’s biggest film success in 2011, with 4.47 million viewers.
Pay-TV platform Sky Deutschland is buying more films than in previous years. In addition to the big blockbusters, Sky Deutschland is interested in outstanding productions from all genres. (Also, the company is launching new channel Sky Atlantic in Germany in May, loaded with HBO shows.)
Meanwhile, ZDF, which is the second important public service broadcaster in Germany alongside ARD, has international cinema on its purchase list — but not as its first priority. “For ZDF, the trick consists of getting access to US studios’ selected films, series and occasionally mini-series through small output deals without accepting programmes that are not usable within ZDF Group,” says executive director, feature films/senior vice-president of ZDF Neo Norbert Himmler. ZDF only maintains an output deal with NBC Universal.
Frank Dietz, chief purchaser for Super RTL, confirms that more budget will be allocated for film acquisitions for the animation-focused Super RTL channel, which is a joint venture between RTL and Disney. “Productions which have already started in the cinema are much preferred,” says Dietz.
International mini-series play only a minor role in the German market. Graf of RTL explains: “Existing programme schedules needed to be broken up for mini-series.” Most of the German free-TV channels have heavily formatted schedules, so finding a slot for a four- or six-part series is difficult. Graf says film acquisitions are not being hurt by mini-series buys, and RTL would rather invest more in cinema co-production instead of event TV.