Worldwide TV Production: Plugging Into a Multiscreen Marketplace

Worldwide TV Production: Plugging Into a Multiscreen Marketplace Tim Westcott, Kia Ling Teoh, Matteo Marchello IHS Markit TV Programming Intelligence Cannes, France http://www.miptv.com http://mipcom.com 9/2/2016 Image: Tim Westcott, IHS Markit

World TV Production: Changing From a Linear TV Era Image: Conviction eone

Connected devices (m) Total connected devices growth Consumers are more connected, with the TV set losing its place at the centre of the video ecosystem After years of dominating the video ecosystem, the TV set is having to compete for consumer viewing time with an array of broadband internet-connected devices chief among them PCs, smartphones and tablet computers. TV is no longer just about linear viewing, as consumers embrace on demand viewing, watching wherever and whenever they want. According to IHS Markit s latest quarterly survey of the connected device market, there were 358 million smartphones in use worldwide at the end of 2015, a number that has trebled in five years and will rise to 495 million by 2020. There were just under 120 million tablet computers, 65 million smart TVs and 56 million pay TV set-tops hooked up to the internet. The smartphone will continue to drive the device landscape's yearly growth, but Smart TVs (after some early troubles) are starting to claw back some of the TV set s traditional position of importance, and by 2020 we expect 122 million to be in the world s homes. Growth in internet-connected devices worldwide 1 200 1 000 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Smartphones Tablets Game consoles Smart TVs BD players FTA set-top boxes Pay-TV set-top boxes DMAs Total connected devices growth Source: IHS Markit Connected Devices Intelligence 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%

Minutes per person per day Linear TV viewing is in decline but that s only part of the story as on demand becomes more widespread With more alternative ways of consuming content in their hands, consumers are watching less live linear TV in many countries. However, in our latest study of linear and on-demand viewing in the five largest European territories, IHS Markit found that live TV viewing is still the leading form of consumption. Linear TV viewing actually increased in Italy and France. 50 40 30 20 10 0-10 -20-30 Europe big five*: Linear and non-linear viewing time change 2011 2012 2013 2014 2015 Non-linear television viewing time change Linear television viewing time change * France, Germany, Italy, Spain, UK In the UK, the average person watched 247 minutes of video content per-day across all platforms, including 187 minutes of linear TV. Online long-form viewing averaged nine minutes and 24 seconds. In France, total viewing time was 248 minutes perperson per-day, with linear television growing by three minutes Non-linear viewing time increased by 17.9% to 23 minutes and 54 seconds. Across linear and non-linear TV, viewing time in Germany increased by 1.4% in 2015 to 227 minutes and 30 seconds. The total share of viewing time devoted to linear content fell from 93.7% in 2014. Non-linear viewing in Italy rose by 11.4% in 2015 to 18 minutes and 15 seconds per-person per-day. In Spain, linear television viewing dropped sharply in comparison to prior years, falling to its lowest level since 2010 at 234 minutes per-person per-day. Source: IHS Markit TV Intelligence

The new TV landscape is building the pressure on traditional TV companies Declines in linear TV viewing and cord-cutting have hit US media companies share prices, especially when half-yearly results were reported in summer 2015. Viacom was one of the worst-affected, as the demographic for its cable networks are closest in profile to the audience which is deserting traditional TV for new platforms. In the full year, Viacom actually showed a marginal improvement in ad revenues, which were up to $4.48 billion. This narrative of decline is not going to be dispelled by a few strong quarters. The US broadcast business remains fiercely competitive, with results disproportionately affected by carriage of events like the Super Bowl (NBC reported a $376 million gain in ad revenue from the 2015 game). The free-to-air networks continue to commission an undiminished number of new scripted shows every season. According to IHS research, the five broadcast networks ordered 110 new scripted series in 2015/16, compared to 121 the season before and 115 in 2013/14. New programming is simply too crucial for ad rates and carriage deals for any network to risk cutting back. However, a comparison with the ad revenues generated by Facebook is sobering; the social network reported $17 billion in global ad revenues. Annual advertising revenue ($m) 18 000 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 2011 2012 2013 2014 2015 21st Cent Fox AMC Networks CBS Corp Discovery NBCU Time Warner Viacom Inc Walt Disney Facebook Source: IHS Markit TV Programming Intelligence from company reports

The new TV landscape is building the pressure on traditional TV companies Broadcasters have at least been able to turn to carriage fees as an important supplementary revenue stream. Over the last five years, affiliate fees and subscriptions have grown steadily on the back of rate increases not without resistance from pay TV operators in the US. But most pay TV networks are now reporting declining subscriber numbers. At the end of Disney s 2015 financial year, it emerged that ESPN had shed seven million households in the US since 2013. 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 Annual subscription revenue ($m) 2011 2012 2013 2014 2015 21st Cent Fox AMC Networks CBS Corp Discovery NBCU Time Warner Viacom Inc Walt Disney Netflix Over the last five years, all of the companies monitored increased their revenues from distribution. AMC, CBS and Fox all reported double-digit gains in revenues from this source. In the case of AMC, this was the impact of its contract to offer the BBC America channels, while Fox benefited from wider coverage for its Fox Sports services. The increase for CBS stemmed from new agreements and from its income from pay-per-view boxing events. Changes in the US pay TV market, with cordcutting a reality and operators under pressure to offer lower cost and more flexible bundles of channels to their customers, mean that further gains cannot be guaranteed. Netflix reported $6.1 billion in worldwide streaming revenues in 2015, thereby generating more from subscription than Viacom, NBC Universal, Discovery, AMC and CBS. Source: IHS Markit TV Programming Intelligence from company reports

Netflix and Amazon are making their mark Global OTT players are investing heavily in programming Netflix and Amazon are both investing heavily in acquiring and originating programming. IHS estimates that Netflix already outspends pubcaster the BBC, US cable programmers Discovery and HBO and European commercial broadcasters like ITV and ProSiebenSat1. Pay TV operator Sky does spend more in the UK, largely because of its sports output. 6,8 7,5 Worldwide annual programming expenditure ($ billion) 4,9 3,1 2,9 2,4 2,5 2,0 2,0 1,7 1,6 1,2 1,1 0,9 0,9 0,8 0,8 3,2 1,6 2,6 2014 2015 Source: IHS Markit TV Programming Intelligence

World TV Production The new TV landscape Image: Deutschland 83 - (C) RTL_Nik Konietzny

OTT Traditional broadcast Online distribution has changed the TV landscape New opportunities for traditional and new players There used to be a clear distinction between linear TV channels delivered over-the-air, via cable, satellite or telephone lines to the TV set, and other video delivered via telephones lines to personal computers. The lines are blurring as linear TV channels stream to a wide range of devices, competing for consumer eyeballs with new, OTT-native services. Broadcasters (e.g. BBC) Premium channels (e.g. HBO) Cable networks (e.g. Discovery, AMC, FX) Broadcaster digital channels (e.g. BBC 4, France O) Online premium (e.g. Netflix, Amazon Prime) Portals (e.g. Yahoo, Twitch) Online broadcaster ad funded (e.g. ITV.com) Online broadcaster subscription (e.g. Hulu Plus, CBS All access) Online premium channel subscription (e.g. HBO Now) MCNs (e.g. Machinima) The oldest form of broadcasting is free-to-air TV, which continues to thrive despite the plethora of alternatives offered to consumers, including free multi channel TV, premium and basic pay channels. Online, consumers can view catch-up content from free-to-view services like Yahoo and Twitch, or pay a subscription to platforms like Amazon and Netflix. On demand and time-shifting is a key feature of most online services, and one that consumers have embraced wholeheartedly. Traditional players have extended their services to the online world, determined not to lose their customer base to new players: free-to-air broadcasters are offering their content online, both free-to-view and using various pay models. However, eyeballs are already migrating to new platforms which are available only online, following YouTubers or indulging a taste for niche content on Machinima or Crunchyroll.

The US is still the driving force behind the global TV business Annual TV programming expenditure, 2015 Data from IHS Markit TV Programming Intelligence shows the primacy of the US in the worldwide programming market. We estimate that in 2015, the US represented 39% of the worldwide total of expenditure on TV programming, with $46.7 billion invested across free-to-air and pay TV (this number excludes carriage fee payments by pay TV platforms and online platforms.) Rest of World 29% US 39% After the US, the mature Western European region is the next most important, investing $38.6 billion, or just under one third of the total. The biggest markets in Western Europe were the UK with $9.5 billion, Germany ($7.3 billion), France ($6.5 billion) and Italy. Western Europe 32% Total: $120.4 billion; based on 39 countries Source: IHS Markit TV Programming Intelligence The rest of the world invested $35.1 billion. Japan is the largest market in Asia Pacific with $9.8 billion, followed by South Korea ($4.7 billion), Australia and India both on $2.4 billion. Leading Latin American markets are Mexico ($3 billion) and Brazil ($1.4 million). Canada invested $3.4 billion last year. Russia and Turkey were both around the $900 million mark. IHS data is collected from company reports and other public sources and includes investment on original production, acquisition and sport.

While the US and some other territories are growing, TV programming spend is on a plateau Worldwide TV programming expenditure was $120.4 billion in 2015, compared to $128.7 billion the year before. The US dollar exchange rate partly to blame: in local currency terms, 31 of the 39 countries covered recorded growth in programming spend. In 20 of these countries, growth was below 10%. Argentina was the standout territory in this period, with Grupo Clarin increasing investment, through growth was exaggerated by inflation. India is one of the fast-growing markets, with competition for sports rights and original programming. Growth in Spain was driven by recovery from recession and pay TV consolidation. Worldwide TV programming expenditure by region ($bn) Top ten markets by growth in programming expenditure (local currency, 2015 vs 2013) 140,0 120,0 100,0 80,0 Argentina India Singapore Spain 22% 22% 46% 64% 60,0 Brazil 16% 40,0 Indonesia 16% 20,0 Ireland 14% 0,0 Turkey 12% 2013 2014 2015 UK 11% North Am W Europe Asia Pacific Lat Am C&E Europe MEA Austria 10% Source: IHS Markit TV Programming Intelligence

Minus sport, TV programming spend fell by $6.5 billion between 2013 and 2015 Worldwide TV programming spend by category ($bn) 61,3 61,3 56,1 The rising cost of sports rights is well documented: with this genre stripped out, the stagnation of global programming spend is clear. Globally, spending on both origination and acquisition fell in 2015; in the case for acquisitions, they fell for the second year in a row. In contrast, over-the-top streamers Netflix and Amazon have strongly increased their investment (both in origination and buying rights). Netflix spent close to $5 billion last year, twice the amount invested in 2013, while Amazon invested $2.6 billion. 35,8 37,0 34,5 Annual programming expenditure by SVoD players ($bn) 2013 2014 2015 Original Acquired 4,9 2,4 3,2 2,6 1,2 1,6 2013 2014 2015 Netflix Amazon Source: IHS Markit TV Programming Intelligence

Original commissions by over-the-top operators have multiplied Online platforms and Netflix in particular have dramatically increased their production of original programming over the last two years. According to our research, Netflix will air some 44 titles in 2016, up from 31 in 2015. Amazon will launch 13 original titles (not including pilots), up from eight last year, while Hulu will show 10, one more than in 2015. There are several reasons for this expansion: Firstly, while Netflix originated as primarily a film-based service, it found that TV series were an increasingly popular element of its service as subscribers binge-viewed entire TV series they might have missed on linear channels. These TV series rights were often easier to secure than movie rights, which still tend to be acquired in the first TV window by pay TV. Second, Netflix and Amazon simply emulated the classic progression of pay TV channels: start with the acquisition of library content in high volume and invest in original content to add value, to recruit and retain subscribers and to build further. Netflix, which launched simultaneously in a further 130 new territories in January, has also innovated by releasing its programming globally on the same day and date. It has also taken binge viewing to the next level by releasing all episodes of its original series at the same time. 80 70 60 50 40 Source: IHS Markit TV Programming Intelligence 30 20 10 0 Original productions by OTT platforms (by year of release) 2012 2013 2014 2015 2016 Amazon Hulu Netflix Source: IHS Markit TV Programming Intelligence

The addition of new programming from online means there s no sign of a fall-off in TV production The addition of new online programming has only swelled the amount of programming being created in the US market. According an annual survey of US scripted production by IHS TV Programming Intelligence, a total of 338 scripted series were produced and aired in calendar 2015, compared to 300 in 2014 and 239 in 2013. Even the networks in the face of declining linear viewing, mounting competition for audiences, and the instability of the advertising revenue cycle produced three more dramas and comedies in 2015 than in 2014, while the output of basic cable networks 152 new series versus 138 was up slightly more. Scripted TV series production by outlet, US 160 140 120 100 80 60 40 20 0 2013 2014 2015 Network Basic cable Premium cable Online Source: IHS Markit TV Programming Intelligence Premium pay cable networks launched 29 new series, the same as the year before. Meanwhile the online platforms consistently extended their bridgehead, with 41 original series in 2015 compared to 20 the season before. In 2016, Amazon, Netflix, Hulu and others have already chalked up 57 original series. Our research excludes original unscripted series, pilots and movies, and any series which has been acquired from overseas. Production by the five broadcast networks and by premium cable has remained fairly stable. The major increase in production has come from basic cable networks. In 2015, they launched 152 new scripted titles, 58% more than the 96 shows launched in 2013. This underlines the fact that even before the online players stepped up, an increase in scripted production was already under way. Amazon, Netflix and Hulu s output will continue to increase in 2016. Netflix stated at the end of last year that it would double its output of original dramas in 2016, while more recently Amazon said it would double its spending on Instant Video in the second half of the year.

World TV Production Concentration, US style Image: Tim Westcott, Mip 2016

In the US, broadcasting and production have become intertwined The repeal of financial interest in syndication ( fin-syn ) rules in the early 1990s was the main factor in the transformation of the US majors from producers and distributors into the owners of networks in the US. A series of mega-mergers saw Disney absorb the ABC network, Time Warner taking over Turner, and NBC combining with Universal Studios. All of the larger US studios now have some kind of TV activity, which not only provides additional revenue streams from advertising and subscription, but also provides the opportunity to develop and deliver programming to affiliated studios. Our analysis of US TV production in the 2015/2016 season highlights some important features of the US TV market: The big four networks commission almost all of their primetime scripted programming in-house: ABC Studios was credited with 23 of the 30 comedies and dramas on the ABC network, while Fox TV delivered 15 of the 20 series on FOX It is not uncommon for networks to commission other studios; ABC and Fox each delivered two series to CBS Sony, the only studio without a stake in a broadcast network, produced seven network series in 2015/2016. Warner Bros delivered programming to all five networks, including half of the series on The CW (jointly owned with CBS). Scripted series produced for the US networks, 2015/16 ABC Studios CBS Studios NBC U Fox TV Warner Bros ABC 23 1 3 1 2 CBS 2 11 2 6 NBC 14 3 4 FOX 1 1 15 2 1 The CW 3 3 Sony Pics 30 25 20 15 10 5 0 US networks scripted TV series production by source 2015/16 ABC CBS NBC FOX The CW In house Source: IHS Markit TV Programming Intelligence

Movies are still an important part of the distribution business for the US majors 2011 2015 35% 5% 25% Theatrical Home entertainment Television licence fees 42% 5% 29% Theatrical Home entertainment Television licence fees 35% Ancillary/other 24% Ancillary/other Source: IHS Markit TV Programming Intelligence from company reports Movies have remained a key part of the US major studios business. Six studios (Lionsgate, MGM, NBCU, Viacom, Walt Disney Co and Warner Bros) reported filmed entertainment sales segmented into theatrical, home video, TV and ancillary (such as consumer products), shown in the charts above. In 2011, total combined sales were $29.9 billion, with theatrical accounting for 25% of the total, while in 2015 theatrical s share was 29% of a larger pie of $32.7 billion. TV sales (including sales of film rights) also increased their share from 35% to 42%. But the biggest change was the decline in home entertainment sales from $10.5 billion in 2011 (35% of filmed entertainment revenues) to $7.7 billion (23% of the total).

US media companies have invested heavily in diversifying outside US and into other media Vice Media (5% stake), Endemol Shine (50%), National Geographic Partners Chellomedia (ex-netherlands), BBC America (49.9%) SBS Nordic, Eurosport, All3Media (50%) Channel 5 UK Maker Studios, Vice Media (funding) Eyeworks (ex-usa) 21st Century Fox, which was created after being separated from News Corp in June 2013, has been one of the most active of the US majors in terms of merges and acquisitions. In 2014, Fox merged its TV production group Shine with Endemol and Core Media, and has also invested in Vice Media and acquired National Geographic Partners. Walt Disney Co has grown its core filmmaking business with Pixar, Marvel and going on to acquire Lucas Film (in 2012) and more recently building its profile on new platforms, particularly with its $500 million acquisition of Maker Studios in 2014 and its investments in Vice Media the following year. Viacom s acquisition of Channel 5 in the UK and Discovery s purchase of SBS Nordic and Eurosport were opportunistic moves which took the buyers into new areas (free to air TV in the case of the first two and sports channels in the case of the third deal). Warner Bros and Discovery acquired more international production scope with their deals for Eyeworks and All3Media.

World TV Production The rest of the world Image: Gogglebox Studio Lambert/All3 Media International

A wave of mergers and acquisitions have created a new breed of super-producers In October 2014, US major 21st Century Fox and private equity firm Apollo Management agreed to combine their production companies to create a `leading global multiplatform content provider`. The Shine Group and Endemol companies have continued to operate independently, but Core Media has since gone into bankruptcy protection. The Endemol network was present in more than 30 countries, and distributes more than 33,000 hours of programming a year. Shine's geographical footprint was smaller 27 production companies in 11 countries with a catalogue of 4,000 hours. Shine and Endemol have both added a growing scripted business to their main business in unscripted entertainment shows. France-based Banijay Group and Zodiak Media completed their merger in February 2016. The new Banijay Group is majority controlled by LOV Group and De Agostini, with Vivendi owning another 26.2%. It is headquartered in Paris with operations in 17 territories, including most major European markets, the US and other key territories including Australia, India and Russia. Zodiak Media was itself formed by a series of mergers. with De Agostini buying up French production group Marathon and Italian groups Mikado and Magnolia in 2007, and Nordic-based Zodiak Television the following year. The acquisition of the UK-based RDF Media in 2010 was another important milestone. Banijay was created in 2008, initially buying up French producer Air Productions and extending into Spain, Germany, the Nordic region, the US and Australia.

Broadcasters have been the most active buyers of production companies in the last five years IHS Markit has tracked production company mergers and acquisitions over the last five years. The most active companies in terms of the number of deals have been broadcasters: ProSieben Sat 1 Media (via its subsidiary Red Arrow Entertainment) with 19 deals from Jan 2010 to June 2016 and the UK s ITV (18) and RTL Group-owned Fremantle Media (18). Red Arrow, only launched in 2010, now comprises 17 companies in seven countries. Its largest acquisitions are in the US, including Kinetic Content, Left/Right and Half Yard. ITV may have done slightly fewer deals but has had certainly invested more, with the 355 million deal for Talpa Media in 2015 and the $360 million acquisition of Leftfield Entertainment in 2014 being the largest. Fremantle Media has, like ITV, made deals in the US factual space, notably Original Productions in 2009 and 495 Productions in 2014. More recently Fremantle has adopted a strategy of investing minority stakes in start-ups, most recently with UK drama specialist Dancing Ledge Productions. Other major investors include indie groups Endemol and Banijay and US studios Sony, NBC Universal and Warner Bros, building their production presence outside the US. 19 18 18 Production company mergers and acquisitions, 2010-2016 1H) 13 9 7 7 7 7 7 6 6 5 5 4 3 3 3 3 2 2 1 1 Source: IHS Markit TV Programming Intelligence

Annual sales ( m) ITV Studios: diversifying its revenue base is at the heart of its acquisition spree ITV is one of the oldest commercial broadcasters in Europe, originating in 1955. ITV was already the largest UK producer after the BBC before deciding to build its activities further by setting up production companies in other territories and acquiring third party producers. ITV remains the leading advertising-funded broadcaster in the UK. In March 2015, ITV plc agreed to acquire Dutch producer Talpa Media for an initial sum of 355 million ($532 million) in cash and further payments subject to performance up to a maximum of $1.2 billion. Talpa is the largest of ITV's production company acquisitions so far, exceeding its $360 million investment in US producer Leftfield Entertainment in May the year before. The acquisition added the rights to 75 shows to ITV's in-house ITV Studios division, including The Voice, which premiered on Dutch TV in 2010 and has sold to 180 countries. ITV's acquisition spree started fairly modestly in 2007 with the 28 million purchase of UK producer 12 Yard Productions. IHS tracked another 19 acquisitions by ITV since then, including companies in the UK, Nordics, Germany and the USA, which has been a major focus for ITV in the last two years. In its 2015 results, ITV reported that revenue from international production was 533 million in 2015, compared to 106 million in 2010. 1 400 1 200 1 000 800 600 400 200 ITV Studios sales by type ( m) 0 2010 2011 2012 2013 2014 2015 International productions Global entertainment UK productions Source: IHS Markit from ITV plc reports

Despite mega mergers, TV production remains highly diverse Despite the consolidation of multiple independent production companies into super-indies, and the creation of international production networks by broadcasters and major studios, TV production remains highly fragmented. According to research for the UK producers association, Pact, published in 2015, most of the companies producing TV programming for the PSBs (BBC 1 and 2, ITV, Channel 4 and Channel 5) have annual revenues of less than 1 million ($1.5 million). PSB producers in the UK by annual revenues 56 Screen Producers Australia members (employees) Large 20 8 (20+) 31 26 11 26 184 70m+ 25-70m 10-25m 5-10m 1-5m > 1m 86 120 Medium (4-19) Small (2-3 full time employee s) Sole trader Source: Trends in TV Production, Ofcom/Oliver & Ohlbaum, Dec 2015 Source: Screen Producers Australia Screen Producers Australia reports a similar situation down under; 120 of its members are sole traders, compared to eight companies which have more than 20 full time staff.

World TV Production Getting with the programme Image: Sherlock BBC

The average production company is small, with linear TV still the main source of commissions IHS Markit conducted an online survey of producers attending MIPTV in April. The sample size is too small to be statistically robust, so we present the results only as an indicator of general trends in the marketplace. First, most of the companies we surveyed produced fewer than 50 hours of TV programming last year (see chart on left). One group produced 600 hours last year; another produced none and two produced only one hour of programming. This serves to confirm research from the UK and Australia quoted before showing how the average production enterprise is small. Our research (chart on right) also indicated that linear TV channels remain the leading source of business for producers, well ahead of online platforms, whether advertising or subscription funded. How many hours of programming did your company produce in 2015? Less than 10 10 18 20 20 22 26 30 Which of the following did you deliver programming to in the last year? Free-to-air TV channel 600 200 40 40 121 100 100 Pay TV channel Online platform (free to view) Online platform (pay) Other Source: TV Programming Intelligence 0 5 10 15

The key for producers is flexibility as commissioners and production partners compete for rights Producers we surveyed were more likely to have produced entertainment or factual programming last year than other genres. Scripted drama and comedy were the least produced programming genres. While budgets vary considerably from country to country, it remains generally the case that entertainment and factual programming costs less to produce, while drama especially high end drama with large casts and location shooting is more expensive. Business models also tend to be different: unscripted programming is more likely to be fully funded by the commissioning broadcaster because sales potential is more limited than for scripted programmes (which is why format sales are the key to non-factual exports). Producers typically look to retain as many rights as they can, although this can be complicated by broadcasters or co-production partners wishing to capitalise on their investments in a programme by exploiting rights in secondary markets. Which of the following genres did you produce last year? Entertainment Factual Children's Other Drama Comedy (scripted) Typically, what rights do you look to retain in programmes you produce? International rights Digital rights Secondary TV rights All rights Source: TV Programming Intelligence

Company profile: eone Canada EntertainmentOne, headquartered in Canada, has evolved from a movie and DVD distributor into a multifaceted producer/distributor. Its TV division has more than doubled in size (in terms of sales) over the past three years thanks to an increasingly full order book and acquisitions including the Mark Gordon Company and (in its Family division) Peppa Pig producer Astley Baker Davis. In the year to 31 March 2016, EntertainmentOne (eone) delivered 998 half-hours of programming and reported sales of 188 million ($374 million). In August, eone rebuffed a takeover offer from ITV, which is expected to face competition from buyout specialist KKR. With scripted development teams in Los Angeles, Toronto, London and Australia, eone is casting its net wide to tap into local commissioning budgets around the world. Current eone productions include drama series Ransom for the CBS network, comedy You Me and Her for the Audience Network, Sharp Objects for HBO and reality series Survivor and Conviction through its Mark Gordon Company outfit. Image: Designated Survivor eone

Company profile: eone Canada John Morayniss, CEO of eone Television, says the company is targeting development to all the main broadcasters and online players in the US. It seems almost every week or month there's either a new channel that emerges, whether linear or non-linear, or there's an existing channel that wants to move more into primetime scripted original programming. What's important to us is to be there with those emerging buyers early. In spite of the increasing alignment of network commissioning budgets with sister studios, independents like eone can play a role. For one thing, the main goal of all those buyers in the US is to get shows on the air that stay on the air, he says. In addition, independents can also be highly flexible, controlling international rights on some shows or working on a straight fee basis on others (especially unscripted shows). The bigger US broadcasters or premium pay cable networks tend to cover the lion s share of production costs, which Morayniss says would typically run to $3.5-4 million an episode at the high end. Image: You, Me, Her eone Morayniss says the company is also happy to work on lower budget productions like You Me Her, which looks like a low budget indie feature, with one writer who did all ten episodes and one director. It has a very passionate, dedicated audience... because the costs are lower, the risks are low... New online buyers like Netflix and Amazon are a welcome arrival to the market. A model where an online buyer wants to control all international rights is problematic for any studio that's in the business of monetising content, he admits. But on the other hand we look at our business as a portfolio business... we do 10 or 15 shows and some percentage happen to be shows where we are making money but not controlling rights, that's OK.

Company profile: Keshet International Israel Keshet International is the production and distribution arm of Keshet Media Group, which operates one of Israel s two leading commercial free-to-air broadcasters. Established in 1993, Keshet has made its mark on the global scene with locally originated entertainment formats like Rising Star and Boom and a series of successful scripted adaptations. Its Hatufim (Prisoners of War) series has spawned several seasons of Showtime spy thriller Homeland, while The A Word, a UK version of Pilpelim Zehubim (Yellow Peppers) was a hit on the BBC and exported to other networks like Sundance TV in the US. Israel s rising reputation as a source of new programming formats is partly the result of regulations encouraging investment in original independent production, but also the country s entrepreneurial culture, according to Keren Shahar, managing director distribution at Keshet International. First and foremost we are risk takers, it s in our nature. You can see that in TV, high tech industries, pharmaceutical then we also have a very demanding, sophisticated audience that gets bored easily, she says. Not having big budgets compels us to be more creative. We are very good storytellers and our shows are more character- and story-driven than action driven. Image: The A Word Keshet International Perhaps surprisingly, Keshet s home production market continues to function on traditional lines, says Shahar. In Israel, unlike other territories, the entire budget is covered by the broadcaster. Even for high end dramas which would tend to come in at $200,000 an hour, the broadcaster pays the entire budget. [But] dramas are not the toprated shows reality competition shows get the best ratings.

Company profile: Keshet International Israel Nevertheless, it s clearly scripted output that has made the US Keshet s most important market at the moment. As well as Homeland and Hostages (which ran for one season on CBS in 2013/14), Keshet also co-produced the miniseries Dig for NBC with Universal Cable Productions. The pilot was entirely made in Israel. The A Word was produced with FremantleMedia outfit Fifty Fathoms and a second series is already in the pipeline. Keshet also works closely with advertisers and agencies through a commercial development department. Gameshow Trade Up, which Keshet launched at MIPTV this year, was conceived by an agency looking to target car companies. Image: Trade Up! Keshet International In the past 18 months, we are seeing growth in scripted revenues from format sales as well as tape sales. It s becoming more balanced. In the past, the lion s share of revenues came from unscripted. Keshet has offices in the US and London and has just established a local hub in Mexico. Asia and Latin America are also markets that are growing strongly main for entertainment shows rather than unscripted. It is no surprise that Israel has seen several M&As recently. Red Arrow bought local outfit July August Productions in 2012. In 2013, Endemol bought a stake in local prodco Kuperman and followed up with a 33% investment in Reshet later the same year. FremantleMedia bought a majority stake in Abot Hamieri in January this year.

Company profile: Fremantle Media UK/Luxembourg FremantleMedia, wholly owned by the RTL Group, is one of the largest television production companies in Europe. FremantleMedia produces more than 260 programmes a year in over 31 countries and territories, including the UK, the US, Germany, Australia, France, Italy, Spain, Portugal, Scandinavia, Latin America and Asia. Among its best-selling shows are the entertainment formats Got Talent, Idol, and The X-Factor as well as classic gameshows Family Feud and The Price is Right. However, scripted is a major area of development for the company, with Peaky Blinders and Deutschland 83 among a growing roster of drama series. Another priority for the company is growing its international presence, with deals in Israel and Argentina among its latest moves and Turkey and South Korea two territories which are also on the radar, according to Sangeeta Desai COO & CEO (Emerging Markets). Fremantle s local outlets either make versions of its hit international formats or depending on the market generate new properties which the company exploits worldwide. Both Argentina and Israel are markets where Fremantle is hoping for the latter. Argentina is a highly attractive market within the [Latin America] region; says Desai. It has a very vibrant outsourced production sector and creative community. Fremantle has already launched a format from Israel s Abot Hameiri, acquired in January this year: Hear Me, Love Me, See Me has already sold into sold into Italy and Turkey. And we re in the process of rolling it out more globally. Image: Hear Me, Love Me, See Me FremantleMedia

Company profile: Fremantle Media UK/Luxembourg FremantleMedia has also set up shop in Brazil and Mexico and has a hub in Miami producing for the US Hispanic market and the Latin America region as a whole. In the Middle East, the company has a production hub in Dubai. It s a licensing territory for us... as the markets develop, we will look at setting up production operations, says Desai. Asia is the other part of Desai s emerging markets domain. Here, the company has production operations in Mumbai, India, in Indonesia and is also active in China. We are investing in growing all of those markets. [They are] all individually attractive for different reasons: India is a very strong production market, with high growth. At the moment, we are primarily entertainment and we are trying to build up our scripted capability in that market. In China, we hired Vivian Yin from Star. We ve been there for a while but Vivian has super-accelerated things We ve already sold a number of formats into China. Indonesia is a market where we have a very strong position, we are the largest and most successful independent production company there. Image: Confessions FremantleMedia The majority of Fremantle s business in India is on a traditional model. The difference is the broadcasters tend to keep the rights. Sony and Colors have global feeds, and they take the rights for all of those feeds. The money is really in the production fee. Fremantle has also produced for digital platforms, working with advertisers on the Facebook drama Confessions It s Complicated and the YouTube series India s Digital Superstar.

Company profile: CJ E&M South Korea CJ Entertainment & Media (CJ E&M) is a leading South Korean media content company founded in 2011 as a subsidiary of conglomerate CJ Corporation. It currently operates five business divisions including media, film, music, live entertainment and animation. The media division operates 16 cable television channels encompassing entertainment, music, film, lifestyle and animation. Its flagship channels are general entertainment channel tvn, music entertainment channel Mnet and movie channel OCN. CJ E&M has two major lines of strategy: global expansion and improving its content production capability. CJ E&M is looking for opportunities to sell its programming and formats abroad and building partnerships for international co-production. It has identified China, Japan and Hong Kong to be the key markets for their business in Asia Pacific. Since 2014, CJ E&M has partnered with broadcasters in China (Dragon TV), Singapore (Media Corp) and Vietnam (VTV) to coproduce local versions of some of its popular TV shows and dramas. Image: I Can See Your Voice CJ E&M

Company profile: CJ E&M South Korea CJ s entertainment series From Start To Clear and computer game gameshow The Genius Game were exported to the UK through a deal with ITV in 2015. It also formed a joint venture with Thai broadcaster TrueVisions to market and produce content in 2016. According to Youna Ahn, marketing associate, most of the entertainment programming on CJ s domestic cable channels are produced in-house, with drama usually outsourced. This gives the distribution division a pipeline of programming, ranging from general entertainment to music, factual genres like lifestyle and cooking and children s programming. Aside from distributing finished shows, CJ also provides production support on formats like I Can See Your Voice, which it has sold to China, Vietnam, Thailand and Indonesia. In October 2015, the company sold From Start to Clear and The Genius Game to UK broadcaster ITV. The Genius Game has also been sold to France and the Netherlands. In March this year, CJ agreed on a partnership with Endemol Shine through which the two companies will jointly create and distribute new entertainment shows. Another significant development outside the Asia region is the US production of its travel reality show Grandpa Over Flowers, which initially aired on tvn. Under the new title of Better Late than Never, the programme aired on NBC in August this year. Image: Grandpa Over Flowers CJ E&M

About the Author IHS Markit TV Programming Intelligence IHS Markit is a global information company with world-class experts in the pivotal areas shaping today's business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. We employ more than 8,000 people in more than 31 countries around the world This white paper is taken from a forthcoming insight report from IHS Markit TV Programming Intelligence, World TV Production 2016 For more information visit: technology.ihs.com Email: technology_emea@ihs.com Twitter: @IHS_TVProg This report is brought to you by MIPTV-MIPCOM MIPTV and MIPCOM are the world s most important global markets for the TV and digital media industry. They are the key events for buying and selling, financing and distributing programmes in all genres, on all platforms. Together, every 6 months, they form the annual landmark events of the entertainment calendar, attracting key industry executives, thought-leaders and creative talent from the entire content spectrum to negotiate deals, network and gain insight. Our websites To follow us: http://www.miptv.com http://feeds.feedburner.com/mipworld/abnf http://twitter.com/mip http://youtube.com/mipmarkets http://www.mipcom.com http://facebook.com/mipmarkets http://linkd.in/mipmarkets http://flickr.com/photos/mipmarkets MIPTV and MIPCOM respectively take place every April and October in Cannes, France. To download our MIPTV / MIPCOM app: http://bit.ly/mymipapp