Videoage International October 2019

16 October 2019 V I D E O A G E A t May’s L.A. Screening, buyers kept one eye on the content on offer from the U.S. studios, and the other on developments behind the scenes at the studios that could affect future editions of the L.A. Screenings. Indeed, there were two recurrent questions on buyers’ lips. First, in light of a new emphasis on OTT services, will studios continue selling their content internationally? And second, will the 56-year-old L.A. Screenings even continue to exist in this new environment? One major Italian TV buyer who wished to remain anonymous told VideoAge that L.A. Screenings 2019 “could represent the end of an era,” and commented: “We’re witnessing a reduced participation of the U.S. majors at international TV markets. If even the L.A. Screenings assumes a lesser role, how will business be conducted without that direct rapport, which is so fundamentally important in our industry between buyers and sellers?” During welcoming remarks at the Screenings, a number of studio executives reassured buyers that they will indeed remain open for business. As to the second query, the informal answer was also yes. The L.A. Screenings will continue, they said, but many noted that the event will most likely morph into something different — something that has yet to be envisioned. Ultimately, the bottom line is this — if the U.S. TV networks continue to commission pilots and hold their Upfront presentations in New York City in May, then the L.A. Screenings will follow immediately after. (And it is on this basis that VideoAge has prepared a preliminary L.A. Screenings 2020 calendar.) Several statements from top-level U.S. network executives further reassured future L.A. Scree- nings participants. According to Lachlan Murdoch, CEO of Fox Corp., which owns the FOX TV network and a group of 28 local U.S. TV stations, the company is expanding its “portfolio of owned and co-owned content,” and FOX will have an equity stake in most of the shows on the network. Joseph Ianniello, CEO of CBS, told The Los Angeles Times that “We don’t mind selling [our] shows to third parties and taking that money and reinvesting it back into more content for us. If we can make money while we’re still driving the number of [CBS All Access] subscribers, we’re going to continue to do that.” It is clear, however, that an era of uncertainty is now engulfing the television world. The latest SVoD developments, driven by Wall Street, have left the worldwide film-TV industry in a state of shock and disbelief, especially because there are no clear answers. Now, more than ever, Oscar- winning screenwriter William Goldman’s quote, “Nobody knows anything,” can be applied to show business. For years, the U.S. studios wanted to “eliminate themiddle-man”andgostraight totheconsumers. This desire was accelerated by the consumer’s (and Wall Street’s) obsession with Netflix. It’s not that the show biz sector necessarily wanted to rush into SVoDs, but when it was explained to Wall Street bigwigs that it would be unwise to give up the assured $11 billion worth of international content sales a year (just by the major U.S. studios combined) for potential SVoD revenue, investors on the Street almost unanimously responded, “Yes, but what about your future digital plans?” And to prove its resolve, the Street gave Netflix unlimited funds, despite the streamer’s $13 billion losses and negative cash flow. This is notwithstanding the fact that big advertisers keep raising the amount ofmoney they spend on U.S. primetime TV. At May’s Upfronts in New York City, the five major TV networks (ABC, CBS, FOX, NBC, and The CW) secured up to $10.85 billion in primetime commitments, up seven percent from last year. “This year’s advertising Upfront was one of the strongest we have seen in years,” said Lachlan Murdoch. FOX presold an estimated $1.82 billion of primetime, versus $1.67 billion in 2018. “I think there is amove back [toTV fromdigital]. There is a feeling of safety,” said Discovery CEO David Zaslav. Even digital streamers like Amazon and Netflix are now increasingly using TV ads to reach wide audiences. It is under this evolving scenario that the over 10 major SVoD services in the works are willing to sacrifice the studios’ combined $11 billion in international content sales in order to reserve programming for their own untested streaming services. And, in committing their best original productions to their OTT services, the studios will also be sacrificing a good portion of their broadcast revenues. In the case of Disney, for example, all its bran- ded content will now go to its new digital plat- form, Disney Plus, while non-branded programs will end up on Hulu. What’s left will then go exclusively to FOX Channels worldwide, which were acquired from 20th Century Fox (and are se- parate from the FOX Network in the U.S., which is still owned by Fox Corp.). In view of these changes, Disney’s international content sales division has been reorganized under the management of Justin Connolly, who will continue to lead Disney’s North American Distribution, Affiliate Marketing, and affiliate- related business operations for all Disney and ESPN services, including Disney Channel and National Geographic. His added tasks include working closely with Disney’s International Content Sales teams who now report directly to their respective regional leaders — Rebecca Campbell (EMEA), Diego Lerner (LATAM), and Uday Shankar (APAC). Connolly is based in New York City and reports to Kevin Mayer, chairman of the Direct-to-Consumer and International division of The Walt Disney Company.  At this point, no one knows if this many streamers will be financially viable in the long term. The industry must wait at least five years to find out (unless the anticipated recession goes into effect during in the early phase of the SVoD launches, which will mean that a negative outcome will be felt much earlier). By then the top brass who made today’s decision to go all in on streaming will most likely be retired, so the ball will be in the courts of new executives, who might never have been fully convinced of the soundness of a streaming-only distribution business. While the full effects won’t be felt for a while, the first consequences of this rush to SVoDwill be clear asearlyasnextyear,whentheU.S. studioswithdraw most of their content from the international TV Changes Will Bring New Opportunities. For Now They Bring Uncertainty L.A. Screenings Review CBSSI’s Armando Nuñez and Barry Chamberlain Disney LATAM’s Fernando Barbosa and his team Paramount’s Bob Buchi, Jim Gianopulos, Dan Cohen Warner Bros. Worldwide TV’s Jeff Schlesinger (Continued on Page 18)