International Sales Opportunities for Independent Producers and Distributors By Meg Villarreal and Diana Ingraham With the evolution of new television channels throughout the world, it makes sense for independent producers and distributors to explore whether or not there may be new sources of revenue for their products. The following pieces are designed to give the newcomer who may be thinking about breaking into international sales an overview of some current trends, a road map to some of the key international markets where programs area bought and sold, and some practical advice on preparing for international distribution. The international marketplace is changing dramatically. Until recently, network television and the major producing studios have dominated the international arena. Although network programs still account for the lion's share of international revenues, the worldwide explosion of cable networks and direct-to-home satellite channels has created many opportunities for the small to midsized American producer with finished product. Viewers in Europe, Latin America and Asia now have access to an ever-expanding array of new channels in addition to the traditional state-run television networks. These new channels are hungry for finished product; particularly in their start-up phases, they may lack large budgets for commissioning new programs. Over the past three years, strong interest has developed in nonfiction documentary programming, reality-based docudramas, educational/edutainment, children's fare and even "how-to." In particular, the international market for the documentary series has exploded. This year, the demand was so great that Europe's premier television marketplace, MIPTV, was preceded by MIPDOC - two days dedicated to documentary programming only. While the state-run networks (such as the BBC in England, ZDF in Germany or NHK in Japan) remain their country's premier outlets, representing the largest audiences and commissioning original series, the second- and third-tier cable and direct-to-home (DTH) satellite channels demand content for their niche audiences. Recent launches include the Odyssey Channel (France); Nickelodeon Latino, Canal+ (France) and its multi-thematic channels in Japan, Germany, and Spain; and JSkyB/Perfect TV in Japan. Cable satellite networks - including the Discovery International Networks in Latin American, Asia, and Europe, HBO International, and National Geographic Channels Worldwide - continue to expand. While the new international television landscape has created new opportunities, it has also given rise to minefields. The proliferation of international networks brought about overlapping territories; this has implications for rights management. In the old days there were fewer potential buyers (the state-run networks in each country), but country territories were clearer. Today, the cable satellite network Discovery Europe, for example, reaches households in the U.K., Spain, Poland, Hungary and other countries, and is looking to acquire exclusive rights for its European cable satellite network. By the same token, existing terrestrial broadcasters and new pay cable channels in each of those countries also want first-run or exclusive rights. In the past, the territory that they would license programs for was defined by country boundaries. Nowadays, there are numerous buyers for each territory for a successful series. As Larry Adler of the distribution company Larry Adler Associates sums it up, "the operative phrase these days for distributors trying to manage their producers' rights is trying to figure out which combination of license agreements will result in satisfying the largest number of clients." For the right product this can translate into additional revenues. Going Rates While experienced distributors, such as Nancy Walzog of Tapestry International in New York, caution against relying on the international marketplace to cover deficits after the fact, people can make money. Programs sold in Europe's top-tier markets can bring in significant revenues. Distribution of a documentary series in the U.K., France and Germany might gross $25,000 to $100,000 per hour if acquired jointly by the BBC, ZDF and Arte/La Sept. New cable networks and direct-to-home satellite services pay significantly less, $500 to $2,500 per hour. For this reason, distributors and rights holders try to bundle programming for bulk sales. For the seller, it costs as much time and effort to sell a 26-part series for $2,000 per episode ($52,000 for the series) as to sell a single program (a "one-off") for $2,000. Once the typical distributor commission of 30 to 40 percent is built in, the economics become painfully clear. Additional sources of revenue from international sales can be found in home video and, in some cases, educational markets. The best bet for one-offs is to try and fit them into an existing strand, which requires knowledge of the marketplace and links to acquisition executives. Outside of network fare and feature films, the genres that seem to travel best are children's animation, science, travel, American natural history, adventure, world history, nature programming and Hollywood biographies and star portraits. In the past year there has been a run on religion and spirituality programs as well. International Program Markets The vast majority of international sales originate at one of the program markets. The Market Overviews section provides brief descriptions of many of the most important markets and festivals where acquisition executives and distributors from around the world gather to buy and sell programming. Tom Salmon, national marketing manager for PBS station WLIW in New York City, is bullish on international potential. "It can be a heavy financial commitment to participate in international markets but remember, one good show will pay your way and then some," he says. "I don't know what it is, but when you meet people for the first time at a big market like MIPTV or MIPCOM, you tend to stay in their minds and often a lot of business connections will evolve as a result of that initial meeting. You are somehow taken more seriously as a player." He does warn, however, to think long-term. "But, if you decide to get into international markets either to sell product or to develop relationships, the key is to make a long-term commitment, because if you don't show up for two consecutive markets, people think you are out of business. Even if you have couple of tight seasons, it's important to maintain a presence." Moving into international distribution is not for the faint of heart; it is expensive and time-consuming. Registration and travel costs can be more than $5,000 per market. Differences in culture and taste, language barriers and differences in technical broadcast standards (not to mention an economic crisis such as the current downswing in the Far East) complicate the distribution process. As with any industry, personal relationships and up-to-date market information are at the core of successful business. Dwight Hilson, chairman of Goldhil Entertainment, a leading distributor and producer of special-interest videos and programs in the U.S., offers his perspective as a relative newcomer to the international scene who started attending MIPCOM just two years ago. "We really didn't start making international contacts until we physically started going to shows two years ago," he says. "Every time we've gone, we've found programs to license, and we've found that personal contact is essential. You really have to meet someone face-to-face to establish a rapport; once you've done that, then you can move forward and do business together." Of course, it makes sense to hook up with a good distributor, but self-education can be an important factor in a successful collaboration. Most of the distributors we spoke with commented that in the best of all possible worlds, producers would attend one or two markets to understand how they work and to collaborate more closely with their distributor. Finished programs still account for the vast majority of sales, but established international distributors are starting to involve themselves more closely in concept development and production financing. Larry Adler likes to get involved at the earliest stage possible. After 17 years in the business, he knows what works: more than 60 percent of his business is international. "I got tired of folks coming with finished programs that had little to no international potential," he says. "Now we get involved at the concept and scripting stage, and can often presell series to our international clients. We find that the international marketplace is becoming more and more important for raising production dollars - in many cases, more important than the U.S." For this reason alone, it makes sense for some U.S. producers to attend one or more of the international markets. (See Market Overviews for more detail.) Getting Plugged into the International Markets "Knowledge of the marketplace" is the operative phrase. But you must pay for that knowledge yourself by spending the time and the money to build relationships and understand that what will and what will not sell. Or you can pay a commission to an international distributor and rely instead on his contacts, experience and salesmanship. Programming trends may come and go, and technology continues to change, but market veterans agree on some basic guidelines for those thinking about exploring the international distribution outlets: Do Your Homework. Read trade publications (Television Business International, RealScreen, World Television News, Broadcasting and Cable International) and find out what buyers are looking for so you don't waste time pitching inappropriate product. Schedule Appointments Ahead of Time. Figure out who you want to talk to and schedule meetings ahead of time. Whenever possible, send information in advance so you don't waste time on "cold calls," which are quickly forgotten at the markets. Take a Long-Term Perspective. The infrastructure of the market consists of relationships; people do business with people they like and trust. Look at your first market as a way to begin building and establishing solid relationships. Then look to subsequent markets to develop further those relationships and partnerships. There is no substitute. Plan to Have a Home Base. It is almost impossible to make any work on the fly without a home base - a place to hang your hat, retrieve messages, take phone calls or screen materials. Develop Effective Sales Materials. Whether you are on your own or working through a distributor, you must make sure that your print materials and demos work. Sales sheets in particular must be graphically appealing and contain pertinent information: running time, number of episodes and program/series description. Follow-up. Follow through by writing or calling. You may think you or your project is unforgettable, but it's not. Trends to Watch in the U.S. Interestingly, some of the most active international players, particularly in the non- fiction realm, are US-based National Geographic Channels Worldwide and Discovery Communications, Inc. Both seem to be shifting toward centralized buying decisions for their worldwide operations, says distributor Steve Janson of Janson Associates in Harrington, New Jersey. In some cases, this one-stop selling can be a boon to independent producers. But Janson is also quick to point out as these cable networks (and, increasingly, A&E/History) seek to acquire more international broadcast, home video and even nontheatric rights, independents are forced into "work-for-hire" situations where they are unable to build equity in and ownership of their work. Moreover, the largest players are often not positioned to exploit the huge libraries they are amassing. Lynne Shore, former Director of Programming and Acquisitions for Questar, Inc., a producer and distributor of special-interest videos and television programs, recommends that producers try to incorporate some sort of performance clause into agreements. If a title is not released into various ancillary markets within a reasonable period of time (one year to 18 months), then those rights revert to the producer.