Everyone in the non-fiction field has been feeling the squeeze of shrinking budgets, including distributors. By all accounts, broadcasters generally have less money for program acquisitions, resulting in reduced revenues for distribs (and producers) from finished product. This being the case, program sellers are having to come up with alternative strategies to stay in the game. One of these tactics, as revealed by the Factual Price Guide survey, is to put more energy into cobbling together funding on the front-end.
‘[We] need to secure as many pre-sales as possible,’ said one pollee. ‘Post-sales business is no longer sufficient to generate a profit or justify a significant investment.’
Simon Willock, the London, U.K.-based group head of factual for Aussie producer/distributor Southern Star, agrees. ‘The distribution process at the bigger market stage is about securing large enough pre-sales to ensure that a) the program gets funded and b) there’s enough profit potential in the rest of the world sales for everybody to make a bit of money. Distributors are having to become pre-sale specialists.’
Huw Walters, head of coproductions at S4C International (the sales arm of Welsh pubcaster S4C), concurs and adds that a well-planned pre-sale strategy is especially important for distribs who offer advances. He explains: ‘Traditionally, we would have advanced money against distribution rights [up to about 20% of the production budget]. That’s obviously a risky strategy if a program doesn’t sell as well as you anticipated. So, you’re looking to underwrite your investment by pre-selling.’
For producers, more pre-sales mean more partners angling for a say in the creative process. But as Michael Stedman, managing director of Dunedin, New Zealand-based prodco NHNZ, observes, it’s all part of the business. ‘They [pre-sale partners] have made a commitment to us, so I think it’s fundamental that we should have regard for that and do what we can within the constraints of budget and time,’ he says. ‘It’s about being client-oriented.’
The other distribution strategy gaining momentum, according to survey respondents, is output deals – ‘to counterbalance high distribution costs and sales guarantees requested by most producers.’ Unlike pre-sales, however, output deals draw a mixed reaction.
Says NHNZ’s Stedman, ‘We’ve avoided up-front output deals [commitments from broadcasters for a certain number of program hours, produced and delivered within a set time frame], because we prefer relationships be strong based on our ability to meet needs, as opposed to what some deal might say.’
However, Southern Star’s Willock observes that output deals definitely have a place. ‘If you’ve got output deals, at least you know there is a certain amount of dollars that are guaranteed going forward,’ he says. ‘Like all businesses, it enables you to plan, so it’s useful.’ Southern Star has output deals for factual programs with ABsat in France, the 10 Network in Australia and RaiTre in Italy.
Still, Willock concedes there is a downside: ‘You’ve tied yourself to one particular ship and if it doesn’t deliver, every time you go to the opposition of that particular broadcaster they’ll see you as bringing seconds… It restricts you from dealing with other people, potentially.’
For a broadcaster’s sales division, however, there are apparently fewer reservations. Says Walters, ‘We’ve just signed an output deal with The History Channel U.K.; it’s certainly the type of relationship we would like to have in all the major territories.’ In this instance, the two broadcasters agree on a specific number of hours at a set rate; S4CI retains the distribution rights for the programs.
But, even Walters acknowledges the potential pitfalls. ‘So many of these output deals have failed, because there has not been a good enough match between the broadcaster’s expectations and the programs they’re getting,’ he notes. ‘But, when they work they work well, because they cement the relationship between like-minded partners.’