As the saying goes, when you’ve got nothing, you’ve got nothing to lose. Those words may be added comfort for the always-on-a-shoestring, non-fiction market during these times of financial uncertainty. But with marketing budgets going the way of the seemingly falling sky, even the fate of cheap programming is in question, despite the inherent tenacity and wherewithal of the barely-funded doc maker.

While October’s bustling MIPCOM didn’t reflect an economic meltdown in the production and distribution sector – in fact quite the opposite with reports of booming business at what was described as one of the largest MIPCOMs ever – media buyers are painting a different story. As Sunni Boot, president and CEO of media agency ZenithOptimedia, says, ‘Flat is the new ‘up’.’ The official position of the Toronto-based agency is that in 2009, national advertising spending will be flat to a growth of two percent, which was revised from an earlier forecast of four to five percent. ‘But personally I don’t even think it’s going to make the two,’ says Boot.

Whether a decline in television spending will have a profound effect on relatively inexpensive factual programming remains to be seen. ‘It’s been fairly clear where the axe has fallen on broadcasting commissions; it has been outside primetime,’ maintains Denman Rooke, MD of London-based October Films. ‘It’s been kids, it’s been daytime; it’s been the more peripheral programming that seems to be first in line for cuts.’

And despite major job cuts, including media giant Viacom slashing 850 positions in early December and Canwest Global Communications (with Canadian Food Network, HGTV and women-skewing Slice, among others, under its umbrella) eliminating more than 210 positions in mid-November, broadcasters are staying relatively mum on the economic climate and the non-fiction forecast remains cautiously optimistic. Canwest’s job cuts were made mostly in the news operations, while Viacom’s were company-wide, including in production and programming.

RDF Rights’s COO Jane Millichip says distributors can look forward to broadcasters either commissioning less, spending less on their commissions or both, which should lead to an increase in acquisitions. The flipside to that scenario is that distributors’ catalogs will weaken if the recession is long and production will take a hard hit. ‘I suspect from the end of the first quarter onward next year, we will see a decline in the number of productions available for distributors to take on,’ she says.

While RDF is ‘bracing for a chill’ and operating cautiously, Millichip confirms a stellar year so far for non-fiction fare, with the company’s catalog of factual, factual entertainment, entertainment, documentary and drama bringing in a revenue increase of 15 to 19% in the 2008-2009 year.

Karen Gelbart, Canwest Global’s SVP of content for lifestyle channels, says despite the cuts, ‘Our specialty business continues to grow in the double digits. Slice is part of a bouquet of women’s skewing specialties… that is particularly attractive to advertisers.’ Jerry Leo, SVP of program strategy and acquisitions at Bravo, corroborates the party line, saying that everything is status quo at the network. The ubiquitous nature of cheap to make non-fiction programming on most networks will no doubt become more obvious in the year ahead. Factual production company heads like October Films’ Rooke are touting an insulation theory, partly thanks to industry lead and lag times – most productions that are in the process of getting picked up have already been in the can. But he also acknowledges that although his company hasn’t been affected yet, indie production companies must move forward cautiously and diversify in order to stay alive. ‘For companies our size, our greatest liability is that we have a relatively small number of broadcast clients. We’ve only got probably about a dozen, and three or four of those have produced much of our income so if we lose one, we’d be very exposed,’ he says. The prodco has already begun work on a commission outside of the broadcast realm, taking its own diversifying advice to heart.

Darrel James, COO of Amsterdam-based Off the Fence, feels his company is in a slightly better position than indie prodcos because it deals with everything from development and production to finished program sales. ‘I think we’re a bit different in a way,’ says James. ‘We trade in 75 countries. We’ve got offices in four countries. We are, I hope, insulated to a certain extent but it will undoubtedly be challenging.’

Small, nimble companies, those that are capable of diversification and those with projects blessed with longer lead times may account for most of the not-yet-feeling-it reports. Richard Propper, president of California-based distributor Solid Entertainment, is calling the mood ‘pleasant denial.’

‘At MIP, there wasn’t a single inch of space that hadn’t been sold by Reed Midem, and the attendance was among the highest they’ve had in years,’ he recalls. ‘Yet two weeks before that, there was a financial meltdown, and not just a little, a lot.’ But the ‘pleasant denial’ seems to have been left on the Croisette, with murmurings that some deals sealed at MIPCOM are now being taken off the table. So while the October market seemed to defy the economic state of affairs in the world, as described by Parthenon Entertainment’s CEO Carl Hall, the pendulum is swaying (see ‘Bank It’, below).

MIPTV in April will be the true measure, says Millichip. That is, once the economy has caught up with the distribution sector and programming is harder to come by. ZenithOptimedia’s Boot doesn’t echo the sentiments of optimism within the television sphere. ‘[The production and distribution sectors] may be okay for the next six to 12 months, and if they are, terrific. But there’s not going to be a lot of money for program production or sponsorship as advertisers look at ensuring their bottom line.’

WORDS TO THE WISE

Even though nobody can be too sure of how they’ll end up on the other side of the recession, some helpful tips can’t hurt.

* Canwest SVP of lifestyle Karen Gelbart says bringing coproducers to the table helps everyone stretch their dollars more.

* Cableready president/CEO Gary Lico recommends spending more time in development and cultivating more relationships, because this is a great time to lay the groundwork for when the economy bounces back.

* Jeremy Dear, head of development at Pioneer Productions, offers this: ‘If you hunker down too much, you risk falling off the other end of the scale. You run as much risk as if you overexpose yourself. You still have to get out there, and you still have to meet the broadcasters from both sides of the Atlantic, since markets are still an essential driver of the business.’

THE FESTIVAL FACTOR

Film festivals are keenly aware of companies’ tightening budgets. Sponsorships are crucial to the events’ existences. Nancy Schafer, co-executive director of the Tribeca Film Festival, says the fact there will even be a Tribeca Film Festival in 2009 is a feat in comparison to the fate of other festivals, whose organizers are in the unlucky position of appealing for money to keep the event going. Take, for example, the Newport International Film Festival which was saved by donations.

Tribeca may have luck on its side but it will still take a lot of work to finance the event. ‘Some of the global companies who have sponsored us in the past are not able to sponsor us again,’ says Schafer. ‘There really isn’t replacement money out there right now. We’re all scrambling to get what we can in the arts world.’

Hot Docs’ director of programming, Sean Farnel, echoes Schafer’s concerns. ‘Corporate partnerships are a big part of our economic puzzle,’ he says. ‘We’ve got a good product and a good audience and hopefully our corporate sponsors will continue to invest in that, but of course everyone’s looking at their budgets right now and seeing where they can tighten up.’

Canadian media conglomerate Rogers and its Rogers Documentary Fund sponsored last year’s Hot Docs and is on board for 2009′s festival as well. Robin Mirsky, executive director of the Rogers Telefund & Rogers Documentary Fund, says these events are the foundations of the industry and as such, deserve the funding.

‘If we want to have a business that works here and abroad, we need to have events like Hot Docs and Banff [World Television Festival],’ says Mirsky. ‘We need to continue to create opportunities for producers to promote their programs, fund their programs, and sell them abroad, so if sponsors start dropping out of these events, we’re only worsening the whole marketplace.’

BANK IT

Cash flow and good credit are the lifelines of any business and during a recession, it’s that much more important to be on good terms with the bank.

Off The Fence’s Darrel James says a longstanding relationship with its Dutch bank, ABN AMRO, has meant that OTF has never had trouble with overdrafts or credit lines. ‘They understand our business, they’ve been very involved, we communicate regularly and we have a secure credit line,’ he says.

Cableready’s local bank offered the company a very good credit line before the crash, which was recently reinforced. ‘They finally understood our business,’ says Cableready’s Gary Lico. ‘Foreign receivables are a big part of it, and not every bank accepts that as collateral.’ Cash flow hasn’t tightened either for the Connecticut-based company.

Parthenon’s Carl Hall says that broadcasters are still paying, but they’re stretching their payment terms out even further. ‘As a distributor, you end up cash flowing not only the producers you support but the broadcasters you’re supplying as well,’ he says.

INDICATORS

While many will be watching their revenues to determine the effects, some in the industry will be carefully looking at other indicators of the recession.

*Cableready’s Gary Lico says his gauge will be if the company’s stalwart programs are not renewed even if they’re doing well, or if networks begin killing deals that were in progress.

*Solid Entertainment’s Richard Propper says, ‘If business is bad, you’ll hear: ‘We’re not doing any acquiring for 2009 based on the current business climate, however we’re starting to look for 2010.”

He also adds that the markets are a good measure of how bad things are, since one of the first things that people cut is travel. ‘If conferences are being cancelled, if conventions are being hugely modified to accommodate a smaller attendance, let’s say NATPE or MIP, those are probably good indicators that we’re in for some trouble.’

*Parthenon’s Carl Hall agrees with travel being a measure, but adds that in bad downturns people tend to stay home and watch more telly. ‘They say the two indicators are pizza sales and the amount of people watching TV, because they’re not going out… I just hope they’re all watching wildlife and documentary programs.’