Fiona Gilroy, content sales and acquisitions director for Australia-headquartered Flame Distribution, shares with Realscreen the myriad approaches that distributors are employing to help producers fund their projects, and why they’re even more necessary now.
Distributors are in a unique position. Their primary jobs are to connect to the global market, talk to buyers and commissioners, track content trends and keep abreast of the slates of producers from around the world. While the pandemic certainly changed the way this work is physically carried out, with virtual meetings and conferences now standard fare, the distributors’ role has become more critical in moving content into production.
As the pandemic saw many productions cease, locked-down producers moved into an overdrive of program development. Increasingly they have turned to distributors for market feedback and to seek assistance in taking their concepts from paper to production.
While it had already become increasingly difficult to finance productions from a single commission, linear channels are now suffering pandemic-related economic pressure of their own as ad revenue drops and the much discussed shift of audiences to streaming platforms surges. So often now, broadcaster commissions look more like presales, and early commitment for content is increasingly hard to find. “Let me see it on completion” is a common response from commissioners and buyers to projects in development.
Even the streamers, despite their doubling of audience numbers, are not all winners with ad funded platforms having to balance a need to feed their subscribers with more content while living with lower CPM rates. In unprecedented times old approaches no longer work.
Producers and commissioners have been pushed by the changes wrought by the pandemic to find new sources of financing for their productions. While many of these funders are not new, they have often been seen as a bonus to backend returns and only used occasionally to leverage finance and complete a budget.
Distributors, who are often in the middle of all the transactions in the content supply chain, can act as a conduit for a producer, accessing a range of non-license fee related sources of finance. With producers and broadcasters rationalizing resources because of the pandemic, a distributor who has developed relationships with sources of finance outside of the traditional channel-funding model can coordinate a suit of options and bring together a diverse range of parties to creatively fund content.
International coproduction is one way for a producer to share the production load on suitable projects. As distributors are connected with many producers around the world, they are well placed to broker project partnerships. With an eye to formal international production treaties, those connections can be optimized to bring government support in the form of tax offsets and government grants with them.
Savvy distributors are looking at other revenue sources beyond license fees or revenue share deals to offset the risk involved in distribution advances. Off-air copyright, music performance rights and book publishing can offer additional backend returns to factor into revenue estimates as program revenue. Bigger producers have been exploiting these rights for some time, but many producers are yet to do so or prefer a single point of reporting with the distributor essentially acting as a disbursement agent for the project.
Additionally, some distributors have the financial wherewithal to offer commercial loans to producers. They can also assist with brokering savings for producers on international funds transfers. On international coproductions or overseas commissions, projects with large budgets can benefit from substantial savings on foreign exchange rates and fees.
While ad funding is more difficult in the present climate, it is still possible for the right program on the right channel to secure funds. As the ad funders need to know where a program is likely to sell, distributors are required to provide projections on sales and territories. Philanthropic investors are also keen to be assured that the content they are investing in will be seen by audiences key to their message and seek the assurance of the distributor that their targets can be met prior to putting resources into a production.
With the many challenges the pandemic has brought to our industry, a move away from the sole reliance on a single commissioning model may well be a liberating move for the production community. A well-connected distributor with the ability to think outside the box can work alongside forward-thinking producers to bring together multi-source funding deals in order to get content made.
2020 certainly crystallized this trend in production funding and we have now seen the business of distribution and production become even more interconnected and the success of both firmly linked.