Co-productions: uses, misuses and abuses.

Co-productions are not what they seem to be

There are many financing arrangements that resemble co-productions but lack what Marla Ginsburg of Paris-based Gaumont Television cites as the driving force behind successful co-productions: a storyline that demands the participation of partners from different territories.

Co-productions are often confused with pre-sales and co-financing. Pre-sales are the simplest of these arrangements; they are straight sales of distribution rights in specific territories.

One has to remember that an American producer who has a U.S. network or cable deal doesn't usually need a foreign co-producer. Indeed, the difference between the network's fee and the actual production costs (including the producer's fee) can be recouped in the international market with money "upped" by the bidding distributor.

The "gravy" or extra income, commonly referred to as the "back-end" market, comes in the form of syndication, pay-TV and possibly home video in the U.S. domestic market.

Realistic opportunities for non-Americans to co-produce in the U.S. occur when Americans are forced to sell a project on the cheap, i.e., below the going network rate; when the production cost is twice as much as the license fee; or when the product is finished ("in the can" or "on spec"). In these cases, the distributor may not be able to cover the deficit and the American producer may opt for a foreign co-producing deal. At this point the foreign co-producer, in exchange for financing a project much larger than a pre-buy, would acquire some creative control and distribution rights. In order for the non-American producer to bring a project into the U.S. market, he or she needs someone with a "name," someone who is known in the business and can take it to the network.

Most likely the script and the talent will take on an American hue, with the "pitch man" becoming the main co-producer if the network commissions it at a regular fee. There are American companies that specialize in creating products for the international market with the U.S. as the back-end market, which could be more promising for non-American producers. However, the core company that puts the project together must be American, since this seems to be the only universally accepted path to success.

Rola Zayed, president of Alliance Television International, acknowledged that true co-productions are rare and require a real sense of the partner's needs to avoid ending up with a hodgepodge show. Co-financing projects, on the other hand, are like pre-sales in that they are easier to produce because of fewer creative obligations to one's partners. Examples of co-financing include The Harlequin Alliance Romance Collection, six two-hour movies starring Emma Samms and Catherine Oxenburg which Alliance produced with CBS, CTV (Canada) and UFA, a subsidiary of Bertelsmann (Germany); and Due South, which aired on CBS this season and for which, because of its international popularity, Zayed was able to continue production with co-finance partners BBC and RTL-2. According to Zayed, Alliance is uniquely poised to leverage its status as a Canadian company; unlike some U.S. production companies that don't make much money until a show is sold into U.S. syndication, Alliance covers its initial production costs by selling shows in foreign markets right away. Furthermore, Alliance is able to defray production costs by hiring a certain number of Canadians in exchange for subsidies and tax breaks and by garnering premiums when the shows are shown on a Canadian network.

Specific market conditions in various territories around the world seem to call for what is referred to as the "co-production quick fix." The incentive for foreign producers to co-venture with their U.S. counterparts lies in the desire not to be locked out of the U.S. market, which foreign programming typically has a hard time penetrating. Of course, what they look for are foreign producers who have either a cable or network deal in place. Sadly, these producers are the ones least likely to enter into co-production deals since they can sell the international rights to a WIN - or Solomon International-type company for more money and retain more creative control in a less labor-intensive transaction. Hopefully the growing demand for local programming around the world, especially in Asia, will encourage more U.S. producers to actively seek some kind of alliance with a foreign partner.

Children's programming is an area in which alliances with strategic partners and co-productions with major broadcasters are well established. Here financial requirements go hand-in-hand with creative considerations. It is true, as Brian Lacey suggested, that U.S. producers of children's programming need to lessen their financing risks by co-producing with foreign partners. Co-production arrangements can net significantly better sales performance in the territory in question. For example, in a co-production with a Canadian partner, Lacey saw a return of $75,000 to $100,000 per half-hour episode, as compared with the $10,000 to $15,000 earned in a straight sales scenario. However, a word of caution is mandated, as children's programming is a world unto itself; for example, it is common to find people who prefer to work with Americans because they are considered more open to ideas and less culturally chauvinistic.

According to Ginsburg, American producers with their backs forced to the wall by flat licensing fees and escalating deficits look to shoot in a foreign location in order to tap local sources for the needed funds. "This 'desperado' financing fantasy misses the point," she said, "because you can't make these things work unless each partner has an appropriate and meaningful place in the creative process." However, as Ginsburg points out, this makes for an interesting cultural chess game. With Nikita, a series Gaumont is currently co-producing with the USA Network, producers decided to bring in a German partner because they needed a location that would convey the sense of danger and lawlessness required by the story. In addition, Ginsburg said that the location, the turn-of-the-century setting and the convergence of different people in Jack London's Tales of the South Seas made it another ideal property for Gaumont to co-produce.

Finally, to succeed in this business one should observe a certain business style. Both Ginsburg and Zayed agreed that co-productions and co-financings work best when the broadcaster's needs are clearly identified from the start. Then the race begins to get everyone to the starting line at the same time, a process which is quite laborious and requires numerous follow-ups. Speed is necessary to ensure successful closure of these cross-border arrangements.