Universal rising.

Universal Television continues its international expansion and steps up network series production

When Seagram acquired Universal (then MCA) in June 1995 for $5.7 billion, it was evident that Canada's Edgar Bronfman Jr. had a lot to learn about the entertainment industry. After a few organizational changes and a name change to Universal Studios, the company has seen a revitalization of sorts, particularly in its television group.

During their first year at Universal, Greg Meidel, chairman of Universal Television Group, and James McNamara, president of Worldwide Television Distribution, have made the television group a lean, mean fighting machine: the staff has been reduced by 20 percent; Universal recently bought the assets of talk show giant Multimedia; TV output has more than doubled; and the domestic and international revenues have increased substantially.

The company is also boasting its most successful network television development season in years. Two of its pilots have already been picked up, Timecop by ABC and Roar by Fox. Armando Nunez Jr., president of Universal International Television, acknowledged that "there's a lot going on at Universal." "The TV group has had much of a revival," he said. "It's rather remarkable that we have two network commitments this early and that the two shows didn't have to go through the regular pilot process. We also are working on an untitled Tom Arnold sitcom for the WB." Nunez noted that, in addition, Universal is continuing to successfully license shows like Law & Order, Sliders and EZ Streets overseas.

Indeed, Universal is increasing its international reach in leaps and bounds. McNamara said that the company has three international goals: to increase its export business, to increase local production and to explore and build its own distribution outlets. Meidel said that the global component has probably gone from being 20 percent of Universal's business to being almost 50 percent. Chairman Frank Biondi said that international sales are expected to more than triple and that they will eventually yield as much as $500 million in yearly incremental revenues.

Universal's archives and first-run action adventure series are the crux of the company's recently signed $1.5 billion free TV output and co-production deal with Germany's RTL. Other international deals include a major volume agreement with France's leading broadcaster, TF1, and an agreement with Kinnevik-owned Modern Times Group (MTG). The latter is one of the largest volume deals in Scandinavia. The TF1 agreement covers new one-hour series and theatrical and television movies and is considered to be the largest volume arrangement ever made between an American studio and a private French broadcaster. TF1 will get free TV rights to a certain number of Universal feature films, television movies and one-hour series that are in currently development. For the MTG deal, Universal will provide MTG's outlets with free television broadcast rights to a variety of Universal feature film and television product over the next three years.

Seagram at a Glance

INTERNATIONAL TV CHANNEL OWNERSHIP

Universal has minority interests in:

Australia:                     Showtime (movies)
                               Encore (movies)
                               TV1 (general entertainment)

HBO Asia:                      Consists of HBO and Cinemax
                               (movies)

Japan:                         Star Channel (movies)

Brazil:                        Telecine (movies)

Latin America:                 Cinecanal (movies)

Poland:                        RTL7 (general entertainment)

SEAGRAM'S INDUSTRY SEGMENTS

Entertainment: filmed entertainment (movies and TV), music,
recreation (theme parks), publishing and merchandising

Beverages: spirits and wines, fruit juices, coolers and mixers

Considered to be the world leader in action adventure programming, and boasting such series as Hercules: The Legendary Journeys and Xena: Warrior Princess, Universal Domestic TV is bringing the first-run weekly action series Team Knight Rider to this market for fall 1997. "We chose to go into the market with the Knight Rider franchise because it is already a proven winner on both network television and in syndication," said McNamara. As a way of minimizing its financial risks, Universal started sharing upfront production costs of network and first-run syndicated series with co-producers and international licensing partners. And since Universal Television combines international, domestic and first-run sales, McNamara insists on rebroadcasting series (often in the same week as the original broadcast), top pricing and choice time periods.

With the Multimedia acquisition came tall show powerhouses Sally Jessy Raphael and The Jerry Springer Show as well as the new Crook & Chase. Meidel said that buying Multimedia was "a very good move, given that it costs around $15 million to produce a one-hour daytime talk format." He continued, "And since it is such a crowded marketplace, if you look at the cost of failure versus the price we paid for Multimedia, that was a very good business decision." Universal plans to develop some new talk shows and is already producing three tall shows in Europe: Vanessa in the U.K., Catherine in the Netherlands and Vera in Germany. McNamara said that Universal will continue to increase its production of both network and first-run programming and that the company is currently putting a major effort behind Crook & Chase. "We are definitely working on new talk shows and other daytime shows for the future," commented McNamara.

Both McNamara and Nunez are fairly new to the company. McNamara started in April 1996 and Nunez started in January 1997. Since he came from New World. a somewhat smaller company, McNamara said, the biggest challenge for him at Universal was getting used to working at a large company. "I had to get accustomed to the power of output by a studio. It puts you in a different position with customers," McNamara noted. "The culture of Seagram is that of changing the standard way of doing things - not exactly like the typical entertainment company, which thrives on the status quo." For Nunez, the most challenging part of his job is staying a step ahead of a constantly evolving marketplace - trying to predict trends and demand for different genres of programming. "Universal has had a long history of producing quality dramas and action programming. Our task now is how to stay ahead, to be innovative and creative in the way we market ourselves with European alliances. Now a deal in Scandinavia gets attention. There are no small territories out there anymore," said Nunez.