How realistic are partnerships? A U.K. case study.
The first is the amalgamation of Granada Television International and LWT International, the second, of Yorkshire Television International and Tyne Tees Enterprises.
The mergers are symptomatic of the upheaval recently experienced by the international sales operations of the regional producer/broadcasters that comprise the Independent Television (ITV) network.
But the question that will eventually need to be answered is whether these two partnerships will work, and if the four participants are in danger of losing their long-established independent identities.
In the last ITV franchise period, which ended last December, the network comprised 15 regional stations, each with a costly sales division. The recession has hurt the world's broadcasters: program acquisition teams are constrained by reduced budgets, and ITV's distribution revenue has dropped. According to the UK government's Central Statistics Office, the total British TV and film industry last year reported its first loss ever in overseas sales - a pounds 45 million deficit (although its figures fail to take co-productions into account). To cut costs and improve profit margins, marriages of some kind were inevitable. But now it is asked did GLWTI and YTTI jump into bed with the right partners?
Industry observers point out that whi Ie other ITV distributors, Central Television Enterprises and the recently formed Scottish Television Enterprises retain their individuality, the former LWT[, Granada TV International, YTVI and Tyne Tees Enterprises threaten to submerge their identities into each other. In fact, when Thames International nearly linked up with Granada. a Thames spokesperson commented that, "It could prove too complex and diminish the individual profits that each company has built."
So how solid is the foundation of GLWTI? Although GLWTI takes a commission from sales, all royalties go back to the program's originator. No framework seems to exist to correct the imbalance if the catalog of one partner sells more than the other. And potential co-producers are free to approach either GLWTI, Granada TV or LWT - there is not one central point of communication.
Sydney Perry, chief executive of GLW'FI and former managing director of LWTI, insisted that his company has no fears about suffering an identity crisis. He denied there will be any temptation to promote LWTI's programs more heavily than Granada's. "there is no advantage for us to be biased. Our combined forces mean there is opportunity for growth from a stronger platform." He also refuted allegations that a conflict of interest is expected when chasing pre-sales cash for the respective production arms of Granada and LWT, or that loyalties will be strained when a buyer is seeking a genre of programming available from both.
You have the programs of two great producers whose repertoire is known worldwide," said Nadine Nohr, GLWTI's head of sales. 'The two have also invested time and effort in building the most efficient sales teams. Now there is a coming together of minds because we complement each other in the type of drama we produce. LWT is also strong in light entertainment programming; Granada is strong in documentaries. LWT is a weekend program-maker. Granada is a weekday program-maker. And both companies have been involved in all areas of program exploitation."
With the combined two catalogs, GLWTI will supply one-third of ITV's programs. In 1991 the ITV companies were responsible for about pounds 90 million worth of international sales including co-productions and pre-sales. "We will be the biggest distributor on ITV," Nohr added. Perry said last year's overseas sales. excluding co-production, amounted to pounds 6 million each for the two previous independent distribution arms. GLWTI will bring in at least pounds 12 million in its first year, he said.
YTTI promises to offer buyers a bright, younger dynamic team with not only marketing and promotional skills, but also a background in production. YTV International. whose parent company YTV Holdings has merged with north-eastern England broadcaster Tyne Tees TV Holdings to form a new ITV company called Yorkshi re-Tyne Tees TV Television (Y-TTV), will contribute a portfolio of drama series, serials and documentaries to complement Tyne Tees' strength in music programming. The teaming with Tyne Tees tempted music program-maker Big Picture Productions, a former Granada TV independent production company subsidiary, to move to YITI.
"In order to sell a product. you need to know how it can be done." said Sarah Doole, 31 year-old director of Yorkshire Tyne Tees Enterprises (YTTE), which is part of Y-TTV's program production division and is responsible for YITI. "the sales team is now part of our program-making division." Doole, who used robe in production, replaced Roy Gibbs, the former YTVI's head of international sales.
"This is a new generation of sellers, a young team. We want everything to look positively bright. We want to be noticed," she explained. Doole has appointed Ann Gillham, TyneTees Enterprises' international sales manager, as business manager to liase with independent producers whose projects are on YTTI's books.
YTTE will be placing more emphasis on merchandising programs; and will retain video distribution rights for the first time: "We plan to maximize revenue in every way." All profits will be poured back into programming. YTTI's first year sales will be based on the combined 1991/92 revenue of YTVI and Tyne Tees Enterprises. According to their 1991 annual reports, that amounted to about pounds 5.2 million.
Ironically, the ultimate threat to the GLWTI and YITI mergers could come from their parent companies. Their priority in the new ITV franchise period is to sell to the domestic market, to maintain the loyalty of their regional audiences, and to sell programs to the powerful ITV central scheduler who controls what is acquired for the national network. Gone is the cosy cartel of the former franchise period when Granada, YTV and LWT were among the Big Five whose productions were guaranteed network transmission.
LWF Holdings, which financial analysts predict will be very influential in the next decade, reported a 40.6 per cent increase in pre-tax profit to pounds 13.7 million in the six months to June 30. It will seek to maintain the momentum by reaping profits from its 20 per cent stake in GMTV, the new breakfast TV broadcaster, and its 50 per cent share in the new regional news service London News Network. The Granada Group reported a 50 per cent increase to pounds 33 million last December for its TV division, but it is still bruised from the drastic cuts that followed a long line decline in profits. Granada had not even bothered to detail overseas sales revenue in its 1991 annual report. And Y-TTV will be investing resources into recouping the combined pounds 53 million a year it has to pay for its two broadcast franchises.
GLWTI and YITI could point out that, in a less secure domestic market, now is the time to embrace sales even more.
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|Title Annotation:||U.K. Report|
|Publication:||Video Age International|
|Article Type:||Cover Story|
|Date:||Feb 1, 1993|
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