Seperating Production from Broadcasting

An analyst in the US has apparently looked at Disney and determined that one strategy is for Disney to sell its 10 ABC channels and exit the broadcast distribution of video content. NBC has been selling stations piecemeal since 2006. News Corp’s Fox has been selling smaller stations to concentrate on the ones in the largest markets.

I seem to remember a recent quote from ITV (and I may be mistaken but I thought it was Michael Grade) that their vision was to be “a content producer that just happens to be a broadcaster” rather than a broadcaster, that also produces content.

Two reasons behind this: -
1. Money - They are making less money out of broadcast and see no way of significantly changing that. Coupled with the need for investment in Digital and HDTV capabilities and with a slow or no return on that investment.
And the second reason is
2. Money - Producing exclusive content for a single technology and with a single primary route to market is risky in the rate and speed of return on the production costs.

Not surprising then that money is the reason as large corporate organisations are run by accountants and not entrepreneurs or creative artisans and ultimately the stock market’s demands for growth and dividend take their toll. Some stations are delisting in the USA as they are bought by private equity. These private equity owners may allow more creative freedom but that won’t solve the inefficiencies in the stations’ operation.

Smaller TV station groups and single stations may be able to run more efficiently. (Buying advertising spots would become more complicated for brands and agencies so some spot aggregator would be needed.) However, the real problem is that many of the people in the day to day running of broadcasting have worked their way up over 20, 30 or 40 years from cheap student labour they have moved from one company to another in a very incestuous industry. Rocking the boat is not the way to get on so received wisdom pervades. The industry needs some outsiders (not accountants or CEO’s or CTO’s) that know how to organise and run efficient repeatable processes. Not just cutting head count and making those behind work harder. People are needed that can remove the operational cost and time to get content on air. People that can cut through the fiefdoms often found in broadcasters, drive out the operational synergies between stovepipe divisions of transmission, network, home entertainment, news media, spot sales and content sales. Release people and money to buy and create compelling content.

On the second reason, making content that has multiple routes to market reduces risk. Take a programme forecast to bring in 8million viewers. The ad space is sold and only 4m turn up suddenly advertisers are complaining and the decision to stick with it or pull it has to be made. The investment in time, effort and money is lost if its pulled but there is no point spend good money after bad. Action is required, so the programme is pulled so the production resources can get the next project out the door to fill the slot.

As an agnostic producer if the programme is pulled. The third option is open, to switch/sell it to another channel where 4m would be a good size audience or via an IPTV, ISP or mobile route to market.

The point is that as a content producer you are not tied to an outlet that drives a creative idea to be dropped rather than developed. So in the UK you could see BSkyB bidding for the rights to Coronation Street. In the USA “24” on ABC or High School Musical on Fox.