Distributors find routes around Covid

December 17, 2020

Pandemic has benefited those with a big catalogue and nimble smaller players able to fill gaps in schedules.

Currently exiled to sheds, spare rooms and attics across the country, UK distribution executives sheltering from Covid-19 will be thrilled to learn that their industry achieved robust growth this year.

The Broadcast Distributors Survey headline figure of £1.88bn represents a 5% increase on 2019’s £1.79bn total in a field that is radically different to last year’s group. If it weren’t for the loss of Sky Vision, Kew Media Distribution and DRG from this year’s table, the industry would likely have topped £2bn.

True, a lot of the revenue in this year’s survey dates back to the pre-Covid era, but about half of our surveyed companies have year-ends that fell during the first wave of the virus in Europe. It’s an impressive endorsement of the sector’s resilience that it was able to keep driving sales despite the cancellation of Mip TV in April and a series of programme spend freezes and budget reductions at TV networks.

Table-topper BBC Studios played a significant role in this year’s strong results, with revenues rising 18.1% to £476m.

BBCS president of global distribution Paul Dempsey puts that down to “bigger risks” on high-budget shows such as Dracula and His Dark Materials, the scale and breadth of its near 43,000-hour catalogue, and strong relationships with both new market entrants and established partners such as European public broadcasters France Télévisions and ZDF.

“Our experience has been that our core customers are doing the same level of business but we are seeing new additive revenues coming from streamers,” he adds.

Dempsey is one of several execs interviewed who assert that this pattern has continued into the Covid-19 era. “Around 70% of BBCS shows that we distribute are back in production and will be delivered without too much delay,” he says. “In the meantime, customers have really leaned into our catalogue – with the result that 2020 has been strong for tape sales.”

In terms of the kind of content selling strongly since the coronavirus hit, Dempsey says children’s and educational content “stood out” in the early months, with comedy seeing “a surge as demand grew for comfort viewing”. Entertainment has also been in demand, he notes, but “it’s not as simple as saying more serious content isn’t selling well”.

Another key contributor to this year’s revenue growth is ITV Studios, which has leaped from fifth on the table to second on the back of a 48.5% rise in revenues that reflects an internal reorganisation at the start of 2020 – up to £318m. Managing director of global distribution at ITV’s production and sales arm Ruth Berry says this is the fruition of a strategy under which the company has invested heavily in content across a range of areas.

“We have an undeniable catalogue and a roster of formattable IP,” she says, pointing to shows such as The Voice, Love Island, Noughts & Crosses, World On Fire and India’s Wild Karnataka.

Like Dempsey, Berry says the scale and diversity of the distributor’s pipeline and catalogue have enabled it to ride out the Covid-19 storm.

“Demand has remained high from SVoD services, which have been less financially impacted than free-to-air broadcasters,” she says. “At the same time, we have seen good global demand for our library content as networks and platforms try to fill schedule gaps left by delays in production.”

Berry says buyers have been more risk-averse than usual during the pandemic, “so committing to new shows without proof of success in a major territory [such as the UK or US] is decreasing”.

As a consequence, interest in established entertainment formats such as The Voice, The Chase and Love Island has grown, while light-hearted series such as the Emmy-winning Canadian comedy Schitt’s Creek have “flourished”.

Third place in this year’s table goes to new entrant Banijay Rights, which has incorporated revenues from Endemol Shine International following the mega-merger of their respective parents.

Accurate year-on-year comparisons are not possible, but Banijay Rights chief executive Cathy Payne says the £302.7m headline figure represents an uptick from both sales divisions. (Last year, ESI’s revenues covering the full year 2018 were £250.1m, while Paris-based Banijay Group did not submit figures.)

Key to the firm’s resilience in 2020 has been its entertainment “superbrands”, such as Survivor, MasterChef and Big Brother, says Payne, who previously led ESI before taking on the expanded Banijay Rights role following the merger.

“At the same time, the merged divisions have complementary content, with ESI’s English-language scripted shows dovetailing well with Banijay’s non-English-language drama and factual slate,” she adds.

The latest run of money-spinning BBC drama Peaky Blinders has been delayed by the virus, but Banijay Rights has been buoyed by its catalogue, which now weighs in at a huge 88,000 hours.

Payne agrees that audiences and buyers have been “looking for programming that offers a distraction to the daily grind of news and Covid”, but shares Dempsey’s view that “lighter fare and escapist programming is not working to the exclusion of documentaries, current affairs and specialist factual”.

One anomaly Payne notes is that programming is finding its way into slots that would previously have been tough to crack – for example, DCD Rights’ Australian drama The Secrets She Keeps went into primetime on BBC1. “There’s also been a trend towards relicensing shows to deal with unexpected gaps,” she adds.

While Covid-19 has inevitably taken the eye away from other industry trends, the Banijay/Endemol Shine merger is an illustration of how consolidation is shaking up the UK distribution sector.

Sky Vision and DRG have both been lost to the survey because of takeovers, while eOne International Distribution is now part of Hasbro. NENT Studios UK – into which DRG was folded – is also looking for a buyer as its parent NENT Group focuses on supercharging its streaming service, Viaplay.

Kew’s overambitious expansion led to its collapse, but it did create an opportunity for Beyond International to acquire and absorb TCB Media Rights and create a bigger player – Beyond Rights. Banijay’s Payne says the market favours “big and boutique players”.

“As a large distributor, scale enables us to form deep partnerships with vertically integrated studios, many of which are streamlining commissioning teams and budgets across their linear and non-linear services,” she adds.

Fourth in the 2020 table is eOne International Distribution, which recorded a modest 2.9% drop in revenues to £285m. President Stuart Baxter says the reduced number of dramas coming through in the final quarter of the year resulted in the dip.

“We’ve been showing very strong year-on year-growth, so inevitably it’s difficult to maintain that upsurge,” he adds. “Nevertheless, we continued to see strong sales for key dramas such as The Rookie and Nurses, which was sold to more than 100 territories, including NBC in the US.”

Like all businesses, Baxter says his division was affected by Covid-19. “However, our distribution business and animation-centred family business continued to thrive, while live-action also continued to develop shows and package talent. Demand for content is high and we are fortunate to have a quality library of returning and new series.”

Demand has been affected by external factors, and Baxter recalls how “the hiatus of production and postponement of sports events caused an initial spike in demand” for eOne’s content.

“That has settled now but we are still seeing a very active market, where buyers need new shows. As a result, we are seeing greater demand for shows that have either not broadcast in a territory before, or broadcast with limited exposure.”

Demand for unscripted shows, which have broadly been able to resume production quicker than scripted, has also spiked, with animal, antiquities and investigation-focused programmes selling well.

Fortunate timing

In fifth place, Fremantle turned around last year’s 5% decline, growing 4.3% to £227.8m. While the firm is best known for its entertainment franchises, strong sales of American Gods, Dublin Murders and the remastered Baywatch underline the level of investment it has made in scripted content.

Chief operations officer for international Bob McCourt sums it up as “a strong performance in 2019 with a short- to medium-term impact on pipeline caused by Covid-19. That, however, led to demand for both new and catalogue content.”

McCourt says the timing of Fremantle’s dramas was fortunate, with most ready for delivery as Covid hit early in the year. “The result was that we were able to sell dramas into some slots that would have been occupied with other suspended shows,” he adds.

McCourt’s assessment is that the pandemic has triggered increased buyer demand for escapist programming in entertainment and drama, and also nostalgic content. At the same time, however, he notes new emerging trends: “True stories such as The Salisbury Poisonings and coming-of-age dramas like We Are Who We Are have done well.”

Furthermore, his team has seen buyer support “for shows that deal with issues that matter” – for example, Samuel L Jackson’s slavery history exploration Enslaved; Arctic Drift, a climate change documentary fully financed in-house; and Syrian civil was series No Man’s Land.

All3Media International’s revenues surged by 29.8% to £133.2m for the year ending December 2019 and its chief executive Louise Pedersen says a big part of that was driven by scripted co-productions with streamers. “Our top three shows this year all benefited from some streamer involvement – The Widow and The Feed had Amazon as partners, while Van Der Valk involved BritBox.”

She adds that both global and local SVoD platforms have been good partners – with Australia’s Stan and AMC Networks-owned Acorn “also party to recent scripted distribution arrangements”.

A big catalogue and strong pipeline are cited by Pedersen as the key defences against Covid-19 disruption. “Distributors have been exploiting their key brands to the max,” she says.

“Anyone who had a show ready to go at the start of the pandemic was in a strong position. Mining catalogues has been key and we’ve benefited from a new cloud-based asset management system from Knox Media Hub.” The top six companies now account for 92.5% of all revenues in our table. They are followed by Cineflix Rights, which has carved out its own revenue band at £55.4m (up 1.1%).

Cineflix Media chief executive of rights Chris Bonney, who is to retire next year, describes it as “a solid year”, during which drama began to play “a significant role” in company revenues.

A deal with Apple TV+ for Israeli-produced thriller Tehran is “an indicator both of the importance of the streaming market and the growing taste for non-English-language scripted content”, he adds.

Factual is still the bedrock of Cineflix Rights and requires it to take an aggressive approach to third-party acquisition – a strategy threatened by the growing market consolidation – but Bonney sees industry developments differently.

“We anticipate that consolidation will strengthen our position,” he says. “While rights retention is an issue, we are attractive to producers who feel disenfranchised by the bigger players. Producers with rights are looking for a distributor that will ensure their shows won’t get lost in a vast catalogue or be at a disadvantage to those produced in-house.”

After Cineflix, most remaining distributors in the table this year are focused on factual or kids’, with DCD Rights, Kew and TCB the key missing players.

Kew’s collapse has resulted in the formation of three new distributors: Jonathan Ford’s Abacus Media Rights, Graham Begg and Greg Phillips’ Rainmaker Content, and Paul Heaney’s BossaNova.

It also gave Beyond International the chance to snap up Heaney’s previous firm TCB, which was part of Kew, and the new outfit, Beyond Rights, weighs in with revenues of £27.9m. (The previous year, TCB posted £22.2m, while Beyond Distribution reported £12.1m.) Beyond Rights chief executive Kate Llewellyn-Jones says: “Factual was the lifeblood of both Beyond Distribution and TCB, with both investing in co-productions. As Beyond Rights, we hope to be a go-to partner for producers in this space.”

She also anticipates the company continuing to be an active player in the kids’ space, while handling rights to recent Australian drama Halifax: Retribution, from production label Beyond Lonehand, points to a desire to do more in drama.

Llewellyn-Jones says demand for Covid-themed and medical programming such as Recruits: Paramedics boomed as the pandemic first took hold, along with lifestyle shows such as Love It Or List It, but an “equilibrium, reflecting the need for breadth” has returned in recent months.

The Beyond Rights chief is under no illusion as to the challenges 2020 has created for the market.

“With a slew of major mergers, the rise of new global SVoDs and Covid-19, the past year has been one of the most challenging on record for the distribution business,” she says. “However, UK-based distributors are well placed to thrive – albeit they need to evolve and adapt some of their current models to do so.”

Factual demand

In mid table, TVF International, Passion Distribution and Hat Trick International report drops in revenue, but are broadly within the range they have occupied for the past few years. TVFI continues to rely entirely on third-party content. It is the largest player in our survey to follow this model and has more first-look deals than any other distributor.

TVFI director Harriet Armston-Clarke says there is an advantage in being a broad-based factual specialist. “We have seen increased demand for volume lifestyle shows such as The World From Above,” she adds. “Factual in general has been a safe bet for buyers, as many productions have been able to continue.”

Nick Rees, chief operating officer of factual and distribution at Passion Distribution parent Tinopolis Group, says 2020 has been a challenging year for sourcing content acquisitions but Passion has the advantage of being affiliated with Tinopolis’s group of production companies, providing a secure pipeline of content.

It’s a similar story at HTI, where around half of the catalogue comes from producers within the Hat Trick Productions family. At the same time, the distributor has solid relationships with around 20 third-party indies, according to HTI director of sales Sarah Tong.

“We are constantly on the lookout for indies that want the kind of bespoke, independent service HTI offers,” she says, adding that this is why the company hired industry veteran Hana Zidek to oversee third-party acquisitions.

Kids’ specialist Cake reports a 42% drop in revenues, but chief commercial officer and managing director Ed Galton says this is purely a technical issue, to do with the way money is categorised for accounting purposes. In reality, he says, the firm is busy across production, co-production and sales, “as well as being profitable” – Cake’s key measure of financial health.

“No one can deny we’re experiencing a down economy, but the sector needs great kids’ content,” he adds. “We’ve established good relationships with streamers, but are also delivering ambitious shows to linear channels.”

Companies posting revenues under £5m have broadly reported growth in this year’s survey. As Orange Smarty chief executive Karen Young puts it, “a disrupted year brings innovation and an opportunity to embrace change”.

With revenues up 6.5% to £3.9m, she adds: “As a boutique distributor, we have benefited from the ability to be quick and nimble in response to external factors – we are not tied by corporate bureaucracy.”

Large-scale distributors tend to view small- and medium-sized firms as most at risk because of their lack of financial muscle and restricted access to content pipelines, while the smaller players see larger firms as weighed down by overheads and red tape. They also see their own personalised services and intimate knowledge of catalogues as key differentiators.

“Buyers will be more cautious in the coming year, meaning they will look to those trusted relationships that guarantee quality programming,” says Young.

Mothballed productions

Among the other boutique players, Drive joint managing director Lilla Hurst reports a 35.8% revenue increase at her company, which has significantly enlarged its catalogue, from 200 to 500 hours. She says channels have been “leaning” on the company to acquire programming that can “fill empty slots created by mothballed productions”.

Meanwhile, 3DD Entertainment chief executive Dominic Saville says the continued popularity of UK programming has contributed to his company’s resilience in posting 4.4% year-on-year revenue growth.

Dominic Gardiner, chief executive of Jetpack Distribution, which has fallen 24.4%, is “hoping things will improve quickly”, while Parade Media chief executive Matthew Ashcroft says his company has responded to market demand for “cost-effective premium factual programming”.

Magnify Media’s revenues have risen 3.4% this year. Chief executive Andrea Jackson says that while all distributors have “had to adapt quickly”, technology has allowed Magnify “to minimise negative impact and create dialogue regardless”, adding: “Next year won’t be straightforward, but I expect to be able to navigate it.”

Sixteenth South Rights, the smallest distributor in the table, can meanwhile look back at the 2020 Survey as the year it came out top of the pile in revenue growth (60.7%).

In a year of uncertainty, change and challenges, the UK’s distributors have forged their own paths to survival and, in many cases, expansion.