TV Producers or Brand Managers

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The shift of earning power from TV sales to consumer products has had a profound effect on the way television production companies bring their products to market. Content producers are becoming aggressive guardians and marketers of their brands. With MIP TV approaching, we look at how independent producers are harnessing their intellectual property rights.

The stage on which television is made and broadcast has changed dramatically in the last ten years. In the early 90s, channel proliferation and enthusiastic investors meant great demand for programming. It was still possible to make a series for children based on the income generated from a commission and some pre-sales.

However, particularly in the pre-school market, those days are gone. Investors are less seduced by programme making, there is more local production in each territory, channels have stopped their rash-like growth and there are far more pre-school shows around. It's a buyers' market and they know how to drive a bargain.

All this puts pressure on producers to find increasingly ingenious ways to generate revenue from their programmes. In marketing circles, such a thing is known as leveraging your assets.

The picture that emerges is one in which merchandising and licensing fuels TV production but in which 'quality' TV content is pre-requisite. However strong the pressure to generate income is, there have been enough examples of putting toys first and content second to convince every one that you have to start with a good show.

All the activities that follow this are essential to ensure your good show gets made, becomes profitable and lives in the hearts of buyers, parents and children for longer than one season. The success stories make the formula tempting: you make a series, put the budget the size of a small company turnover behind its marketing, put in place a roster of quality licensees and before you know it the show is earning you millions through the sales of video and licensed merchandise.

In the UK there is a particular model of production company emerging. The Hit model of owning the production, video and licensing functions, makes obvious sense and other, smaller companies are applying the same logic. (Hit itself was a small company not so long ago.)

Contender Entertainment Group evolved from being a video label in 1995 to being a production company with its own video, publishing and merchandising businesses when managing director Richard Bridgwood (previously at Hit) realised that income-generating video distribution was a sensible basis for the riskier (but potentially more rewarding) business of making television programmes. He describes it as the tail wagging the dog. Contender's first step was to set up a publishing division, partly to create another cash-generative operation but also to have access to the immense and diverse creativity that is in children's writing and illustration. It was from a published idea that Contender's first pre-school show Tractor Tom originated.

Richard is one of many managing directors who talks with a passion about his show because the truth is: everything rests on it. It is only now that Tractor Tom is on air and has the key licensing deals in place that Contender is adding a second show, Peppa Pig, to its offering. Hit might have a development slate which is bringing many projects to maturity in succession but it is more often the case to have one show in the limelight at a time, receiving the focused efforts of the whole company. As Richard says you put everything you can in place and then you have to rely on having made and done the very best you can.

UK producer Pepper's Ghost has become a company of multi-skilled brand management teams focused entirely on the success of, in this case, Tiny Planets, which was in development for five years. Paul Michael, managing director at Pepper's Ghost, suggests that to increase the likelihood of success you must stay at the quality end of the market, offering something unique and very special. Exploiting the rights yourself helps you maintain this quality. 'I describe myself as a producer', says Paul, 'but I am really an intellectual property builder. We get right behind it, don't dilute it and then keep looking at ways to evolve. Who better is there to be the guardian of the brand than the creators of it?'

The phrase 'all your eggs in one basket' comes to mind. It's a huge effort put behind one idea. But people seem more candid about the quest for profits, too. The creative and the commercial objectives are now proud bedfellows. 'The financial return has to work,' says Paul Michael 'and that's the benchmark. That's how you create funds to develop more programmes.' Richard Bridgwood admits he is aggressively commercial but that he sees quality as a prerequisite to this. 'There's a discipline involved. You want to create a peerless product.'

In programming aimed at an older children's market, merchandising isn't the 'must-have' in order for a show to get made. Why is this? It's partly because broadcasters pay more for these shows than for pre-school shows but also because co-production is more common. Even the BBC acknowledges that for this age group, co-production is a viable way to get shows made and that it has the added benefit of making a show more international if an overseas partner is found.

European broadcasters are less keen on pre-school programming than those in the UK and as a result there are more programmes for older children where licensing isn't appropriate. There is a long history, particularly in France, of co-production, which spreads the risk and means merchandising revenue is less important to complete the financing. 'Licensing is becoming much more important in non-UK European territories but it still isn't the tradition,' says Maia Tubiana, managing director of producer France Animation. 'We mustn't forget that in terms of licensing, Europe is still a fragmented territory, not to mention one of individual cultures and styles'.

It is for these reasons that many producers, even those determined to manage their own properties, allocate agencies for different territories. For example, Pepper's Ghost will look to agencies to manage Tiny Planets abroad once it has established success in the UK, as that's where all the other territories look for comparisons.

Although most companies want to hang onto their intellectual property rights it's clearly important to recognise when to be flexible and when it's not necessarily the right thing for the brand. UK production company Tell-tale is representing its new show for 8-12 year olds called Sprogs. However, its pre-school show Boo is managed by Universal Studios. Tell-tale's Karl Woolley explains this is because Boo 'caught fire' so quickly (it sold in 25 territories in the first two months) that it needed action and it was appropriate for Universal to handle it. It involved speed and skills that Tell-tale couldn't necessarily offer in house.

In France and Germany broadcasters often demand some merchandising rights along with distribution. Canadian production company Decode sees that this can be a benefit. 'To get good placements, there are certain rights you might have to relinquish but we always retain as much as possible. If you can motivate the broadcaster you can get great results,' says Decode partner Beth Stevenson.

Decode also sees the benefits of accessing experts who can do the best for your programme, especially as each one requires a new licensing model. 'Our core business is making TV. Some programmes lend themselves to licensing, others don't. Just because it's on the air and doing well doesn't mean that products will work,' says Beth. She points to Rugrats as a logical model: 'It was on air for two years building awareness and that spawned a successful licensing programme. For a company like ours if the product comes out too quickly and doesn't sell through, it's a disaster'. So for Decode's new preschool show Franny's Feet (commissioned by UK broadcaster Five) the plan is to get it on TV and take things a stage at a time.

For France Animation, the animated show Titeuf is the intellectual property model it would like to replicate. Titeuf was spotted just before it was very well known, the perfect time to develop a property. France Animation aims to be a major partner in projects (i.e. the maximum financing partner) and to acquire properties with strong merchandising potential. 'This is not because we are looking for high volumes of programming but because we want properties we can maximise opportunities for,' says Maia. France Animation has no in-house licensing so it can think about the properties on a case-by-case basis. For Titeuf, the logic was for Glat, the publisher, to manage the merchandising.

Rumours abounded at MIP COM in October that production companies were giving shows to broadcasters in order to guarantee airtime, which will support merchandising. Unsurprisingly no one is especially prepared to discuss whether this is the case or not. But Richard Bridgwood suggests that although you don't want to give anything away, you have to be flexible. and think ahead to the best thing for the property. 'You have to be ready to have conversations about consumer products at all stages,' he says.

Whether or not the rights to the show remain with the producers, Tell-tale's Karl Woolley suggests what matters most of all is the licensee having access to the creative process so that it comes to the project creatively as well. 'When Tweenies was being made we showed licensees round the studio every day to encourage a full understanding of the show and the logic behind it,' Karl says. Tell-tale's track record of the Tweenies helps it open doors at very early stages, but Karl says they are also sensitive to licensees' requirements.

Video and publishing generally make up the lion's share of merchandising income, helped if the company owns the video distribution, such as the case with Entertainment Rights or BBC Worldwide (which sold more than half a million Tweenies and Fimbles videos in the build up to Christmas 2002). In a typical example, merchandising income as a whole probably contributes two-thirds of the total income for a show. A quick look at the results of a company like Hit reveals that the contribution TV sales make is shrinking all the time.

Richard Bridgwood regrets the small number of companies now in the market who can really invest. 'What we need now is companies taking a risk; people with enough money to take a punt on exciting new ideas.' Contender will put quarter of a million pounds behind the Tractor Tom video launch because it feels it's worth it to launch properly. But he thinks there aren't enough companies like the BBC and Hit that have sufficient capital to take the lead.

How the financing of TV production will develop in the future is interesting. US retailer Toys R Us has suggested it's not impossible to imagine a retailer financing a TV series. Whether we ever see this in Europe or not, it's true to say there is now a different mindset; one of creating a virtual circle where children first of all enjoy a TV series and then excercise their demand for toys and videos.

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