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Endemol Shine International CEO Cathy Payne on making drama that sells worldwide.

INXS: Never Tear Us Apart is Endemol Shine International (ESI), headed by London-based Australian Cathy Payne. She has been embedded in the Endemol side of the business for decades through takeovers and mergers involving Southern Star, Fairfax and others. The Endemol Shine Group is one of the world’s major TV conglomerates. In 2015 its 120 companies in more than 30 markets produced more than 700 productions in more than 50 languages airing on about 250 channels. Endemol Shine Australia and Endemol Shine Banks made some of these shows. About 40 per cent of the properties ESI distributes are made outside the company, including by Seven Productions.

<h6>Cathy Payne</h6><p>Chief Executive Officer, Endemol Shine International</p>
Cathy Payne

Chief Executive Officer, Endemol Shine International

First some background

“Endemol Shine International employs 83 people based in nine locations with our head office being in London. There are 40,000 hours of programming in the catalogue. Third party acquisitions make up 40 per cent and the rest comes from Endemol Shine companies. We now produce in more than 30 countries, including South Korea and Turkey. ESI’s returning client base includes more than 400 linear and non-linear broadcasters, platforms and home entertainment distributors.”

“ESI invests significantly in order to retain distribution rights, with the largest share being for scripted programming. What you invest in a particular title is a reflection of where you forecast you can sell the title. We have a good understanding of what sells where and what the market is looking for at any particular point in time. We position ourselves as a broad audience distributor and look for product that has the ability to sell across a large part of the globe; we tend not to involve ourselves in specific genres such as arts or specialist history.

Broadcasters want one-hour returning series

“Most of our third party acquisitions these days will be big bets: that is, very ambitious scripted and non-scripted series. Since the merger of Endemol and Shine we do have a strong internal flow of product, however, we are always active in seeking out particular titles of interest from the independent sector. In terms of duration, and in particular with scripted, broadcasters’ preference is for one-hour returning series with a minimum of six episodes. Mini-series and one-offs do not give the opportunity to build a returning audience.

“If a show is based on a previous piece of work – a book or a remake – it will have an audience already and that’s good. For specific projects we invest in early development, however, our larger financial investments are normally confirmed when the primary broadcaster is secured. Who that broadcaster is will say a lot to the international market regarding the look and feel and likely audience.”

“Australian drama is often quite safe”

“I love Australian scripted series but the truth is that most are not selling well internationally. The Australian commercial channels are commissioning to appeal to their audiences, which have to be their number one priority, and often the most successful local series are very domestic in nature. Just like in the UK, this success often doesn’t translate into international appeal.

“Australian drama is often quite safe and not distinctive. To appeal internationally producers need to embrace bold storytelling and not be afraid to take risks. Of all scripted genres, the contemporary relationship drama is the hardest to sell widely as most markets produce their own.

“You could say that The Slap (represented by DCD Rights) is relationship drama, however, it had a number of strong selling points: it was based on a book and had a central universal issue – hitting someone else’s child –and internationally recognised cast.”

A Place to Call Home series 4

The Aussie drama that sells for Endemol Shine internationally

Home and Away is still our highest grossing Australian drama, driven by its huge success in the UK. (It was originally seen on ITV before moving to Five in 2001.) The Seven drama team has kept Home and Away relevant and successful for so long – what a list of international acting talent it has given birth to. The end of Season 29 marks 6750 episodes and we are starting to plan its 30th anniversary!

“Our best-selling Australian drama is A Place to Call Home, one of only a few Aussie dramas on the BBC – on afternoons not in primetime. (Seven Productions produced the show first for itself but then for Foxtel. The fourth season premieres in September 2016 on Showcase.)

McLeod’s Daughters is very successful in terms of markets sold. The 224 episodes are now available in 18 languages. While it has not been produced since 2008, with that language asset library, you find new homes on new platforms regularly, particularly as it was shot in HD. It is great to sell a series the first time, but it is when you are able to relicense it for the second and third times that you can really start to build on the royalty potential.

“It would be great to have more series that break through. But, unlike 10 years ago, most of the larger Australian producers of scripted programming now have an association with bigger companies: Matchbox with NBCUniversal; Screentime with the Banijay/Zodiak Group; our own Endemol Shine Australia (which means the rights are not available to any other company).

INXS: Never Tear Us Apart made it into Screen Australia’s top sellers list because of a significant sale to the US – the band was huge in America. It was sold in some other countries but not to the UK.

“Australia is regarded as a great talent pool. I’m working with a lot of writers and directors and actors living in London or the US that I used to work with in Australia.”

Luke Arnold stars as Michael Hutchence in INXS: Never Tear Us Apart

The Endemol Shine Aussie drama selling locally

“We have another biographical mini-series, Peter Brock, coming through under the Endemol Shine brand and will rely on the Australian and NZ market to largely recover our investment. I expect 70 per cent from local. Local also drove revenue on Peter Allen: Not the Boy Next Door, Howzat – Kerry Packer’s War, Power Games: The Packer-Murdoch Story and Paper Giants. That said Howzat screened in the UK but on BBC4.

“We now have more than 70 episodes of Offspring. (Produced under the Endemol Shine banner, season six premiered in June 2016 on Channel Ten.) Being that it sits in the contemporary relationship genre, 70 per cent of its revenues come from Australia and New Zealand too.

“DVD is still a good market in Australia, as is subscription video on demand (SVOD). If Offspring didn’t have that secondary window life we couldn’t afford to make it. Some say home entertainment is dead, however, while some of that business has moved into the streaming area, you can still make significant revenues from series if you can protect your windows so that each does not cannibalize the other.”

Comparing Australia and the UK is illuminating

“Australia is a small market of 23 million people and that only allows a certain production cost. With 64 million in the UK there’s more revenue to support original storytelling. The UK probably spends double on development and script. British scripted has reinvented itself over the past 10 years. While writing was always very strong, that combined with packaging talent on screen and behind the camera, has improved its appeal internationally.

“Our current slate includes Steve Knight’s Peaky Blinders with Cillian Murphy and Tom Hardy, The Fall with Gillian Anderson and Jamie Dornan, Rowan Joffé’s Tin Star with Tim Roth and Christina Hendricks, John Ridley’s Guerrilla with Idris Elba and Freida Pinto, and Delicious with Dawn French. That is some serious packaging behind and in front of the camera!

“In general, outside of big budget packaged shows like these, there is limited opportunity to presell before something is screened in its own territory. There’s never been a time when there’s been so many buyers for scripted but there’s also so much being made and buyers have the luxury of being able to wait and see how shows perform.

“What works is not always predictable: the tough British series Happy Valley is set in a grimy northern town, nothing nice happens and it is not packed with international names. However, the quality of Sally Wainwright’s writing and vision and a standout ensemble led by Sarah Lancashire delivers on all fronts. It was a must-watch binge view for me.

“The value of programming fluctuates wildly but we can achieve very significant revenue per episode for the British scripted – seven figure numbers plus per episode. Outside of the phenomenal Home and Away, we have never had an Australian drama that attracted revenue to the level of a big British or US show. The most successful might demand 30 per cent of a British success.”

Revenue from US drama is down

“The big change in scripted drama is that revenues are in decline on a lot of US product – although self-contained episodic procedural shows still travel. The highest rating US show in the UK in the last year, the reboot of The X-Files, attracted an average of 3.6 million consolidated viewers. In comparison, the local show Call the Midwife achieved an average consolidated audience of nearly 10 million.

“The cost of US production hasn’t gone down so something has to give. There’s more direct-to-series drama to amortize costs, for example, rather than making expensive pilots that can cost anywhere from US$6 to $10 million.

“The growing amount of scripted on a wide range of US cable channels naturally aims to -first and foremost – cater to their audience; so the shows won’t have the same international audience appeal (as broadcast shows). But a huge hit in the US, even on broadcast television, does not guarantee that it will travel internationally as it once did. Empire is an example.

“You always hear about the hits but don’t hear about those that don’t sell. Internationally we all know of the huge success of Breaking Bad, The Walking Dead, Game of Thrones and Homeland, but there are hundreds of others produced for cable with seven figure deficits that will not find an international audience.”

Some thoughts on SVOD services

“Streaming services such as Netflix have opened the audience up to scripted content from all around the world and offer producers the opportunity to tell stories without commercials and other constraints (for example, episodes being the same length).

“Netflix wants Australian drama but has a remit of exclusivity and if something is commissioned for Seven it’s on Presto, or for Nine it’s on Stan. Netflix prefers to have a show for everywhere and, in particular, needs the domestic second window. Netflix also comes on board for enhanced presales: a second window locally and a first window everywhere else.

“When Netflix launches in a market it also needs library product, however, as its audience has grown it has become more discerning. Basically it wants product for a global footprint – great for actors and creators because that translates into global exposure.

“Other over the top (OTT) SVOD services include: Amazon, which only exists at this time in the US, Germany and the UK, although it plans to roll out into more global territories in the near future; YouTube Red, which is a global service; and Hulu, a US service. All three commission originals – Amazon pilots its scripted series – as well as being in the market for enhanced presale acquisitions.

“There is also the middle ground between an enhanced presale and a co-production where the level of investment will provide certain editorial involvement. All the platforms want models that will extend their programming budgets. Investments buy exclusivity and come with holdbacks on EST (electronic sell-through) and linear television. This has a very significant effect on the overall financing and cash-flowing of a series: if more rights are restricted or eroded upfront by extended holdbacks then there will be less revenue we can invest.”

Howzat: Kerry Packer's War

Australia holds its own in reality

“Big reality shows are still selling very well and there is great non-scripted talent in Australia. We represent, outside of the UK and the US, the Seven Network created-and-owned format My Kitchen Rules. It has recently been renewed in Belgium and Norway and other markets are under negotiation.

MasterChef was on the BBC for many years but what turned it into a global success was MasterChef Australia. Dancing with the Stars, the Seven Network version of Strictly Come Dancing, laid the groundwork for the growth of that format. The manner in which both were adapted demonstrated to the world how each could travel.

And, finally, how to make everyone happy

“For us, success means finding an audience for our broadcasters (through the shows ESI sells to them), getting our advance repaid, and investors/talent receiving royalties because that makes everyone happy.”

During the interview, Cathy drew attention to a distribution survey published by Broadcast that showed Endemol Shine International had the second highest turnover in the UK. BBC Worldwide had turnover to April 2015 of £321 million (A$544m) and ESI’s was £211 million (A$358m).