MIPCOM 98: A Show of a Different Color

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Cannes, France -- MIPCOM, the annual international program
market, held here earlier this month, exhibited some sharp contrasts with editions in the
recent past, and much of that had to do with the Asian economic crisis and the growing
maturity of the pay television business worldwide.

"A year ago, the Asians were here in droves," but
that wasn't the case this MIPCOM, according to Ed Sullivan, president and CEO of
Pittard Sullivan, a California-based company involved with on-air graphics design and
marketing.

Sullivan did note, however, that clients visiting his suite
across from the market's venue, the Palais des Festivals, did include executives from
India, China and Japan -- most notably in the direct-to-home sector.

While the Asians weren't there en masse, they
definitely were on the minds of several programmers who attended the market. One top
official at a major U.S. panregional programmer in Asia estimated that subscription
revenue for his networks would be off by about 20 percent this year.

The good news is that many panregional programmers in Asia
have not suffered losses on the ad-revenue side of the equation.

What's troubling some, however, is that the
renegotiation of subscription fees with Asian operators hasn't ended; they keep
coming back for further reductions. "It's like Swiss cheese, but the holes keep
getting bigger," said one top official at another major U.S. programmer, speaking of
Asian trouble spots such as Indonesia, Malaysia, Thailand and Taiwan.

In particular, he noted that Taiwan's two main MSOs,
Videoland and Rebar, are asking panregional programmers for new cost reductions that go
well beyond adjustments for the economic downturn.

The duo are involved in both operations and channel
distribution, and they are in the process of combining some of their distribution efforts.
"They're going to their respective channel partners and asking for significant
reductions," the source said. "They're coming from an extreme
position."

That's particularly troubling because Taiwan, although
relatively small, has a very high subscription-TV penetration, with about 4.5 million
subscribers, accounting for as much as 40 percent to 60 percent of all Asian subscribers
for several panregional programmers.

Another troubling market is India. Several U.S. networks
received visits recently from Indian government officials who informed them that the
country's new broadcast legislation is likely to be passed in two months' time
-- with the stipulation that most program networks targeting India cannot have more than
20 percent equity ownership from overseas investors.

Despite those grim reports, networks like Viacom
Inc.'s Nickelodeon and Kermit, a joint venture between Hallmark Entertainment
Networks and The Jim Henson Co., are moving full-steam ahead in Asia. Their executives at
MIPCOM noted that they considered the economic downturn to be an opportunity to gain
market share.

That was also the philosophy of Bill Simon, managing
director of the global entertainment and media practice at executive-search firm
Korn/Ferry International, who noted that his company's Asian business will be off by
about 25 percent this year.

One U.S. channel widening its international vistas at
MIPCOM was Lifetime Television. That network took exhibit space for the first time, with
the objective of distributing some of its original series overseas in program blocks or a
la carte -- an activity that's already borne fruit in several markets.

Lifetime has always refrained from full channel expansion
internationally. But the network's president and CEO, Douglas McCormick, said he
expects one of its series -- half-hour magazine show New Attitudes -- to provide
the seeds for a full-blown network over time, with an overseas debut occurring before U.S.
distribution.

From the perspective of America's major studios, the
notable difference at this MIPCOM was the lack of any "hot" market for pay TV
licensing deals.

"This is the first year [in recent memory] when a
major new pay TV deal wasn't announced at MIPCOM," noted Jack Waterman,
president of worldwide pay TV at Paramount Pictures' TV group. His company was one of
only a few American programmers to drop word of new channels that are about to debut.

Paramount's latest offspring will be a version of its
Paramount Comedy Channel for Spain, with a launch on the CanalSatelite DTH platform in the
first quarter of next year, although distribution will not be exclusive to CanalSatelite.
An official announcement of that network is expected shortly.

Nickelodeon is expected to share the channel slot with
Paramount, with Nick taking daytime hours and Paramount taking evening hours, as the
services currently do in Britain.

Here are some other highlights of international network
activity at MIPCOM:

• Disney Channel's launch in Italy Oct. 3 was
quickly hailed as a success by both Disney and Telepiú officials. They said 46,000
subscribers had signed up for the service at launch, paying about $7 per month for the
premium channel.

Disney's next major European expansion will come in
Germany, with sources indicating that the channel launch will take place in October 1999,
most likely as a premium service, as well.

• E! Entertainment Television signed a deal with
London-based distribution company Zone Vision to launch a 24-hour service in Poland by the
first of the year and a Russian service later in 1999. Chris Wronski, Zone Vision's
president and CEO, said his company will handle dubbing and other production-related
duties, as well as carriage deals with cable operators.

Separately, Turner Broadcasting System Europe Ltd. signed a
broad deal to allow Zone Vision to handle distribution activities and related business in
Central and Eastern Europe for Cartoon Network, TNT Classic Movies and CNN International.
The three-year pact includes all countries in the region except Poland, Slovenia and
Bulgaria.

• Don Wear, president of Discovery Networks
International, said a production pact announced here with French channel Voyage could
ultimately lead to the two companies working together on new channel launches in France.

• George Stein, president and CEO of Hallmark, said he
expects to crack the U.K. market soon with cable distribution for flagship channel
Hallmark Entertainment Network.

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