Kate Bulkley, Media Analyst.

Media money: Is the US now looking more attractive to British indies?

By Kate Bulkley

Broadcast News

For Broadcast December 06, 2007

Shine's prospective £97 million purchase of Reveille, the biggest US indie and maker of Ugly Betty, is the latest sign of the growing clout of UK producers in Hollywood.

The success of UK factual entertainment formats in the US market has opened doors in LA and the US scriptwriter strike is offering increased possibilities for UK producers.

Before the ink was dry on his £25 million deal to sell Wall to Wall to Shed Media last week, founder Alex Graham was on a plane to LA with Who Do You Think You Are? scripts and reels in his hand luggage. Meanwhile, Shed-owned Ricochet is also adding to the bottom line, with half of the profits for the producer of Supernanny coming from the US.

Currently Ricochet is producing six shows in the US, including two for big broadcast networks, with four more in "funded development" with US broadcasters.

Shed is also hoping to take back the license for a badly-executed US version of Footballers' Wives and give it to another US network (NBC is interested) for a second try. "The US market is massive," says Eileen Gallagher, CEO of Shed Media. "The margins are bigger certainly with the big broadcast networks."

Scale is also important. As well as becoming a £100m turnover company, the deal to buy Wall to Wall makes Shed Media much more diversified than when it floated two years ago. with more current and future programme "brands" to exploit.

Non-scripted fare will likely continue to be the way into the US market, but the Shine-Reveille tie up will help change that balance. Shed plans to make more US programming rather than simply licensing formats and surely more Brit-inspired fare will appear on US networks before long.

Just this week CBS green-lit the ninth US edition of its summer staple Big Brother. But this edition won't be waiting for the summer months - it will air early next year to fill the gaps created by the writers' strike.

Will Kangaroo make money for its broadcasting owners?

The short answer is yes. The more difficult question is how much, and over what period?

The idea of creating one destination site for UK broadcast content makes sense and if broadcasters don't aggregate themselves, they will have it done to them by others.

Why help other aggregators build a cyber-gateway business when UK broadcasters can quite easily build a site themselves? Combining programming brands will create an attractive destination site to complement their individual online sites. What's not to like? And creating Kangaroo is especially important for ITV and Channel 4. While the BBC is the third-largest site in the UK, neither itv.com nor channel4.co.uk individually have anywhere near as much reach.

Creating Kangaroo means the broadcasters keep more of the margin from any programmes delivered outside of their own sites. The market for on-demand programming is forecast by Screen Digest to be heading to £180 million by 2011, split into 50% from ad-supported VOD; 35% from download to own services like iTunes ; and 15% from VOD/PPV.

And these numbers don't take into account advances in technology. Sony will launch an IPTV set top next year, Freeview boxes will start to have IP ports and all of Sky's new HD PVRs already include a broadband connection.

If Kangaroo can attract the right third-party content (Five would be a logical first call), the site could become an important new revenue stream in its own right.

The ultimate economic success of Kangaroo will be down to how it is priced and how easy it is for surfers to find and use.

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