Download McFall

The production of broadcasts and remuneration of
rights: a business perspective
An assessment of broadcasting’s contribution to copyright
A presentation by Godfrey McFall, Senior Associate, Oliver & Ohlbaum Associates
WIPO Headquarters, May 25th 2009
An assessment of broadcasting’s contribution to copyright
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distribution)
2
Contents
 Flow of funds in the European broadcasting market
 The contribution of the five largest European markets
 A UK case study
 Summary points
3
Contents
 Flow of funds in the European broadcasting market
 The contribution of the five largest European markets
 A UK case study
 Summary points
4
Flow of funds in the European broadcasting market
Schematic flow of funds – direct and indirect copyright contribution
SOURCES OF
FUNDING
BROADCAST
INDUSTRY
REVENUE
BROADCAST
INDUSTRY
EXPENDITURE
RIGHTS
SALES
ADVERTISERS
PROGRAMMING
SPEND
• Creation of original IP
• Talent investment
• Music creation and rights
• Arts/photography
• Acquisitions
• Live events
• Others (toys and games)
TECHNOLOGICAL
INVESTMENT
• Telecommunications
• Platforms and distribution
• Digital software
• Consumer electronics
OTHER
REVENUES
OTHER
ANCILLARY
REVENUES
CONTENT
CREATION
ADVERTISING
SPEND
FLOW TO
COPYRIGHT
HOLDERS
RADIO & TV
BROADCASTING
SUBSCRIPTION
FEES
CONSUMER
PAYMENTS
LICENCE FEE
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Flow of funds in the European broadcasting market
Sizing the European content industry and flows to copyright industry
European broadcasting flow of funds, 06/07
 Total industry worth
over €86bn
86.3
 €37.6bn (44%) of total
revenues invested into
content creation in
06/07
PAY TV
BROADCASTER
COSTS & PROFITS
OTHER
 Content spend creates
original IP and flows
into copyright sectors
identified on previous
slide
ADVERTISING
RADIO SPEND
TV SPEND
LICENCE FEE
Source: O&O Trends
6
Flow of funds in the European broadcasting market
Programming spend and constituent flows to copyright
Total European content creation, 06/07
RADIO SPEND
DIRECT IP CREATION
• PODCASTS
• EXCLUSIVE ONLINE
CONTENT
• COMEDY/DRAMA
• CULTURAL DIVERSITY
FLOWS TO COPYRIGHT
• COLLECTION AGENCIES
• TALENT
• NEWS AGENCIES
• TRADEMARKS
• MERCHANDISE
SPORTS RIGHTS
FILM AND TV
ACQUISITIONS
NEWS
EXTERNAL
IN HOUSE
Source: O&O Trends
• CONTRIBUTES TO
PRODUCTION FINANCE
(PRE-SALE OF RIGHTS)
•
•
•
•
• ORIGINAL JOURNALISM
• DOCUMENTARIES
• CULTURAL DIVERSITY
• TALENT (WRITERS,
CONTRIBUTORS)
• WIDER PRESS/NEWS AGENCIES
• PROGRAMME IDEA
CREATION (BOTH
INDEPENDENT AND IN
HOUSE)
• CULTURALLY DIVERSE
RANGE OF PROGRAMMING
TOPICS
• NEW FOOTAGE/FILMING
• ORIGINAL MUSIC SCORES
•
•
•
•
TALENT (WRITERS, DIRECTORS)
COLLECTION AGENCIES
NON-DOMESTIC RADIO/TV
MOTION PICTURE
COLLECTION AGENCIES
TALENT
ANCILLARY ACTIVITIES
ARCHIVE FOOTAGE
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Flow of funds in the European broadcasting market
Non-subscription funded broadcaster’s contribution to programming spend
Non-subscription funded broadcasters proportion of overall programming spend, 06/07
 In all but two EU
territories, nonsubscription markets
account for greater
than 50% of all
programming spend
AVERAGE –
72%
 In largest markets,
non-subscription
funded broadcasters
represent between
65% and 87% of all
content spend
Source: O&O Trends
8
Flow of funds in the European broadcasting market
Non-subscription funded broadcaster’s contribution to original content creation
Non-subscription funded broadcasters proportion of overall origination spend, 06/07
 Non-subscription
funded broadcaster’s
account for over 75%
of all original content
investment in all
markets
 In the majority of
European countries,
publicly funded
broadcasters tend to
invest more heavily in
original content than
their commercial
counterparts
Source: O&O Trends
HIGH RELATIVE
PUBLIC INVESTMENT
HIGH RELATIVE
COMNERCIAL INVESTMENT
AVERAGE –
91%
COMMERCIALLY
FUNDED
PUBLICLY
FUNDED
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Flow of funds in the European broadcasting market
Audiovisual sector’s contribution to EU economy
Gross Value Add (GVA) by EU copyright industry sectors as a % of total GDP, 2000 & 2008
estimate**
 Audiovisual sector still
remains a critical
contributor to the EU
economy
 Indicative values of
growth suggest
audiovisual sector
holding up better than
other industries faced
with digitisation of
media consumption
*Audiovisual industry includes radio, TV, film and video; **Study includes national data from 15 European Union member states **2008 – indicative values
Source: European Commission, Oliver & Ohlbaum Trends
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Contents
 Flow of funds in the European broadcasting market
 The contribution of the five largest European markets
 A UK case study
 Summary points
11
The contribution of the five largest European markets
In terms of revenue
Total broadcasting revenue (radio and TV) by country size, 06/07
RADIO
• Big Five – 72% of revenues
• Non-pay – 2/3 of big five revenues
NON-PAY TV
PAY TV
Source: O&O Trends
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The contribution of the five largest European markets
In terms of investment in content
Total programming spend by market and broadcaster type, 06/07
% PROG SPEND OF NON-SUB
FUNDED BROADCASTERS
87%
70%
65%
74%
67%
• Big Five – ¾ of all programming
spend
PAY TV
• Non-pay – 87% of spend in Germany
RADIO
COMMERCIALLY
FUNDED
PUBLICLY
FUNDED
Source: O&O Trends
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The contribution of the five largest European markets
In terms of investment in original IP
Total originations spend by country and broadcaster type*, 06/07
% PROG SPEND OF NON-SUB
FUNDED BROADCASTERS
92%
98%
PAY TV
COMMERCIALLY
FUNDED
78%
92%
90%
• Big five - >€14bn investment in
original IP
• Non-pay accounts for over 90% of this
investment
PUBLICLY
FUNDED
*Radio excluded
Source: O&O Trends
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Contents
 Flow of funds in the European broadcasting market
 The contribution of the five largest European markets
 A UK case study
 Summary points
15
A UK case study
Total TV and radio market revenues 2002-2007
TV & Radio industry revenues (nominal), 2002-2007
Compound Annual
Growth Rate (CAGR)
02-07 %
 Market growth just
below GDP growth
driven by subscription
revenues
5.2
SUBSCRIPTION
REVENUE
8.4
ADVERTISING
REVENUE
2.6
 Burgeoning pay TV
market – 55% of
homes in 2008
 Decline in advertising
in ‘real terms’
 Licence fee revenue
has grown at around
GDP
Note: CPI CAGR of 3.2%; GDP CAGR of 5.4%
Source: O&O Trends, Ofcom, RAB, Zenith, BBC Annual reports
REVENUE
FROM PUBLIC
FUNDS
5.1
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A UK case study
Broadcasting contribution to copyright collection agencies increasing
Performing Rights Society (PRS) for Music revenues by sector, 2003-2008
 Growth in the UK
broadcasting market
has translated into a
rise in the total value of
collections made by the
PRS for music from
2002 to 2008
MECHANICAL
INTERNATIONAL
 Broadcasting and online
contribution copyright
agency grown at CAGR
of 10%
PUBLIC
PERFORMANCE
 Broadcasting now
BROADCASTING &
ONLINE
single biggest
contributor to revenues
BROADCASTING
CONTRIBUTION*
*Note: excluding online revenue
Source: PRS for Music, O&O Analysis
24%
24%
24%
24%
25%
26%
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A UK case study
Programming investment in the face of advertising declines
Commercial terrestrial programming spend versus revenues (real), 02-07
 Despite pressure on
commercial terrestrial
players, investment in
programming has
remained steady
 Real advertising
decline of 1.3% while
programming spend
grew at CAGR of 1.7%
ADVERTISING
PROGRAMMING
SPEND
CAGR
02-07
%
(1.3)
1.7
 Competitive dynamics
in UK market have
ensured a sustained
level of investment in
programming
*Includes spin off channels; values
Source: O&O Trends, Ofcom
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A UK case study
Critical role of terrestrial broadcasters in original content creation
Total originations spend by broadcaster type, 2004 – 2007*
 Terrestrial broadcasters
play a critical role in
investment in original
intellectual property and
cultural diversity
THEMATIC
PAY CHANNELS
 Account for 95% of total
COMMERCIALLY
FUNDED
spend
 Thematic programming
spend dominated by
acquisitions and sports
rights so contribution to
original content creation
relatively small
% PROG SPEND OF TERRESTRIAL
BROADCASTERS
*Excludes regional spend; includes terrestrial spin off spend
Source: O&O Trends
PUBLICLY
FUNDED
96%
96%
95%
95%
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Contents
 Flow of funds in the European broadcasting market
 The contribution of the five largest European markets
 A UK case study
 Summary points
20
An assessment of broadcasting’s contribution to copyright
Summary
 EU broadcasting contribution to core copyright of over €30bn
 Public and commercial broadcasters invest significantly more in original
radio & TV IP and related copyright sectors than subscription funded
counterparts
 Additional investment in partial and interdependent copyright industries
 Big five markets account for disproportionately high share of original IP
generation in EU
 Smaller markets remain crucial for cultural diversity and it is the non-pay
broadcasters driving creativity in these markets
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