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Q&A With Jeffery Schlesinger, president, Warner Bros. International Television

As the long-time head of Warner Bros. International Television, Jeffery Schlesinger runs one of the world’s largest distribution operations, making him a perfect candidate to talk about the sales climate in 2007 and the demand for American product in 2008. In an edited transcript of an interview with the editor, Schlesinger discusses the state of the business, the outlook for NATPE and some of the industry’s biggest challenges.

Q: As we go into 2008, how do you see the sales climate for yourself and other major studios?

A: It is very strong but when you talk to us or the other majors it is not about selling month to month. We have big lumbering deals in place in most markets and occasionally they come up for air to be renewed.

This year we’ve had an incredibly successful with shows like Pushing Daisies, Gossip Girl, Chuck, Moonlight, The Big Bang Theory, and Terminator: The Sarah Connor Chronicles. Sara Connor hasn’t gone on yet but what could be a better brand and franchise for the international market than the Terminator.

We expect to have six shows renewed for the full season, assuming there is a full season, and likely renewed for next year. Compared to last year, our slate this year is a hands-down winner. It is really good globally appealing programming and we are getting a very enthusiastic response.

In most cases in the major territories, we have deals with broadcasters where they have an obligation to take a certain amount of them. But with a six pack of shows like this even if we have shows that are not selected by primary broadcast, we are finding outlets for them.

One of the things that we are finding in the multichannel world is that the cable and satellite channels are beginning to step up and start to pay pretty significant prices that in some cases is very competitive to what terrestrial broadcasters are paying.

The addition of Virgin One [channel] in the U.K. has been great. They’ve bought Sara Connor and Chuck from us. And they paid grownup money for the product.

I think the weak dollar has definitely had a beneficial impact on our business for those deals that are done in dollars—and as you know deals are done in a variety of different currencies.

While there has not been any breakout head of the class hits, we’ve got a bunch of shows that are all in the very good range and very marketable range. So we are feeling very positive about 2008. And even if nothing else gets made in terms of development for next year we have already committed a J.J. Abrams show and Jerry Bruckheimer show. You know those two are going to be very well received by the international market place.

And, our features are not doing badly. So 2008 is looking very positive.

Q: What is driving this growth? Are we still seeing record prices and price increases for series or is the growth really coming from the fact that you have more windows and the fact that some channels in some of these windows, such as basic cable, are growing and able to pay more money?

A: You certainly have a maturation of players. You have small players becoming adolescents and adolescents becoming grown ups. So they are paying more.

The other good thing is that our shows are working. It is not just us, but U.S. shows are getting better chances in better time slots and they are performing well.

I think we have a very cyclical business. Five years ago, everything was about local production. But once people became accustomed to that they want something else. No matter how good caviar is, if you eat it every day you will get tired of it and you will desire something else.

And as an industry, our shows have gotten better. We are spending more money on them, there is more talent in them, they are more globally appealing, and they are working. All of those factors add to a buoyant market.

Are we going to see a replication of the price that Sky paid a year ago for Desperate Housewives and Lost? On the whole, probably not.

But when studios are not involved in longterm volume deals and they have a successful show, a proven show, they will get the very good price. Heroes [which is sold by NBC Universal] was on Sci Fi in the U.K. for one year and when that deal was over, it was bought by the BBC at a very significant price.

Another factor here is whether you do deals on a year-by-year basis or on a multi-year or a life-of-the-show basis.

There is a risk reward issue here. If your show doesn’t work and you have a-life-of-the-show and it goes six years, you will be very happy to have the safety net.

But if your show is a breakout hit and you have a life-of-the-show deal at moderate increases each year, you kind of think, “Gee, if I didn’t have that I could go back and double the price in year two and three.”

It is sort of like going to a race track. You never know if the favored or long shot will pay off.

Q: How do you see NATPE and the CES in 2008, which seems to be getting more attention this year from some of the studios?

A: There is a lot of attendance of CES. It is an interesting place to go to see the coming trends in new media. But it is not as much of a place for buyers and sellers in the television industry to meet. It is more of a place for “let’s go shopping and get some new ideas and see what kind of functionality there is on some of these new platforms.”

NAPTE is still a programming market. It doesn’t have the same impact that it did in the past but we still get a very strong contingent of Latins and Asians, and a bunch of Europeans, though not quite as many Western Europeans.

Our attendance at the market has gone down dramatically. We take fewer people and we are more selective about who is there. The reality for us we don’t live or die by any of these markets.

We are kind of like the department store that anchors the mall. We have an office in every major territory. Unlike the independents that can’t afford to travel and depend on these conventions to see the clients, our people see our clients every day of the week.

Q: I know that you, like the other heads of the international divisions at the studios can’t talk about the writer’s strike. But beyond that, what are the really the biggest challenges facing the industry?

A: It is all the things we’ve been talking about here. It’s the inventory management, the windowing and managing the product lifecycle between transactional VOD, subscription VOD, advertising supported VOD, linear free broadcasting, pay broadcasting, basic cable broadcasting etc. The big question is how you move your product through the windows, both those you own and control and those you license to so that you give everyone [in the cycle] value and not cannibalize your revenues. [With all the new platforms], figuring out how you avoid cannibalizing a dollar for a dime is really a challenge.

The beauty of the business right now is that we have great programming and we have lot of people who want it. There is no lack of outlets today. It is all a question of what your objectives are and how you keep your traditional big money coming in and at the same time develop new forms of exploiting your product. The key is to do that in a way that is as little cannibalistic as possible to the players that have fed you very well for a long time and that have been very good to you.