Simon Spalding is a bit of a homebody. When the Fremantle Media regional CEO Europe & Asia Pacific is not travelling around on business he likes to spend time with his family in Amsterdam.
The 49 year old Spalding has close to a quarter of a century‘s experience in a career spanning toy marketing (with Hasbro Europe), licensing (Dreamworkz) and television (Fremantle).
10 of those years have been spent in building Fremantle into the global TV powerhouse it is today. He set up the UK operations, built them up and, then moved onto Sydney Australia where he forged a merger between Grundy and Crackerjack to create Fremantle Australia. Today it probably is the largest Australian TV producer.
He then moved back to Europe to oversee Asia and Europe, leaving the Asian operations in the able hands of Patrick Schult.
Spalding was in India to touch base with the Indian operations of Fremantle India, which are headed by Raj Baruah and also meet up with broadcast executives at the leading Indian networks. The TV executive - who counts West Wing as one of his favourite TV shows - caught up with Indiantelevision.com‘s Ashwin Pinto on Fremantle‘s Indian initiatives and the vision for the production house.
Excerpts:
Was 2009 a difficult year due to the economic downturn?
It was a better year than we expected it to be. We made our budget but in order to do that we took some things out that we had been saving for a rainy day. Last year we had a couple of rainy days. There has been a bit more of a time lag for producers as the first half of 2009 was committed in the second half of 2008. So the first half of last year was good and it got tougher in the second half. We are still feeling the impact this year.
How do you see this year progressing?
We have taken a more conservative position regarding our budget. We have recognised that we will be a slightly smaller company this year. But overall the interesting thing is that our big shows are getting bigger. So while everybody was concerned that shows like Idol or Got Talent would also suffer in the recession, the fact is that we are getting a larger audience share. It is also encouraging that more people are watching television than ever before. If you have the right content and can produce it at the right price there is market out there for it.
At this point which are your top five formats?
Our big three entertainment formats are Idol, X-Factor and Got talent. Our game shows are strong like The Price Is Right which has been around for 54 years. It was the number one daytime show in France after being reintroduced after an eight-year gap. This show has been reintroduced in nine other markets. Fremantle is also a drama producer. Our serial dramas do well.
What additions have been made to your catalogue recently and are you looking at more genres?
We look at new genres. We brought 10 new formats to MipTV. Some were reversions of existing catalogue. Some we develop ourselves and some we do in partnership with others. We have a show Push The Button which has been done with Gallowgate which is owned by the guys who host Got Talent for us in the UK. We constantly look for new ideas. We recently picked up a new cooking format from Romania. It is a reversion of a classic show called Give Us A Clue.
‘Historically we have come in on the back of a successful show. Once that show fell away we did not invest in building infrastructure and a broader base to sustain our business (in India) . This time we have come in to build a base. We have a detailed business plan.‘
What goals have been set?
From a company point of view we are trying to do three things. We want to continue to build and develop our network. We have production companies in 22 countries. We want to strengthen those. If we have a strong entertainment business, for instance in Denmark, we focus on building a drama business. In Italy the situation is the reverse where our drama business is strong. There is already this piece going on as well as looking at new markets. Last year we opened offices in India and Brazil.
The second part of what we are doing is to build and grow our creative pipeline. The content that we bring to the market is what is going to drive our business forward. So we have made significant investments in developing original content and also in partnerships with third parties.
The third part of our strategy is building new capabilities. As the world changes, different platforms emerge and people want to use IP in different ways. We are looking at the skill sets and resources that we need available to help build that. This would encompass developing our live show business, gambling business. We want to grow in these areas too.
How much business comes from Asia in terms of business generated? Which are your top three markets?
Not enough business comes from Asia. I cannot give you a split though. India, China, Indonesia and Japan are our priority markets in Asia. These are the markets where we have production capabilities. In the other territories we have partnerships or licensing operations. We have nailed down
what we want to do in the markets mentioned earlier. Where do we go next? Do we want to open more production capability?
We have a strong licensing and co-production business in Vietnam. This is a market where at some point we should open a business. The Philippines is also important. We are trying to balance the benefit of having a local production capability against the cost of a startup. In the current economic circumstances it is a tough decision to make.
Are you still an acquisition target? And how is the RTL ownership helping you?
We are 100 per cent owned by the RTL Group. RTL is 91 per cent owned by Bertelsmann. They are happy with Fremantle as we have shown a compound annual growth of 9 per cent in revenue and 13 per cent in EBIDTA over the last six years. That makes for a happy shareholder. We can access investment funds. I just bought a company in the Netherlands as I want to strengthen our drama business there. We also made an acquisition in Italy which gives us more content. RTL Group CEO Gerhard Zeller has publicly said that Fremantle is not for sale.
What is your vision for India?
What I am looking for is a successful locally driven production company that takes full value from the Fremantle network and also contributes back to the network. The Indian group should take programmes and IP and bring them to India. Also over time they should develop things that travel broadly within the Fremantle network.
Will Fremantle be open to considering paper formats from Indian creative professionals?
We do look at them. Obviously they are much tougher to get to but you have to start somewhere. We would look at an original idea when we have identified a customer. A programme idea is only good if you have a customer to sell it to. Once we have found an idea that we can link effectively to a customer that is when we can offer support to bring that idea to a pilot or a series. Once we have tape then we can start pushing it around our network.
An example is a format developed in France but we could not find the right customer for it there. We found a customer in Australia. On the basis of this successful launch we took it to other territories. The format is Take Me Out.
You have made efforts to set up office in India earlier but retreated? What makes your current foray any different? What kinds of investments are you looking at pouring in here?
Historically we have come in on the back of a successful show. Once that show fell away we did not invest in building infrastructure and a broader base to sustain our business. This time we have come in to build a base. We have a detailed business plan. We have a detailed idea of how much money we need to spend and when we expect ROI. The company has signed up for a longer term vision.
Endemol has raced far ahead of you here. Zodiak is doing well with SOL. Disney has found customers for its products here. Are you coming in too late?
The decision for us to withdraw from the market just before I took over the role was perhaps short-sighted. My ambition was to get back as the Indian market watches the kind of television that we produce. India has a range of free to air broadcasters who would want to buy our content. Why would we not want to be in India which is a growing market? The aim is to build a solid foundation and not try to run before we can walk. We don‘t just want to be in entertainment. We want to be in multiple genres.
Is Fremantle also considering taking a stake in a local production house to complement your non fiction business?
If there is a strategic fit we would look at it. There are other business models. It could be a JV or a partnership. It could be investing in creative people and giving them a place under the Fremantle umbrella. We don‘t have a one size fits all approach.
‘What I am looking for is a successful locally driven production company that takes full value from the Fremantle network and also contributes back to the network.‘
For this year what is your priority?
We have to deliver shows that we already have an order for. Indian Idol was our number one priority for Sony. We also focussed on getting our relationship with Colors correct for Got Talent. We want to establish our credibility as a serious content producer in India. You can talk about lots of things but until delivery happens it is only talk.
Do you think the Indian broadcasting and production business is receptive to formats as it is in other developed markets such as the US, the UK, Australia, Malaysia? Are they willing to pay for formats or are they more prone to rip-offs?
There are examples of formats being ripped of here. Once a successful format is launched there is a temptation on the part of other broadcasters to put something similar into the market. Indian Idol success is a testament to the strength of the IP. Viewers feel that it is worth sticking with. Broadcasters know that they can get away with ripping off stuff once in a while however, they also know that they need the best content and to get that they need to find a way to work with the people who own that content.
American Idol has lost share in the US partly due to the fact that the format has gotten stale. How is Indian Idol faring?
This year we have made a significantly better show. The talent is stronger and the production is better than it has been for a while. We had a strong launch. The numbers dipped. The test is if we can deliver what Sony expects and what viewers want.
What new formats are being brought to India?
We are meeting broadcasters. We are trying to fit our shows with the specialities of broadcasters. Every network wants differentiated content. Our entertainment shows have a lot of potential. We are sure that X Factor will be in the market soon. Historically our game shows have done well. So we will bring in some of those. Comedy will be more challenging as it may be tough to translate but I want to do this genre in India. We have some factual content that we feel the market is increasingly ready for. I want to do drama but we are not yet ready.
Are you going to be going into the languages area? Tamil, Telugu? Endemol has done that well.
This is an area that we have identified and it is a question of building the organisation so that when we make this approach we are capable of delivery. A number of game shows would work here. They are cost effective to do in multiple languages. For instance for Family Feud you could build one set and then bring in different hosts, different families, audiences.
Has there been any learning from other Asian markets that you would look to apply here?
We have to accept shorter pre-production times. We have figured out how to produce formats that have worked in Europe here though the cost structures are different and circumstances are different. We have learnt about cultural sensitivities. We make three versions of a dating show in Indonesia. We have figured out how to do it in a way that is culturally appropriate. You also figure out when something is culturally inappropriate as opposed to something that they do not want to do.
Most of your shows are upscale. India is discovering rural, massy content. What plans does Fremantle have here?
We have IP. What our Indian team has to do is sift through them and decide what could work depending on the environment. They have to identify gaps that can be filled locally. That is what we do in different countries. Americans do not just pick up everything that is developed. They pick up some stuff and develop other content that is appropriate. This is also true for the UK, Germany, and France.
Also, there seems to be no differentiation among the Indian general entertainment channels. Nobody wants to take a leap. Do you see innovation happening?
I am optimistic that it will happen. What we have seen globally is that companies which have innovated and done different stuff have step-changed their position in the market. For us, I accept that we will need to create formats here that travel. That will be a step-change for us.
In the format business what trends are we seeing?
We are seeing more uplifting themes being popular. So if it is a reality show then one about success works rather than celebrating disaster. In drama the themes are not as dark. There is more comedy coming through. There is more subject matter considered niche like cooking that is growing. They do well not just on lifestyle channels. They have gone mass market.
Could you elaborate on the plan for the production services division and what is its USP vis-a-vis what is already available?
The combination is that we have a huge catalogue of IP coupled with a group of people that can produce it as they are linked in to the Fremantle network. Our team understands how to produce shows here and the shows have worked well abroad. Talent, IP and international support are what we offer.
The market consists of local companies which are developing their own IP or buying IP and produce it here. Fremantle is unique in terms of how it is networked. No other company comes close to our ability to move information around and support productions apart from the BBC. They are obviously very different. Endemol and we are the main global players.
‘What we have seen globally is that companies which have innovated and done different stuff have step-changed their position in the market. For us, I accept that we will need to create formats here that travel. ‘
The Indian television general entertainment market has seen growth and also some consolidation. How do you see it progressing and what are the challenges that general entertainment broadcasters will face?
The economic circumstances will continue to be a challenge. How the advertising market responds to the economic environment, the shift in advertisers‘ priorities between television and other media is a concern. Secondly, they have to remain distinctive and at the same time attract the broadest possible audience. A balance has to be struck. You need to have a personality while not alienating people whom you want to attract.
Channels have to figure out how to get high quality content whether it is sports rights, news etc. They have to maintain the right relationships to deliver desired content.
You see foreign players actively looking at India, the latest being CBS. How will this change the market dynamics from your point of view?
Competition is healthy. But is enough investment being made to train people who you will need to run businesses? This is a concern. If this is not looked after then staff will be poached and there will be unpleasant salary inflation. If international companies bring in expats then it would be a step backwards.
Could you talk about the strategy that Fremantle follows in exploiting brands beyond the television screen?
We look at it in terms of what we term the wheel of value. The hub of the wheel is content. We look at spokes that can be used to exploit that property. Is there a format, a tape sale, home entertainment piece, an Internet experience, a mobile experience? A brand like Idol fills in most of the spokes. The Price is Right also lends itself to various activities. However, a factual entertainment show may not fill many spokes. You can sell this show in many territories but you do not get the mugs and T-shirts part of the business or the live show.
For The Price is Right we sell the American version in some territories. We also have a DVD. We have multiple online versions where you can play for prizes, fun, and money. We have lottery scratch card elements. We have merchandise like a board game, mugs and T-shirts. We have a gambling version through slot machines in casinos. We have a live version of the show in America. We have sold it to a casino in Belgium. We have also developed a mobile application which has had 500,000 downloads on the iphone. The only thing that we have not done is a film.
Are you looking at creating content for the mobile in India with 3G coming in?
We have done a number of shows specifically for the mobile or net. The challenge is to create a business model. We have experimented. We have an online comedy service Atomic Wedgie in the US. It has translated into a TV show. We have done other stuff like cut down versions of Baywatch on mobile.
We are not making much money but we are learning. We are investing rather than losing money. We did a show for MySpace where we went to find interesting people on this social network.
How is the iCount viewer research panel helping Fremantle understand viewers better?
We rolled this out in Germany. We are about to launch it in the US. It allows us to get very fast feedback from engaged viewers. It does not substitute other forms of research that we do. It allows getting a fast read on what would engage viewers. We can do more pre-testing. So for instance, if you want to look at a storyline in Neighbours, you can talk to those engaged viewers and get a read on whether they think that it is something they feel that we should be doing or not.
We can test out casting, validity of characters and get a read on other things going on in the market. We get feedback on where people are watching stuff, what they are listening to and how they spend time. It gives us a more complete viewer of the consumer at a reasonable cost.
Are you planning to introduce this for India?
We will roll it out on a territory by territory basis. Australia is probably going to be the first place in the Asia Pacific region where we will roll this out. In India and Indonesia do we have enough shows where the iCount panel could influence? If you only get feedback on stuff already done it is interesting, but may not be useful beyond a point. I probably will not roll this service in China.
Has Fremantle cracked the social media puzzle and taken advantage of the buzz going on there?
I will go back to the point about developing new capabilities. There are processes and techniques going on in that world which need skill sets that are different. What we have to figure out is what we can contribute from our existing skill set to the party. We are playing around the edges of social networking, social gaming. We realise that we as a company need to take more positive steps in this direction. For us gaming is a separate skill set.
It is a big move for a television production company to say that it also wants to get into gaming. Similarly gaming companies like EA took a while before deciding to enter the entertainment business. Gradual steps were made and now there is more cross over. While the Tomb Raider and Prince of Persia games were made into movies, it took quite a while before that crossover happened.
Four years down the line will Fremantle be among the top production companies in India or would it have wound up?
India is a territory that we will never be able to not be in. I want us to be a production company that people trust to bring them high quality content. We need to have a range of customers providing a range of genres across a range of price points. We have to be a full service production business.
The more interesting question is whether we will just be a production company? How will we characterise ourselves three years from now? We already talk about being an entertainment business and not a production business. How we evolve will impact the way in which we develop here.
