European TV executives expand boundaries

Tough economic times are providing the backdrop this week as television executives swarm Cannes in the south of France for their industry’s largest international sales festival.

European broadcasters, like their counterparts in the U.S., have been reeling from a steep fall-off drop in advertising revenue. Even more so than in the U.S., the uncertain economic climate in Europe has meant less money for independent TV producers, who are jostling one another to place their shows on the air.

Michael Murphy is a longtime TV executive who launched a channel in Ireland in 2006, only to sell it two years later — just before advertising cratered. He is now chief executive officer of Windmill Lane Entertainment, an arm of one of Ireland’s largest post-production and visual effects houses, Windmill Lane Pictures (Windmill Lane earned a footnote in music history when nearly 30 years ago it was the studio where the Irish band U2 recorded its early albums).

Murphy’s job is to encourage international TV and feature film producers to take advantage of Irish tax incentives and bring their projects to Windmill Lane. Ireland has been particularly hard-hit by the financial crisis rippling across Europe. We talked with Murphy about how the economic upheaval is affecting television in Europe. Below is an edited transcript.

Describe the changes facing the European TV market.

Advertising revenue has just fallen away. The Irish ad market collapsed in late 2008 to mid-2009 by 30% to 35%. This happened all over Europe, although not as large as in Ireland. A lot of the TV channels looked at places to save money and so they cut back on the budgets for programs. Television producers who were used to receiving 80% to 85% of their budget from the broadcaster were now getting 40% to 60%.

Suddenly you found TV producers looking for soft money through tax credits to make their budgets.

Name a U.S. project that took advantage of Irish tax incentives.

“The Tudors” [which ran four years on Showtime] was an example of an international TV project that was shot in Ireland, in Europe, posted in Canada, and delivered to an American network. Those models have been around for quite a while in the film business but now more TV producers are looking at them. They are looking at shooting in Africa and Eastern Europe. This is a significant change in the culture of TV drama production in Europe. It is moving toward the feature film model, which is getting your budget from different sources.

And how does that compare with U.S. TV production?

The major networks are still strong in America. I don’t think they have been hit in the same way. America is quite self-sustaining. There is still a lot of money put into development, and a large number of pilots made every year. There are projects, “The Borgias” [another Showtime drama] is being shot in Europe. There has to be a reason to shoot on this side of the world, but ultimately we are going to have more opportunities to work with American TV producers like we do with film producers.

In recent months have you noticed things beginning to turn around?

There does seem to be a little bit more optimism now, but I’m not sure that’s linked into the economy. In Europe the only real strong economy at the moment is Germany’s. Here in Ireland, things are still quite grim. But my business is focused internationally and there is still an appetite for very good programming. Buyers may have reduced the volume of what they are buying but they are still buying programming because they need to keep their channels on the air. In terms of price, people are not paying as much as they were paying a few years ago but that period may be seen as the height of the boom.

What year did the market peak, 2007?

Even up to 2008 there was huge competition and big prices being paid for international programming. The right program will still get very good prices, but I just don’t think people are as free and easy with their checkbooks as they were before.

meg.james@latimes.com