America vs. the U.K.: Who Makes Better TV Shows?

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1:31Matt Belloni:It is Wednesday, August 26. I'm in Scotland at the Edinburgh TV Festival. That's the big international television business conference. Great opportunity to discuss a topic we don't talk enough about on the town. Namely, why the UK seems to consistently punch above its weight in the creation of hit TV shows and formats, particularly in the unscripted world. There's a reason for that, it turns out, both culturally and from a business perspective, and I got a great taste of the United Kingdom market and the hot issues there in my panel this morning that I hosted. I had Patrick Holland. He's the head of Banaget UK.

2:05Matt Belloni:That's now one of the world's largest production companies after it merged with all three media a couple months ago. And Patrick oversees now everything from Black Mirror to Peaky Blinders, MasterChef, and Big Brother. I also had Jane Root. She's a veteran TV exec and producer. her company, Newtopia, is behind a lot of these celeb-driven docs like Pole to Pole with Will Smith, Limitless with Chris Hemsworth, World War II with Tom Hanks. I also had Dimitri Daganis. His company, Raw, is a top producer of documentaries for streamers like Netflix with the Tinder swindler Don't F with Cats. They do scripted stuff, too.

2:39Matt Belloni:It was a great conversation. We got into the UK versus US question, how producers can own more of their shows, the YouTube of it all, and even Harry and Meghan. Today, it's the inside look at why TV is often better in the UK, live from Edinburgh. From The Ringer and Puck, I'm Matt Felony, and this is The Town.

3:01Matt Belloni:Welcome to the panel. I want to get right into this because we were talking beforehand about the difference between UK and American television and production companies. And it struck me that there is an ecosystem in the UK that exists that for some reason leads to better formats and unscripted and interesting dramas. And I want your take on why that is. Why is UK television better? And why is the ecosystem here set up in such a way that it makes better programming? Well, I don't know that it's better, but I think the ecosystem is different. And because you've had these broadcasters where you've had specifically an unscripted and documentary, you've had those genres as part of mainstream schedules, right?

3:59So you've had documentaries, documentary series, unscripted series in the mainstream on the networks forever. However, there's been a production community that's grown up to service those. So you have in the UK in a way that you didn't have in the US, you've had people growing up coming into the industry as researchers, APs, sitting in edit suites, going on shoots, becoming producers, going on to direct, run shows, series producing, becoming executives. And so you've got this kind of cohort that's grown up over the last 40, 50 years, which which have been steeped in the craft of unscripted television.

4:40Matt Belloni:Oh, sorry. And a certain kind of unscripted television. And a certain kind of unscripted TV. I forget, was it you that said, in America, there's documentaries, and then there's trash, or there's reality. Sorry, I may have said trash. And in the UK, there's a long history of nighttime documentaries that are in the middle. Primetime documentary. And that is what is working on streamers right now. But I think there's also something about, is the British audience, I think, has been trained almost like they're at school for 50 years by three of the five biggest networks having a commitment to innovation in the core kind of rules of who they are, BBC One, BBC Two, ITV, Channel Four.

5:25They have to innovate. And as a result, British audiences are completely unkeen to accept anything that feels like a copycat. They reject it like crazy and they celebrate newness and difference. I think it's perhaps something to do with kind of eccentricity of the British persona or way of life or something, but British audiences leap into things that American audiences would find really hard. All three of us have been involved with shows which initially people would be like, what is that? I was involved in the start of the British office and nobody got it but people slowly got into it and it led to the phenomenon you had the same with picky blinders you can you can start you can persuade people to be excited by innovation here but there's a business aspect well there's one thing that I was going to just chip in with which is that for May in 2003 the um the media act that came out in 2003 gave, if you were making a show for one of the PSVs, you retained your IP.

6:32Matt Belloni:That's a public service broadcast. Public service broadcaster. Publicly funded and has a mandate to serve the public interest as well as create entertainment. Not just public. So there are some commercial broadcasters that have got public service licenses. So ITV, Channel 5, got public service licenses. Channel 4 funds itself, but it is publicly owned. So it's all quite, you know, there's nothing simple. But they are public service broadcasters. As Jane said, they've got a mandate. They get a license from the government. They have to innovate. But what also happened in 2003, Terms of Trade gave producers the right to own their IP.

7:07So you own the IP. And it means that one of the shows that Banerjee makes and is famous around the world is Masterchef. Masterchef is now made in 70 different territories. It started off on the BBC. And it started off on the BBC. To Jane's point, it grew and sort of like developed. It wasn't a massive overnight smash, but it's grown into this huge IP monetization machine undervalues the great creatives that are making it. But the point is that what happened with the Broadcasting Act is that producers like Dimitri, like Jane, like all the producers in Banerjee, suddenly they had skin in the game.

7:47And so that entrepreneurial creativity, which was already implicit within the UK system at the time, was suddenly unleashed. And so we have got a cross-scripted and unscripted amazing, great entrepreneurial creativity baked into our system. And I think there's a way of drawing those two threads together. So as Patrick says, the business of it means you're incentivized to innovate here. Because if you come up with something new, you can own a piece of it. And I think in terms of the audience, one of the massive differences for me going as a seller to the US is we had a very early on in our lives, we had a hit with a show called Locked Up Abroad.

8:30We went to the US and everyone was like, what's our version of Locked Up Abroad? Give us our version of Locked Up Abroad or give us our version of Gold Rush or whatever it was. And whereas in the UK, no buyer would ever say that. They'd say, we've done that already. We don't want that. What else? Can you think of something different?

8:45Matt Belloni:And then just to reiterate, the government incentivizes creation here by giving you ownership of the shows that you create for public service broadcast. And that, if you ever wonder why the big reality formats seem to come from Europe and the UK, that is the reason. Because the innovation happens and because you as the producer can monetize around the world if you create a good show for this market. For those broadcasters. Yeah. Not for other broadcasters internationally or streamers working in Britain. We'll get to that. Yeah. Because it does, I think it does create an environment where if you have the right idea or the right format or you're willing to experiment, you come here.

9:35Matt Belloni:And that's, I mean, one of the truisms on this show is that the way to get rich is ownership or back end. Yeah. And with the streamers, that's not the case. So how are the streamers impacting this market? Because it's really controversial right now in the UK, the impact that the global streamers are having on this ecosystem that has given rise to the community that you guys have right now. I mean, one of the issues, there's all of the things that you painted, Matt, is perfect apart from money. Because if the broadcast, if the PSB doesn't have enough money in terms of funding the original show, then you can't iterate, you can't grow, you can't monetize it.

10:16So at some point, someone needs to invest in a show that means that it will get off the ground and it will be big enough and the audiences will come to it.

10:25Matt Belloni:And why should the government be subsidizing the creation of millionaires in the TV sector? And to be clear, they're not subsidizing it. It is a version of subsidy, though. What they're doing is creating a regulatory framework, which means but they're not actually giving money there's no public there's no public money but the public gives money to the broadcasters which creates the environment that you can own what you create some of it only to the bbc and the bbc isn't paying is isn't you know we're not getting any of that money we're just getting ownership of the thing that's being made for that money so it's they're forgoing it's like a passive subsidy they're forgoing potential revenue rather than directly.

11:08Yeah, the BBC, when they commission a show from a Banerjee company or from any of us based in the UK, that what they're doing is they pay a license for that show. They pay, and so there's a tariff that we then make the show with. If it's a scripted show, then the BBC might put in, I don't think it's uncontroversial to say, you know, around a million pounds an hour. And then we would, the show that we then make, something like SAS Rogue Heroes, Steve Knight Show, that that show cost an awful lot more than a million pounds an hour. That the deficit finance that is then put into that show means that the UK audience gets to see a show that is significantly better funded than it would have been had their BBC not had that model.

11:52But they're giving you the seed. But we're giving the seed. We can then build it. We can then sell it around the world and we can then offset the risk that we've taken by putting that investment into it. But there's not enough of those commissions from the public service. for the cost is to keep us all going. And that's the controversy. How much they should be putting in.

12:09Matt Belloni:And that's where we come to the streamer question, which is where you started, right? They're more than happy to step in where these commissions end off. Totally, yeah. And to own the whole thing, lock stock, and then to your earlier point, we don't then retain ownership of it. So I think there was this kind of, almost like a gold rush when the streamers first, and particularly kind of into and out of COVID, where suddenly there was loads of streamer money, there was this huge boom in UK production and it was kind of it was great for a short period of time right because production budgets were higher there suddenly were new entrants and new buyers entering the UK market that unleashed this kind of wave of productivity and talent and but obviously the problem is you're then on a work for hire model and if you're a producer or a production company.

12:59You make that show that year. The next year you start at zero. You've got no rights retention, no passive income coming in. And so you have to climb the same mountain every year, unless you've got returning series.

13:11Matt Belloni:Well, it's a version of what happened in the US. Totally. The streamers came in and started buying out the top showrunners and saying, we'll give you a$200 million overall deal, create exclusively for us. Oh yeah, we don't really pay backends. It's all upfront. And the agents were more than happy to put their clients into these deals because they were getting paid now. And yet we wake up as an industry 10 years after the fact and it's a work for hire industry. No one has skin in the game. And then the business has been fundamentally changed forever. And then you have creators, producers, or writers who look back on huge value that they have created and realized that upfront money for those overalls or whatever it was, or for the bigger production budgets, It looks like cheap money.

13:59Matt Belloni:Well, yet you continue to do it. You make the Tinder swindler. Well, we're running companies. We're all work for everybody. You know, you work. Yeah, I get it. But like you, your company in particular makes a lot of the top performing documentaries on Netflix. That's kind of you to say. And you don't own any piece of them. That is an endless source of pride and pain. So how do you change that? It would seem to me that there would be a market opportunity here for a streamer or someone else to come in and offer you that and take your talents down the street. I totally agree. And I think what's interesting, you think about the streamers were insurgents eight years ago, five years ago, even.

14:45Now they're the establishment. And so what does the next wave of insurgency look like? Because that's what always happens, right? It was cable networks launched, then the streamers, and so on. So there'll be another wave. And I do think, to your point about ownership, and you show me the incentive, I'll show you the outcome, if you can incentivize producers to work at the kind of scale that the Netflixes and the Disneys and the Apples and the Amazons allow you to, but retain some ownership, you've just incentivized people in a completely different way.

15:21Matt Belloni:But they're not going to do it unless there's a competitor, right? No. I mean, you can go to YouTube and own 100 % of it. But to be fair, Netflix is bringing you a pretty big audience for these types of programs. So someone told me that Tinder Swindler had been watched by half a billion people, right? I don't know if that, I mean, Netflix will know. There's no... The fact that you don't know is part of the problem, by the way. Well, that's a whole other avenue we could dance down. But the notion that a documentary would be watched by 500 million people of any sort would have been unthinkable 15 years ago, probably even 10 years ago.

16:01That just did not happen, right? So there is no doubt that Netflix particularly, but the streams coming up behind Netflix also have transformed the opportunities in unscripted. I think scripted has a different dynamic and we are doing more and more scripted alongside our unscripted stuff, both in kind of film and television. But it is, they have created a market as well that we are benefiting from. So I don't want to sound too kind of bitter and twisted about it because there is no doubt that we have also had this extraordinary benefit. And that's the kind of pleasure. Yeah, sorry. No, I was just going to say that from a scripted perspective, that what you have is you have to have a diverse, you know, ideally you've got a diversified portfolio.

16:48You've got some shows for the BBC or Channel 4 and you retain the IP. You have some shows that you make for the streamer. And because writers want to write, producers want to produce. And as I said earlier, there aren't enough opportunities with the PSBs and they're not paying the big enough tariffs for the shows in order to make the shows of scale. So inevitably, if you're making a show like House of Guinness, Netflix developed that show. It's a bigger budget show than the model that I described before would allow. And Steve Knight is a writer who works across the world. So he has, to Dimitri's point, got that ability to reach global audiences because of the platform that is Netflix.

17:30But you want that diversified portfolio. Just the point about IP and the streamers, that there is so much sleeping IP that is in those libraries now. And one of the ways in which producers have been brilliant in the UK in terms of monetization is to take that IP and diversify it. You know, work out how you can make it.

17:52Matt Belloni:And Netflix is not doing that. And because there are shows, not just Netflix, but there are shows that are sitting in streamer libraries that are just, you know, right at the bottom of the sump tank. No one's watching them. And if that show was, there is a secondary tape sale value. There is a, you know, there is a whole way in which you can, as a producer, make money from a show and would do if you were incentivized to do it. But we can't do it at the moment. But that's one of the big new things at Newtopia we're trying to do is to work with some of the big stars that we work with, Will Smith, Trevor Noah, Jeff Goldblum, and work in partnership with them and make shows directly for YouTube and TikTok and everywhere else.

18:34And that's a big new thing that we're doing. And that leaves the broadcasters out. They won't be on the scale of some of the giant things that we make for Disney, but they will be their partnerships. and that they will be brand funded. And that for us is our answer to some of these conundrums, which is that we love working for Disney. We love working for Netflix. But everybody wants to have some skin in the game. And that includes the stars. The broadcaster notes the feeling that they don't get to do what they want to do, that they're treated as work for hire. That's a big deal for them as well.

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21:12Matt Belloni:One of the other ways to combat the power of the streamers is for the production side to get bigger and bigger. And you, your company has been part of this L3 Media merger, which the justification for that was to have the scale in negotiation. So are you using that scale? You could say, listen, Amazon, Netflix, Apple, the rest, you don't get any of our shows unless you change your model. Well, we like working with our partners, obviously. But then why have the scale? The gun to the head hasn't come out quite yet. It's only been a few weeks. It has only been a few weeks. No, I think that it is about working with your partners.

21:56You've got the scale. One of the things you've got with scale is that in terms of IP from all three, from Banerjee, that library, the catalogue, in terms of licensing, in terms of tape sales, that that in terms of having regular income and having the, when you think about diversification, you think about what Jane is doing with YouTube, we're all trying to find the new, but we're also trying to find some regularity of income. And when you've got a great tape library and you've got a great format library, then bringing Banerjee and all three together really has got that scale that you can be, You are able to take these shows out and re-skin them or reinvent them.

22:39But you do want to have those conversations with streamers about things like the shows that are sitting passively there. Because we can be better partners. Going back to Big Brother or MasterChef or recently as Studio Lambert have done with Traitors. You take a piece of IP that sort of works somewhere else, and then you can turn it into something of true global and financial significance. And so I think if I was a streamer and I was sitting there, I would be thinking, how can we? We're not being as entrepreneurial as we could be as partners. And why don't we do more of those sorts of deals? because there's an opportunity to grow content in a way that currently in that sort of we take everything and then it's up to us to decide what we do with it next is not in the best interest of the content.

23:32But Matt, to your point, they're not going to do it unless they're forced to. No, of course not. I'm sure they're sitting in the audience right now laughing. Yeah, totally. So in a way, I think that leaves me thinking there's two potential routes, and I'm sure there's more. But one is to make the, exactly as Patrick's starting to do, you make a business case, which is, hey, look, you're sleeping on money here. There's money left on the table. We can help you with that. And the second is, I've got something you really want, and you're not going to get it unless. And that's the only real leverage that I think we have.

24:10Matt Belloni:Stars can be part of that. That goes to the something you really want, right? And yet what you're talking about is taking those star-driven projects and then putting them on YouTube. Aren't those the very projects that could get you some leverage with the streamers? That is exactly the idea. The idea is that we will start those projects on YouTube and that there will be secondary users. And we've already had a ton of conversations with people about... And when you say secondary uses, you mean launch it on YouTube and then use it as a test ground to sell it to a streamer and then take it off YouTube?

24:42That's all going to depend on how much money people pay, right? And what the deal is. All of those things are being discussed. But that idea of launch it on YouTube, own it with the stars, and then find secondary places for it. And also, that's one of those things where you can, we were talking this morning about how it's hard to really make something breakthrough on YouTube and that you want things to grow in an organic way. But then if you find something big, if the Trevor Noah show that we're making right now becomes a really big thing, which I think it will, then it might well be that people around the world want to buy that.

25:20And you would own it. We would own it with Trevor.