CEOInterviews.AIEpisode 5 - Pact's Chief Executive John McVay OBE & Realscreen Publisher Claire Macdonald

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Justin Crosby0:00

Hi, I'm Justin Crosby. Welcome to this week's telecast. On this week's show, John McVey, CEO of Pact, joins me alongside Claire McDonald, VP at Brunico and publisher of Realscreen, Peter White from Deadline, and K7 Media's GTS Leis. So welcome to telecast, Claire McDonald and John McVey. How are you doing?

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John McVey1:06

Good thank you Justin. I'm great. Thanks for having me on the show.

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Justin Crosby1:08

John, we'll start with you if we may. So you lead Pact, the organization that represents the interests of UK TV producers both domestically and internationally. Tell us about the current state of the TV production sector in the UK.

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John McVey1:26

Well, like everywhere else, it's quiet at the moment. Normally this would be peak activity, but we're way short of that. Many productions had to stop or suspend. We've been working on recovery, getting back into production safely. The UK TV production sector is made up of micro indies and freelancers. Everyone has been hit, but it's not just about money; it's about the whole range of burdens on how businesses operate. The UK is one of the most efficient TV markets in the world.

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Justin Crosby4:03

Yeah, and we'll come on to talk about restarting production. Before we do that, you recently secured a landmark agreement for UK Indies with the BBC. Can you tell us a little bit about that?

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John McVey4:28

This was a very protracted negotiation. The BBC wanted to provide more programs for free, but they didn't want to pay. We deficit finance in the UK, so we needed compensation. After 18 months, we came up with a new structure where the BBC pays for additional use and reduces their license period. This makes us attractive for deficit financing.

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Justin Crosby7:03

Well, the UK terms of trade has been a model for many countries. It's great that this new agreement with the BBC has been finalized. There are so many other things to focus on now, like getting the business started again. That brings us to your first story, about production starting back with new pan-industry guidance.

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John McVey7:43

This was led by major broadcasters. They involved us in development. It's high-level guidance on public health principles. It's not prescriptive; each production is unique. It gives everyone confidence that we take this seriously and can get back to work safely. I don't think production will ramp up quickly; it will take time.

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Justin Crosby11:01

It's been a real joint effort. The first question I've got is: will it mean more cost? Is production more expensive now, and are broadcasters prepared to pay that?

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John McVey11:30

We've analyzed budgets and see a 10-20% uplift. We can mitigate by filming differently. If increased costs damage margins, broadcasters will have to cover them. There's a risk of asymmetrical recovery where big platforms self-insure and become more attractive, but we need the whole audiovisual economy to recover.

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Justin Crosby13:21

Obviously we're talking specifically about the UK. Have you any insight into what different countries' production communities are doing? Are they approaching this in a similar way?

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John McVey13:39

Most territories are competitors, so we're not sharing. France has introduced underwriting for production insurance. Australia, Canada, US are looking at schemes. No one can get commercial insurance for pandemic-related disruption. The UK is a competitive market, and I'm making representations to government not to damage our creative economy.

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Justin Crosby14:57

Absolutely. That's a long and hard-fought battle. We saw Channel 4 announce huge restrictions on commissioning budgets. Production budgets are going higher, commissioning budgets lower. Producers are in the middle. How are they going to make it work?

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John McVey15:33

There will be ways to save money, but if broadcasters have less money, they need to adjust their editorial specifications. They can't get the same for less. Producers' thin margins are already at risk. We've had conversations with Channel 4 making clear they must adjust ambitions if they don't have the money.

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Justin Crosby17:21

Yeah, yeah. So Claire, welcome to the show. Thanks for joining us. How are things going on over in Toronto and what's the latest going on at Realscreen?

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Claire Macdonald17:33

We've been out of the office since March 16. We've all been working from home. It's been remarkable how we've adjusted. We've had to completely rethink our business and come up with virtual events. People are in good spirits. We're beginning to see restrictions lift in Toronto, but we're not in a rush to return. We'll take a phased approach.

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Justin Crosby19:02

So Realscreen is a well-known brand for publications and events, like the Summit in January and Realscreen West. Realscreen West isn't happening this year, right? And you've launched a new virtual event.

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Claire Macdonald19:23

That's right. Realscreen West was scheduled for June 2-4 in Dana Point, California. We had to make a difficult decision about six weeks ago. It just wasn't going to happen. We created Realscreen Live, a virtual event on the same dates.

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Justin Crosby20:05

Okay, all right. We look forward to seeing that. There are a lot of familiar elements of the usual Realscreen events that you've incorporated into Realscreen Live.

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Claire Macdonald20:19

Yes, that's right. We have one keynote from General Carnell, EVP of original non-fiction kids programming at HBO Max, four panels over three days, our signature 30 Minutes With sessions (broadcaster briefings), speed pitching, and we'll announce the finalists of Propel, our female accelerator program in partnership with Abby Green Felder at Everywoman Studios.

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Justin Crosby21:03

Fantastic. Well, wishing you all the very best with that. Obviously, virtual events have become an industry norm. Who knows, they may become part of the new normal. We may see a mix of virtual and real-world events going forward.

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Claire Macdonald21:30

Yes, we're thinking about that as we plan for next year's Realscreen Summit in New Orleans at the end of January. At this point, we don't really know what will happen, so we have to plan for all events. We would much rather have the event live in New Orleans; it's our last year there before moving to Austin. There's something unique about meeting in person that you cannot replicate virtually. But we will do what we can to unite the community.

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Justin Crosby22:21

All right, okay. Well, let's keep our fingers crossed that as many real-world events happen as well. So on to your first story of the week. You've highlighted HGTV ordering its first self-shot show. Tell us a little bit about that.

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Claire Macdonald22:37

The reason I picked that show was to demonstrate how resilient and resourceful this community is. Families, including first responders, receive a box of decor items and virtual coaching from HGTV design experts, and they record the transformation. They've adapted to change, which is a luxury in unscripted. Senior executives have commented on massive creativity and predict a boom for the genre. It will be interesting to see what ideas and protocols stick post-COVID.

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Justin Crosby24:01

Yeah, and on last week's show we were talking about the Golden Age of unscripted. This could be a real opportunity for unscripted to pick up the slack from delayed drama production. Production companies and broadcasters that are agile and creative can take advantage. It's reminiscent of the writers' strike when unscripted gained momentum. So John, your second story centers on production insurance. What are the issues and why is it a roadblock?

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John McVey25:21

There are about 500 claims going through brokers. Big platforms self-insure, but small indies cannot get cover for pandemic-related disruption. Broadcasters won't underwrite, or they'd want too much control. We're working on proposals for government to act as a guarantor for suspension costs. If we can get that, we can start working and get freelancers back. Otherwise, there's a risk of asymmetrical recovery where US platforms move quicker.

To compete and recover as quickly as possible with inward investment. You mentioned France being one of the first countries to start to resume production. How have they dealt with the insurance issue over there? They're basically getting a government guarantee for suspension and abandonment. Right, okay, so it's a similar approach. The principles of insurance are pretty much the same really. We've developed a different proposal to what they're doing in France, but the principles are the same. In order to have business confidence, you need to be insured or have some underwriting or guarantee, right?

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Justin Crosby30:44

Okay, well, this is again a huge issue, and presumably until this is fixed in the UK, as you said, nobody can really step out the door and make a TV program. Well, some will because they're desperate and they need to, or they've managed to find some way to cover the potential risk and good luck to them, but there's a big risk. We don't know what's happening with the pandemic. What I fear is that even shows that maybe could get back into production because of the core related costs or because of the risks around not being insured, people will hold back going back into production. The suspension will be longer and that's not good for us overall. It's not good for our schedules, it's not good for our creativity, it's not good for our exports. And this is normally when we're filming, principal photography, there's very little principal photography going on right now.

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John McVey31:39

Yeah, so it's all really about building that business confidence and removing the roadblocks to that recovery.

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Justin Crosby31:47

So well, good luck with all of that, John. That's obviously fantastic work that you guys are doing there.

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John McVey31:52

I'll come back on and let you know if we're successful. Absolutely, I'll be on the phone or another Zoom. I won't let you forget that promise.

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Justin Crosby32:00

So Claire, your second story is around Leonardo DiCaprio producing a feature doc. Tell us about that.

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Claire Macdonald32:09

Yeah, story ran just yesterday in Realscreen. It was an announcement that Hulu is premiering the film 'And We Go Green', which actually launched last year at TIFF. But it just reminded me of how many celebrities are attaching themselves to documentary. It's not new, it's been over the last couple of years, there's just been this huge proliferation of productions that have celebrity names attached to them. A&E Networks just announced Lincoln and Theodore Roosevelt and another three-parter 'The Men Who Built America', and they're all produced in part by Leo DiCaprio. He's a pretty busy guy. And then there is a new series in the works at AMC with Bill Clinton. Then of course there's 'Trial by Media' which is on Netflix right now, exec produced by George Clooney. And then there's everything that's coming out of the Obamas' Higher Ground Productions. So it's not necessarily a new trend, but I feel like there are more and more stories happening with those celebrity names attached to them, and I think it speaks to the golden age of nonfiction because people are watching it and there's an opportunity there. There's been this incredible resurgence of fantastic documentaries, and these people want to have their names attached to them. So it's more of an observation than a hot news story.

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Justin Crosby33:43

No, absolutely. I think that obviously the scripted industry is going to be on hold for a little bit longer than unscripted, so perhaps we might see more and more of these passion projects from some really well-known Hollywood actors who want to tell unscripted stories. So that's really interesting. We'll keep our eyes out for more of those.

So now it's time for Hero of the Week. This week John, you're going to go first. Who's the person that has inspired you, delighted you, or a person or thing that gets your accolade of Hero of the Week?

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John McVey34:22

Hero of the week? Good weather. Ah, excellent sunshine. Lockdown is way better than raining lockdown. During the past 10 weeks we've had maybe one week where it rained the whole week, and that was way more stressful for everyone than a little bit of sunshine, a little bit of hope, a little bit of outdoors. So I would say good weather is a big hero during lockdown.

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Justin Crosby34:51

Yeah, you're absolutely right. I've said that myself to many people, that if it was the normal London springtime weather we usually have, it would be a much more miserable place. But we've been blessed by the weather gods. At least Claire, who's your hero of the week?

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Claire Macdonald35:10

My hero of the week is a gentleman by the name of Chris Sloan. I have not had the pleasure of meeting him, although he has been to a couple of our events over the years. I read about him in a regular column in Realscreen by Joy who tells unique personal stories of members of the global community. Chris is a former unscripted network exec and he now runs a production company in Miami. Six years ago, he lost his young son Calder in a horrible accident. He said that his son had incredible empathy and compassion, and the word that best described him was 'awesome', and that's what he and his wife used to call him, 'Mr. Awesome'. Three days after they buried him, a friend of Chris put a self-portrait of Calder on the web with 'Mr. Awesome' across the top. It went viral, and many celebrities held up the picture, and Ellen did a segment. The Calder and Chris Sloan Foundation started, which services missions around the world. So far they've sent half a million dollars of aid. When COVID hit, they created a campaign to match donations for people giving to charity that helps first responders and people fighting the virus, and so far they've raised $120,000 benefiting a hundred different charities. So Chris Sloan is my hero.

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Justin Crosby36:35

Well absolutely, I think we can all support that very much. For those who want to know more about the foundation, there's a link in the podcast description to the foundation website, so please go and check it out.

And now it's time in the show, Claire, to find out who or what you're going to be telling to 'get in the bin'.

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Claire Macdonald36:58

Well Justin, I am going to throw working from home permanently in the bin. There are many upsides: I don't have the commute, I don't spend a ton of money on gas, I don't have to pay for parking. But I really miss the camaraderie of being in an office with my colleagues. It's one of those situations where the grass is always greener... or is it?

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Justin Crosby37:28

Yeah, absolutely. That's something we're hearing from a lot of people on the show. You take for granted the amazing people you work with in an office, even the guy you pass in the store or go for coffee with. You realize how important that human connection is, and when we're all forced into lockdown, it really brings that home. So I'm with you on that one. It can get in my bin as well.

Perfect. All right, Claire, fantastic. Thank you so much for being on the show this week. Really appreciate your time. Thanks again for coming on, and we look forward to seeing you soon.

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Claire Macdonald38:27

Thanks again for having me, Justin.

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Justin Crosby38:30

So John, coming back to you, who or what are you throwing in the bin this week?

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John McVey38:34

I think the Home Office migration consultation. I think it's badly timed and not consistent with public sentiment right now. We will end up with something that controls the British borders better, that's a manifesto undertaking and I respect the government's commitment to do that. However, in terms of timing and the impact on carers or health workers, I think it's a crass moment to open that consultation. These people are heroes, not migrants. I despair at that. I'd hoped this brutal experience might have brought more political wisdom.

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Justin Crosby39:34

Well, we were talking about how governments handle communication issues, and you're right about the timing.

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John McVey39:50

I've got another bin. It's the first ever double bin. Double bin is 'stay alert'. That's an ideology, not a practical instruction. No, no, exactly.

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Justin Crosby40:09

Brilliant. Okay John, thanks so much for your time. It's a busy time for you, in the middle of negotiations to get the UK production industry going again. Thanks again, take care.

So it's that time in the show where we head over to Hollywood and chat with Deadline's Peter White. Hi Peter, how are you?

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Peter White40:44

Hi Justin, I'm good. The lockdown's easing in LA. We're all heading to the beach. That's the plan at least.

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Justin Crosby40:57

And it's still the upfronts, or the upfronts that aren't upfronts, but I hear there's been some news from CBS.

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Peter White41:07

Yeah, CBS was this week. They announced their full schedule, or as Kelly called it, 'full' depending on when they can launch shows. New shows include 'The Equalizer' with Queen Latifah, a Chuck Lorre comedy 'B Positive', and a Silence of the Lambs series 'Clarice'. There's no set return for production yet, but they're sticking these into the schedule. It's a gamble, but interesting.

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Justin Crosby42:21

So it's a bit of a gamble. They could find out something completely different from what they published.

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Peter White42:32

They've got options. They have stuff in the pipeline from ViacomCBS, and shows on the bench like 'Blood and Treasure' season two. They're banking on these being ready. They have a few months to figure it out.

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Justin Crosby43:02

So what else did we learn from the CBS upfronts?

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Peter White43:04

There was talk about reality shows like 'Love Island' and 'Big Brother' airing this summer. They're optimistic. But they also have a gap after Sharon Vuong left for NBC. They're reevaluating that role. CBS does less reality, but it's an area where international producers do good business.

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Justin Crosby44:03

There'll be a rush on unscripted while scripted slows down. Apple seems to be making big content moves.

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Peter White44:11

Apple bought the Tom Hanks film 'Greyhound' for $70 million, going straight to Apple TV+. They also bought a doc series, have Sofia Coppola making a series, and a first look deal with Ridley Scott. They're gearing up. 'Defending Jacob' was their second biggest show after 'The Morning Show'.

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Justin Crosby45:49

Apple is cash rich, so there'll be opportunities for content and acquisitions.

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Peter White46:03

Steve Coogan and Hart Hanson are writing a new adaptation of 'The Persuaders'. Coogan was going to star with Ben Stiller years ago, now it's a US TV version. Could be fascinating.

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Justin Crosby47:02

Any chance to hear Steve Coogan's Roger Moore impersonation is great. I'm a big fan.

Exactly. Peter, thanks as ever for your time. Stay safe in LA. We look forward to catching up next week.

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Peter White47:19

Thanks Justin, see you then.

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Justin Crosby47:25

So it's that time in the show when we join K7 Media's G. Leis. This week we're discussing SVOD, AVOD, TVOD. G, we had Olivier Jay from Pluto TV last week. Which models are going to work?

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G. Leis47:54

That's a great question. It's a paradox: new streamers launch every month, but when you look at business models, subscription services seem bulletproof with growing subs and hours. However, ad-supported VOD is being overlooked. It will bounce back. In the short to medium term, a mixed tier service with free ad-supported and premium subscription is the safest bet.

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Justin Crosby52:51

So you're advocating AVOD over the others?

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G. Leis52:57

Yes. AVOD has a bright future. Many markets don't have a tradition of paying for video. Advertising tolerance is returning, especially among younger people. Post-crisis, ad dollars will flow to AVOD because of better targeting and ROI. AVOD will be in a stronger position than linear TV.

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Justin Crosby55:47

Do you see any other VOD strategies emerging?

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G. Leis55:53

Clusters around language are growing, like Shahid for Arabic, mlay for Chinese, Discovery with Polish content. Also, the value of human connection and community features is being recognized.

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Justin Crosby56:57

What timeline for the bloodbath you mentioned?

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G. Leis57:07

I'd give two to four years for some streamers.

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Justin Crosby57:23

Interesting. Let's keep an eye on AVOD and TVOD. Thanks G. We look forward to catching up next week.

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G. Leis57:40

Absolutely, take care.

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Justin Crosby57:51

That brings us to the end of another episode of Telecast. Thanks for listening. Share the show, give us a review, and see you next week. Stay safe.