Finding Waldo In Central and Eastern Europe Is A Puzzle

The goal is to find out how many TV channels from CEE countries could be distributed in the U.S., where foreign-born citizens now represent 13 percent of the population, or 40 million people. This is in addition to 88 million permanent residents and 15 million temporary legal residents. Of these, 14 percent, or 20 million people, are of European origin.

But first, it is important to figure out what exactly constitutes Central and Eastern Europe. NATPE Budapest organizers would not touch the topic, but looking at a map, one could indicate (in alphabetical order): Bulgaria, the Czech Republic, Hungary, Poland, Romania, and Slovakia.

Not so, according to The Economist, which recently ran a piece saying that, in the post-Communist world, Eastern Europe has moved even further east and now includes Lithuania, Belarus, and Ukraine.

Others refer to Belarus as a Russia-dominated Commonwealth of Independent States (CIS) group, while Ukraine is supposed to be a CIS associate. But considering its conflict with Russia, it’s probably safe to include Ukraine among the CEE countries.

Patrick Zuchowicki of Basic Lead, who created and organized the Budapest TV market before selling it to NATPE in 2011, said that to define CEE it’s best to use a list from Europe’s Organization for Economic Co-operation and Development which includes Albania, Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, the Slovak Republic, Slovenia, and the three Baltic States: Estonia, Latvia, and Lithuania.

Then, there is a more complex CEE definition given by Wikipedia, which includes definitions from the World Factbook (from the CIA) and Eurovoc (an E.U. publication used by many U.S. studios). Indeed, each studio looks at CEE a little differently with regards to territories.

In any case, one could easily say that a universe of at least 13 CEE countries could make some 150 TV channels available for international distribution. Naturally, some of those are already available in the U.S. — specifically, those from Poland, Hungary, Ukraine, and Romania. According to 2016 U.S. Census statistics, there are 425,000 foreign-born Polish residents in the U.S., followed by 348,000 Ukrainians, 161,000 Romanians, and 62,000 foreign-born Hungarians.

Christian Morsanutto, SVP of Business Development and Operations for Toronto-based TV channel aggregator ECG, reported that, in regard to channels from the CEE territory, the most prevalent are the Polish channels that will number in excess of 31 linear channels in Canada and the U.S. within the next few months.

He further explained that there are several factors that come into play when — prior to launching channels in a specific language — aggregators and TV channel operators alike evaluate variables such as market size, socio-demographic profile of potential audience members, and availability of these channels among the pirates disrupting the industry.

This is the case, for example, of the Russian TV channel market. A once thriving segment in the international channels distribution realm, this language group has been a primary target by pirates, forcing many operators to drop their Russian-language channels due to subscriber losses.

Nevertheless, there are other language groups that, although smaller in number of potential audience members, should be able to establish a foothold in North America. Among these are channels from the Balkans, CEE, and CIS countries.

Morsanutto also explained the basic business model: A TV channel from any CEE territory, or any country in the world for that matter, first contacts an “aggregator” (Condista, ECG, I.N.D. Group, or IMD, for example) and negotiates a distribution agreement, which is typically based on a revenue-share model, such as a 50-50 revenue split (on the net to the aggregator), or in some cases, a fixed license fee.

The aggregator then negotiates with multiple cable TV operators (MSOs), which will arrange to feed the TV channel to their systems only, whose subscribers include that particular ethnic community. The MSOs determine the channel’s premium fee (it is never part of the basic fee) to subscribers. A portion of that fee goes to the aggregator.

In some cases the TV channel could try to use a direct approach and contact a DTH “platform” (e.g., DirecTV or Dish Network), an OTT platform (e.g., Dish Network’s Sling or DirecTV Now), or a cable operator and try to negotiate a direct deal between the channel and the platform. In other instances, channels have also approached hardware-based platforms like Apple TV and Roku.

The aggregator will tell the MSOs or the DTH platform (ECG, for example, serves cable, direct-to-home satellite operators, and OTT platforms) how they will receive the TV signal to their headends. From one continent to another, a channel can utilize one — often two to be safe — of three delivery options: Satellite capacity (acquired from carriers such as Eutelsat, Hispasat, Intelsat, or SES), private fiber link from the channel’s control room to the platform destination point, or, the fastest growing delivery method, IP Transport Stream over public Internet.

In terms of marketing, Morsanutto explained that for MSOs and DTH, the best balance for a channel offering in a specific language is usually reached with a maximum of five to seven different TV channels per language. The advantage of the OTT operators is that they don’t have any capacity constraints (like cable or DTH operators do), and therefore, their single-language channels are usually much larger compared to other types of operators.

As far as the TV channel that the aggregator or platform will receive, this has to be an “international” (clear-rights) channel, or the channel itself has to blank programs that don’t have territorial or language rights. “If the channel has just a local channel and not an international channel, ECG can substitute programs before the signal is sent to MSOs and DTH operators,” explained Morsanutto.

“Not too long ago, a channel sent to different time zones had to provide its operators with different feeds at very high operational costs. Technology has made giant steps in the last five years, and today it allows international channels to decrease their expenditures through automation. As an example, if before there was a need to have multiple feeds for different time zones, now, with new technology, everything can be done in the cloud. Diversified feeds, programming substitution, advertising insertion, time-shifting, and standard conversion are routine operations,” continued Morsanutto.

Two of the key challenges for international TV channel distributors (aggregators and platforms) are generated by cord-cutters and piracy. Condista’s Miami, Florida-based Jorge E. Fiterre, who, from Europe distributes four TV channels from Spain and three TV channels from Italy, expanded on the topic.

“We are after pirates who pick up FTA channels in various countries and sell the Internet feed in our territories,” said Fiterre. “These pirates not only harm aggregators like us, and retailers, but also program producers, content distributors, and everyone involved with the shows that shouldn’t be shown outside the country that has the TV rights,” he explained.

The international channels are difficult to pirate since their transport is encrypted and they are not available in the country of origin.

As far as cord-cutters are concerned, Fiterre sees “growth in the Hispanic market, versus the general market.” He also sees “a great potential in the U.S. for TV channels coming from CEE countries. The expansion of OTT over private networks will open up more opportunities.” But, he warned, “retailers now expect that channel operators be proactive in promoting their channels to the niche-targeted consumers.”

Fiterre added that there are better and cheaper ways to get international channels to the market today, partly because of increased satellite capacity. Finally, Fiterre noted that he generally prefers a revenue-sharing model over a flat fee option.

On the channel side, Poland’s SPI now has two channels on Dish Platforms (DTH and Sling) in the U.S — Kino Polska and Kino Polska Muzyka. However, the Canadian Telecommunications authority has cleared the launch of 10 SPI channels in multiple languages in Canada.

SPI’s Berk Uziyel explained that three of those channels are available with multiple language options (subscribers can choose from a language menu), covering a total of 20 languages.

As far as piracy is concerned, “It is an issue [that is] hard to fight,” said Uziyel, “Our local and regional offices work with in-country monitoring organizations and authorities to investigate any illegal decoding/broadcasting/streaming of our channels, which is then handled by our internal legal team, or, in specific cases, by an international law firm that has been working with us on these issues. Measures and actions are determined by local laws and regulations,” he concluded.

Russia’s RT channel is distributed in the U.S. through all platforms (cable, DTH, and OTT) and, according to RT’s Alla Zelenova, it has a weekly audience of 11 million viewers.

(by Dom Serafini)