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Co-producing 101

For an independent producer new to the scene, venturing into a co-production may be as overwhelming as the prospect of marriage. Kidscreen spoke to a number of newcomers and vets on how to maximize regional funding, efficiently split production tasks and gain access to worldwide markets.
October 1, 2011

It’s no wonder co-productions are often compared to marriage. Think about it. There’s dating (MIPCOM), introducing that special someone to your family (applying for regional tax credits), followed by making a formal, legally binding commitment to each other (signing that lengthy co-production agreement). Let’s not forget lovers’ quarrels (creative disagreements, overspends), making up (compromise) and finally ushering your miraculous first-born into the world—a.k.a. the completed 52 x 11-minute series.

For an independent producer new to the scene, however, the reality of venturing into a co-production may well be as overwhelming as the prospect of marriage. The kids entertainment business is built on co-productions forged by a tight-knit web of producers and broadcasters savvy in the ways of maximizing regional funding, efficiently splitting production tasks and gaining access to worldwide markets. Kidscreen spoke to a number of them this summer to get some insight—including useful tips and cautionary tales—about how to start navigating the terrain of global co-productions.

Territory appeal
Simply put, it’s becoming nearly impossible to produce a show without sharing financing and resources with partners. And most co-productions involve pairing up with a partner from a country covered by a treaty agreement, which enables the project to benefit from local incentives and tax credits. (See info charts highlighting some of the more popular co-pro territories throughout this article.) Tapping into these territory incentives, however, often requires getting a regional broadcaster on-board at the outset.

“If you know you’re comfortable creating the storyboards and having the animation done somewhere else, find the countries that are good places to get that work done and find a broadcaster for your project,” says Olivier Dumont, MD of eOne Family and owner of Paris-based prodco FrogBox. With more than 10 years under his belt, Dumont points out that each territory has different rules and fund disbursements. For example, he says, the funding is reliant on how much a broadcaster invests in a show in Canada, versus France, where the incentives are more fixed. “You select a production company that will be in charge of raising financing locally and discuss what the possibilities are,” he says, adding that researching information on which countries have good co-pro agreements is key. Local partners will also have a keen sense of how much local broadcasters are looking to spend and the kinds of genres for which they’re willing to pay more.

Creative cobbling
When it comes down to putting together a co-pro, there are arguably an infinite number of ways to structure the deals both financially and logistically. When Billy MacQueen, MD of London-based studio Darrall MacQueen, began looking for partners for the studio’s recent comedy series Pet Squad, he needed to find companies that understood the toon’s mix of 1970s style with a fast-paced SpongeBob-esque stream of jokes and character gags.

First, the UK studio teamed up with Toronto, Canada-based March Entertainment, which had a number of like-minded 2D series in its portfolio, as well as a firm grip on regional tax breaks. MacQueen then looked to Malaysia for an animation partner. Malaysian multimedia development org, MDeC, which has a mandate to promote country’s animation industry internationally, introduced him to one of its top-tier studios, Inspidea. The company immediately got the humor of the series and also had an impressive track record. “They had done their homework, and they knew they wanted to get a better feel for the international market and how to make international content,” says MacQueen. He adds that the production and financing was pretty evenly split, with each partner contributing roughly US$1.6 million apiece to the project.

In 2007, Rio de Janeiro, Brazil-based 2D Lab struck up a co-production deal with Toronto, Canada’s Breakthrough Entertainment on My Big Big Friend, which just bowed last month on Canadian preschool net Treehouse  and Discovery Familia in the US. A true 50/50 deal, the financing was split down the middle and took advantage of government incentives from both territories. (In terms of production, scripting and post-production were completed in Canada, and Brazil looked after the animation.)

2D Lab partner and executive producer André Breitman says constructive feedback from Canadian broadcaster Treehouse was invaluable to the series’ development, as Brazilian nets are not focused on creating content with an eye to making international sales. But since beefing up governmental animation incentives in 2008, Brazil has been a territory to watch for co-production opportunities. Besides continuing to add more territories to its treaty list, private equity firms from any industry are also given major tax credits for financing animated projects. So Brazil’s producers often end up pitching screen concepts to the likes of mining and energy companies, which in turn bank-roll production. Breitman says the treaties allow Brazil to co-produce with multiple partners. “So we don’t have a treaty with Italy, but we could carry 20% of the cost in Brazil, 20% from Canada and 60% from Italy,” he explains.

For Jordan-based Rubicon Studios, which has offices in L.A. and the Philippines—none of which have co-production treaties—most deals are based on equity financing. The company scouts for IP with potential, and as executive director of development and production David Corbett explains, if the company can interest a distributor and generate some presales, it brings the rest of the financing to the table through its creative resources.

The company’s latest kids series to net global sales, Pink Panther and Pals (26 x half hours) was a no-brainer, says Corbett. Rubicon produced the series with MGM Pictures. The Hollywood heavyweight brought a presale from Cartoon Network to the table. “We then raised the balance of the budget through our resources,” adds Corbett.

It’s true that most US indies don’t have the backing of a multi-national like Rubicon. But besides leveraging a groundswell for your property through viral online channels, Corbett recommends looking to other territories—namely Canada—to get North American projects off the ground.

More than 20 years in the business has also taught Corbett some important lessons. His first piece of advice is to watch your cash flow and bottom line on budgets. And he’s made a habit of hiring consultants who understand local tax credit systems, which he describes as moving targets. Make sure you are eligible and approved for all available tax incentives before you get bank funding. “I’ve seen situations where percentages of tax credits have been denied and then you end up owing the bank,” he says. Keeping on top of overages is also important. “If your partner is causing overages, you can have all the contracts in the world, but somebody has to have the money to finish and meet delivery.” Finally, Corbett contends that you can’t move forward solely on the word of a potential partner that says it has interest from a broadcaster or distributor in its territory. “They can be interested in a lot of things, but it’s what they buy that counts,” he notes. In short, do your homework. If you’re told Paramount is on-board as a distributor, call Paramount. Everything should be completely transparent.

The big little guys

Being an international entertainment and distribution company has its advantages for eOne and eOne Family. “We’re in a good place for financing our shows in a variety of ways—we can set it up in Canada, and we can also co-produce with my production company in France,” says Dumont. Series like Peppa Pig and Ben and Holly’s Little Kingdom, which were co-produced with London-based Astley Baker Davies, saw eOne acting strictly as a financing and distribution partner. Currently eOne is developing co-production Mong & Oose with Studio Moshi in Australia, which has the support of a local broadcaster that wasn’t ready to be revealed at press time. Dumont says he’s had initial interest as well from Canada and the UK, but the final deal keeps changing based on where eOne Family is fielding the most interest in terms of raising the funding. “We’re finalizing the development work, and depending on where we get a bite from a broadcaster, it will determine where we set up the co-production.”

Josh Scherba, SVP of distribution at DHX Media in Toronto, echoes Dumont’s suggestion to focus on territories that have access to funding. He also advises avoiding going too far down the road with a broadcaster in the country in which you want to co-produce. When you get that initial interest from a network, he says, that’s the time to talk to a production partner in that country and have it see the conversation through with the broadcaster. “We feel it’s the most appropriate way to go forward,” says Scherba. At DHX, he’s witnessed the benefits of small independent producers partnering with a company that has built-in distribution. “It makes sense for one of the rights owners to handle distribution, rather than getting a co-partner and then layering on a distribution partner, because from a deal standpoint, it’s just that much more complicated to pull together.”

And from DHX’s point of view, distribution capabilities also influence the choice of companies with which it works. For example, Scherba says DHX has struggled to work with French partners because so many of them have distribution arms, which would ultimately pit the partners against each other for sales rights. “It’s important to look at the size and strength of the two companies and figure out right from the outset if a deal makes sense,” he says. However, Scherba stresses that these days it’s an asset to be flexible. For example, preschool series Waybuloo was a UK-based co-production with Zodiak, for which that company retains worldwide rights. For its part, DHX oversaw the animation work from Toronto and got Canadian net Treehouse on-board as a broadcast partner.

Don’t forget the broadcaster

Flexibility is a concept broadcasters are also having to embrace right now. Even heavyweight Cartoon Network has seen a lot of change in how it approaches deals over the past few years, according to Adina Pitt, VP of content acquisitions and co-productions at
Cartoon Network US. Whereas producers used to be able to get shows financed with a few presales and then approach CN for US placement, Pitt says the norm now requires the network to get involved with projects at their earliest stage, whether it’s a straightforward acquisition or a co-production deal.

“It enables us to get really great shows, lock into those partnerships early on, and still not incur the costs that it would require if we wholly owned those properties or made them in-house,” says Pitt. Also a first for the net, she says, is its foray into partnering with broadcasters all over the world that have the ability to bring local government incentives to the table and are eager to tap into the channel’s comic sensibility and creative resources.

Pitt says CN partners with its sister networks in more than 100 countries around the globe as often as it can, but is open to negotiating for access to a show. For example, she says a co-production deal with TF1 might mean that CN would wait a little longer to air the show after it premiered on the French terrestrial channel.

And besides dealing with worldwide broadcasters, Pitt is known for her attention to working with indies. “We’re in a position where we can help an independent producer get something off the ground—that’s a powerful position and one that we don’t take lightly,” she says. For her part, she knows what the needs of the market are at any given moment and tracks genres of interest all year long. Sales markets like MIPCOM are less transactional for Pitt and more a means of meeting and catching up with producers and managing relationships.

As for producers looking to get that first spark of interest from a broadcaster that will jump-start a co-production deal, Pitt suggests identifying some of the people at nets you’d like to be working with and requesting informational meetings. Show them what you’re doing, ask for their feedback and their ideas on what companies to approach. Also, ask what you can do to package your project into something that’s ready to come to the network.

“The last piece of advice I would give to producers is be prepared to listen,” she says. “The hardest part is hearing what you don’t want to hear.”

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