Lionsgate’s Sandra Stern at the TV Drama Festival

Sandra Stern, President of Lionsgate Television Group, explained how the independent studio is teaming up with established and new talent to meet the needs of curators across broadcast, cable and streaming at the TV Drama Festival today.

You can watch Stern’s keynote with TV dramaby Anna Carugati here. It started with Stern discussing the studio’s long heritage of finding partnerships outside of the US, which dates back to his own time working with Jon Feltheimer – now CEO of Lionsgate – at New World. “We were still looking for money, so we looked outside the United States to see if we could raise money, which we did.”

“These days we continue to do co-productions,” Stern said. “Fortunately, we are no longer so tight for money! Today, our co-production partnerships are really focused on strategic initiatives rather than financial ones.

Stern referred to the joint venture with BBC Studios. “They are co-production partners. They share the funding. But the driving force behind this venture was access to the UK market. This company gave us access to the BBC [Studios] sizes. More recently, he gave up Ghostsour big hit on CBS; Welcome to Flatch on FOX; and six, eight or ten high-quality format projects that we have in various locations around the city. This has been an important strategic initiative for us. We view co-ventures and co-productions and the international market as a way to expand our access to top quality material and talent.

On how Lionsgate has been able to significantly expand its television slate, Stern noted that the studio has benefited from the emergence of a wealth of new buyers. “I don’t know if others are as laser-focused as we are on new platforms, but this is just a boon to the whole industry. What’s been unique for Lionsgate has been our focus on providing access to the most undeniable content. It meant undeniable partners. Acquiring the majority stake in 3 Arts, for example, gave us access to talent, materials, creative viewpoints that we wouldn’t otherwise have.

Stern also referenced the importance of Lionsgate’s stake in UK management and production company 42. “The UK is a reservoir of great talent. Many of these talents are actively working in the United States or aspire to do so. We had the opportunity to exploit this talent. The relationships we have made have been a very good source of material for us. We’ve been very careful and intentional about the overall deals we have, the people we’ve brought into our fold, and the way we’ve pitched and packaged our projects.

Stern continued, “Almost every platform wants to keep their projects in-house. To get noticed, we need to be able to deliver things to them that they otherwise don’t deliver for themselves. These can be high-end IPs that we have been able to access, both through our own library and from our companies. It can be a well-packaged project that has things they want to do business with. It may just be a take or an approach that is, again, unmistakable. The third element is our relationship with STARZ. This allows us to get a precise overview of what they are looking for so that we can try to direct our development towards things that make sense to them. Lionsgate has big aspirations. We have something like 30 or 31 scripted series, we have bigger aspirations than any network can achieve. And not everything we do is good for STARZ. They need to build their platform for their audience. But there is no denying that our relationship and our access to STARZ has allowed us to increase our production.

On co-funding models, Stern noted, “Most platforms want to have a stake in everything they broadcast. This is a rare case in which we are not partners of the platform. Lionsgate has always been quite innovative with our funding. So do we need a network co-production to finance our series? Probably not, because we are quite innovative. But it doesn’t hurt to have network funding. The major advantage of network co-productions is very strategic. It gives us a window into the network when we partner with their sister studio. It can give us an advantage if we have a show that is on the bubble.

Discussing Lionsgate’s overall approach to funding, Stern said the studio takes a portfolio approach to its slate. “We seek to try to achieve the right balance between projects for which we are loss-making but for which we control all the ancillary rights, so a program broadcast, for example; [and projects] broadcasters will pay extended license fees – a cost-plus license fee with a substantial premium – for rights for an extended period. We recover these rights. We can monetize downstream, but it takes time. We try to balance these two different types of models. Ideally, if we are successful, we have a stand-alone system where the premium on cost-plus streamers allows us to hedge the risk of the broadcast model.

Lionsgate has also done well to “renegotiate and restructure some of these broadcast models. The broadcast model had been difficult – high risk, high reward. It was outside of our risk appetite. But over the past few years, we’ve worked very aggressively and very successfully with some of our broadcast partners to change the model, to rebalance it in a way that was financially beneficial to us and strategically beneficial to the platform. The world has changed and it is no longer the case that the broadcast network is the sun in the universe constellation of these vertically integrated platforms. It no longer makes sense that it once made sense to consider a deal with ABC as a deal for ABC alone. We changed the way we thought about the television landscape…to start watching this programming in a way that was in everyone’s interest. It allowed us to get back into the broadcast business. We have series on all four networks, which is really a first for us. Luckily they have all been renewed so we can breathe a sigh of relief. Some of the risk has been eliminated and hopefully will continue to be so.

Regarding the opportunities and challenges ahead, Stern noted, “As we look at a maturing streaming market, in which unlimited growth may not be the future, there could be some pushback. It is both a challenge and an opportunity. This forces us to redouble our quality, to be the studio that stands out. It is a challenge to continue to have access to high quality talent. Something Lionsgate is very good at is working on both ends of the spectrum. Not everything has to be $10 million per episode. We seek to be able to serve all platforms. As the financial capacity or willingness of some platforms to spend hugely maybe diminishes, we’re able to pivot in a way that I don’t think a lot of studios are able to do.