Israeli TV Shows Are Already a Hit Abroad, but Producers Believe the Sky’s the Limit

'We’re not good at the Olympics or soccer, but we’re good at telling stories.' says Israeli producer Avi Armoza. 'It's possible to develop the high-tech model for the content industry too.'

At a quaint cafe in the southern French city of Cannes, the walls this week were adorned with publicity materials for the new Israeli television format "Gran Plan," in which a trio of grandmothers coach a team of youngsters.

The concept was developed by Artza Productions, an Israeli television production firm. And although it has not been broadcast locally, the show is being touted by Armoza Formats, another Israeli firm that is engaged in program development and distribution, as one of its leading program ideas at Cannes' MIPTV, the content trade fair for interactive media that opened in the French resort city on Monday. And that means something because the Cannes gathering is the largest content and format trade fair in the world.

Armoza Formats' Avi Armoza, 55, is one of the Israeli pioneers in the business of exporting programming concepts. These days there are many companies that export content from Israel, including the international division of Channel 2 franchisee Keshet, in partnership with the Reshet franchisee, Britain's ITV, Dori Media and others.

One of Israel's major programming achievements is the success abroad of "Homeland," based on Keshet television's Israeli show "Hatufim" ("Prisoners of War" ). Once dedicated to serving its tiny home market, Israel's program-content industry has become an export sector.

In 2005, Armoza began distributing Israeli program content to television networks abroad. Due to his efforts, 1,000 episodes have been aired around the world of foreign versions of Channel 10's "La'uf al Lamilion" ("The Money Drop" ), produced by July August Productions; Koda Communications and Hot's "Mehubarim" has been shown in 10 other countries; the format for Reshet's "Tzhok Meavoda" ("Making Fun of Work" ) has been sold in Europe; and a host of other shows that have never been aired in Israel are running in a number of other countries.

With the opening Monday of this year's MIPTV event, in which a record number of Israelis are participating, Avi Armoza believes the country has a chance to make a real breakthrough in the field.

"There seems to be something in our culture or roots that makes us a success in creating good formats," he says. "Maybe we're not good at the Olympics or soccer, but we're good at telling stories. If we use these abilities we can create a lively industry exporting content that is not based on the local market. It's possible to develop the high-tech model for the content industry too."

Asked what the revenue potential was for a successful program format, he replied, "It's like the potential for a start-up. It can be several hundred thousand dollars and it can also be a billion dollars. Income potential is a factor of the number of countries and the number of seasons in which a program is broadcast, which ultimately translates into the number of episodes.

"The person selling the format gets a certain commission [of about 5% of the production cost] of every episode that is produced and aired. Sometimes there is also revenue from spin-off products or reruns. The potential can be limitless. Look for example at the show 'American Idol,' which is generating billions."

That means the potential for making a lot of money from exporting programming content only exists if the format is sold in a large number of countries and is aired for a number of seasons - like "The Money Drop," for example, which has generated millions of dollars for the people who own the rights to the show in Israel.

The good, bad and ugly

Early in his career, Armoza worked as a public relations assistant at the Jewish Agency, where in the 1980s he began developing the organization's video production efforts. His work included documentary films on immigration, as well as a television show for the American market. In addition to being engaged in hasbara - public diplomacy on Israel's behalf - Armoza said, "we gave our viewers human drama with strong stories."

But as with any good reality show, there is also an ugly side of Israeli TV - behind-the-scenes intrigue, power struggles and disappointment. Recently the production companies have been leveling complaints against local broadcasters, particularly the two Channel 2 franchisees, Reshet and Keshet, saying the broadcasters are seeking to control the rights to the shows they air. They claim that in the process the broadcasters are preventing producers from developing and exporting new ideas.

The production companies say that in order to market a television concept abroad, the show must first be a success in the company's home country. But, they claim, the broadcasters here - or the companies with which they have contracts - control most of the ownership and management of those shows.

"As citizens, it is in the interest of all of us that the country have a dynamic and lively industry and not one based on a limited number of broadcasters and a few content directors who decide what gets aired and what doesn't," Armoza said. "The regulatory foundation is very important to the success of this industry. I believe very much in the potential for this market but there are conditions required to complete the picture - that the market allow for openness and initiative and for entrepreneurs to have the ability to have a financial stake in realizing these dreams."

Armoza believes the Second Television and Radio Authority should issue rules placing ownership of program rights primarily in the hands of the production firms. Britain has a similar setup which resulted in a flourishing television production industry over the past decade. The way things are now in Israel, there is no prospect for competition in the production market or the entry of new players, Armoza asserts.

"The broadcasters are continuing to keep the power in their own hands," he says. "The initial obligation of regulation is to look after market competition and fight concentration of power. If we want competition in the television market and pluralism of thought, that means that an entrepreneur can come with ideas and promote them and then reap the financial rewards. But currently, all of the decision-making power over what will be promoted and what will not is in the hands of the broadcasters."

Israeli formats may be a hit abroad, but international production companies that choose to open offices around the world are not rushing to get a foothold in the Israeli market. It is true that the German ProSieben group bought a 50% stake in the Israeli firm July August Productions last year. But other than that, the big players from abroad are not going into partnership with local firms, even though some had previously looked into doing so.

"If the subject of regulation is solved and the production companies can retain ownership of their products, they will be able to rather easily raise money, and we'll see the foreigners entering the market just like they entered the advertising and accounting sectors," Armoza predicts. "International companies are looking at the level of creativity here, for which we get very high marks, and then they examine the issue of intellectual property rights. From that standpoint, the market here is highly concentrated and companies that have looked at investing here have made a strategic retreat."

Moti Milrod
Reshet
Armoza Format