In August 2016, the day before she was due to board a plane for a family vacation in Singapore, Danna Stern received a surprise phone call. On the line was Dan Selig, an executive at U.S. cable company HBO, which had an exclusive broadcasting agreement with her Israeli satellite TV company, Yes.
“We’re coming to Israel tomorrow,” he told the then-director of content and acquisitions. “Can we meet for lunch?” A bit panicked, Stern tried to find out what the issue was. He replied briefly that there was a change in the Israeli broadcasting lineup, and “wanted to talk about it and explain.”
At the meeting the following day, Stern discovered that the U.S. company – which was responsible for some of the biggest hits broadcast by Yes in Israel, including “Game of Thrones” – was about to also sign a broadcast agreement with Yes’ competitor, the cable company Hot.
“That wasn’t an easy meeting for me,” Stern recalls some five years on. “This was a decisive moment in my career, when I almost broke. I was no longer enjoying it. I felt betrayed – as if I’d gone into my own home and found my husband in bed with another woman.”
After the meeting, Stern went on her family vacation as planned. But she spent almost the entire time trying to alter HBO’s decision, she says. “For us, this meant losing the exclusivity we had enjoyed until then with HBO, which provided us with excellent content. This was a serious blow.”
Danna Stern. One of only three Israelis on the list of 500 top entertainment business leaders last year.
Eyal Toueg
There were other behind-the-scenes dramas too, but when the dust finally settled Hot started broadcasting HBO’s content as well. To this day, the entire unpleasant incident is seared in Stern’s memory.
Adapt or die
The incident attests mainly to the changes the local TV market has undergone, with the local cellphone operators Cellcom and Partner offering their own TV services in recent years. The entry of media giants Netflix and Amazon has further transformed the market beyond all recognition.
Why this Arab Israeli made a TV show about racist young Jews
Eccentric Hollywood producer returns to his Jerusalem roots
Documentary on Israeli lawyer who defends Palestinians nominated for two Emmy Awards
Yet despite the crisis, Stern did not stop. She tackled a new area that Yes was not covering at the time: focusing on overseas distribution and content production.
“For two years I sold our series to various customers around the world, in tandem with our regular work. I did this at night, but it wasn’t regulated; there were no clear procedures,” she relays. “For years, I’d seen companies that distribute content internationally growing and succeeding. I realized that the world was changing, and we’d have to adapt.
“Gradually, this activity took up more of our time. I started grabbing people from my team to lobby Yes for this new initiative. It’s difficult to change the focus of a company: You have to distinguish between the traditional work at Yes and entrepreneurial projects, which take place in a completely different business arena – but ultimately it worked.”
And so, in June 2017, the company established its Yes Studios division, dealing with the sale of content to overseas buyers, with Stern placed in charge of operations.
Four years on, she points to a long list of successes, including the sale of “Kvodo” (“Your Honor”) – a series about a judge getting tangled up in the criminal underworld – to no fewer than eight markets around the world. The most prominent is the U.S. adaptation that premiered late last year starring Bryan Cranston. There are other versions either set for production or already made in India, France, Italy, Germany, Russia, Turkey and South Korea.
In addition, Amazon will soon broadcast the U.S. version of the Israeli series “On the Spectrum,” which deals with three young autistic people who share an apartment. Netflix also produced an American version of the comedy “Hashoter Hatov” (“The Good Cop”), starring Tony Danza.
The season 3 cast of “Fauda”
Elia Spinopoulos
However, despite all this, Stern recently announced her decision to leave Yes at the end of the year after 22 years at the company.
“There are lots of opportunities in this field,” she says, careful not to disclose where she is heading. “The international market is flourishing. There are many agents in the production business and there’s a growing need for connecting. I know how to link between multiple bodies and create productions. I feel that it’s the right time.”
It’s not just personal ambition that’s driving Stern, but also the understanding that local players such as Hot and Yes will find it difficult to compete with the global giants that have pitched up in Israel and started to gather steam, and that some of them will have to merge or possibly disappear.
According to Stern, though, the market is changing worldwide. “Advertising is moving to Facebook and Google, and content companies have less revenues. The feeling is that there are a lot of opportunities in the content area but that broadcasters cannot finance their production,” she says.
A senior figure in the industry, who spoke on condition of anonymity about Stern’s departure, notes that if the sale of content to overseas buyers was considered such a success in Israel, they would have “expected Yes and Hot to produce much more content than the regulator obliges them to – but that’s not happening.
“Currently, companies are trying to reduce their financial exposure to investment in TV series and are trying to garner partners to take on the production in advance. Stern may have done a few nice things, but her scope of operations at Yes is being curtailed. This may have been one of her considerations in making her decision,” the senior figure adds.
Threat to local production
In a market featuring such a glut of providers, the risks involved in producing new content are huge. The ability of a film or series to stand out, succeed and offer a return on investment become more challenging by the year. Furthermore, subscribers have been cutting the cord with traditional cable companies in recent years.
In addition to all this, and in contrast to the international companies entering Israel, Yes and Hot are subject to regulation that obliges them to invest 8 percent of their revenues in local productions. This means that while Yes provides work for the local industry, including screenwriters, cinematographers and producers, Partner and Cellcom are not enriching local content in Hebrew, since the law only applies to cable and satellite companies.
Online companies are not subject to regulation, at least for now. Thus, Google, Apple, Amazon and Netflix, who are already operating in Israel, are constantly eating away at Hot and Yes’ slice of the pie without having to invest in local production.
Danna Stern.
Eyal Toueg
With commercial TV viewers now addicted to reality and documentary-style shows, the burden of investing in high-quality scripted content has fallen on Yes and Hot. This situation threatens productions in Hebrew, and it seems likely that fewer original Israeli series will be broadcast in the future.
The Volkman Committee, which dealt with the future of local broadcasting, published a report recently recommending that Netflix be compelled to invest in Israeli productions. But since this is only a recommendation, much depends on legislation led by Communications Minister Yoaz Hendel on these matters. Moreover, the committee also recommended reducing the proportion of revenues given by Yes and Hot from 8 to 6 percent.
“In order to survive in the rapidly changing media market,” a senior person in the field explained this week, “smaller content producers must merge. One can already see this in France and the Netherlands. They can survive that way, offering digital platforms and a VOD service.”
He added that the Israeli market is unstable. “There’s a chance that we’ll soon find ourselves working in opposition to five or six global giants that dominate the content market and all of us, as producers, will be providing services for them.”
The greatest shadow is cast by Netflix. The streaming platform is consistently growing and expanding the range of series and movies it offers, as well as expanding its geographical reach. Active in some 200 countries and with an annual content budget running into the billions of dollars, it is providing stiff competition to all content producers worldwide.
In recent weeks, it has celebrated the unprecedented success of “Squid Game,” a Korean TV series that has become a global sensation. Last week, Bloomberg reported that the series was forecast to generate around $900 million for the company. Production costs were only $21.4 million.
Netflix refused to discuss these figures, but reported that over 142 million subscribers watched the series in the first month it was available on the platform. “This is an insane multiplier compared to the investment,” Stern says, “but I don’t know what one is supposed to do with that information.”
Perhaps calm investors down? After all, Netflix is making some crazy investments in content.
A scene from Netflix’s “Squid Game.”
Youngkyu Park,AP
Stern: “I wouldn’t worry about it. Like every high-tech company, it is not yet profitable but it’s not even close to maximizing its global potential. They want to be everywhere where there are people who want to watch – and they’re now entering the area of gaming, which points to their thinking about the future.”
How surprising is it that Korean content of all things is conquering the world?
“First of all, there are lots of successful series. ‘Squid Game’ is the most successful and talked-about one recently, but this changes all the time. Korean content has been dominating Asian and Middle Eastern TV for years; the 2019 Korean movie ‘Parasite’ did the unimaginable and won the best picture award at the Oscars. The Korean boy band BTS is the most popular in the world. It’s fertile ground. Furthermore, most Korean series offer clean, family-oriented content. There’s no sex, no nudity, and that suits the culture in Asian and Middle Eastern countries.”
Why would Netflix disclose the number of viewers watching the show?
“Up till two years ago, Netflix refused to disclose these numbers. This was criticized by content producers, who wanted to know what works, how many people watch their shows, etc. Subsequently, the company decided to disclose the data and is now displaying transparency toward producers who work for it, reporting the number of viewers at different points in time. Netflix even reveals how this impacts previous seasons. I don’t know any broadcasting body that does that. Following this, we discovered insane viewing numbers for ‘Fauda’ in Brazil and India.”
How does one decide which program to purchase, and who are the people making these decisions?
“It varies, depending on many variables. All the gatekeepers in streamers such as Netflix and Amazon are American. As noted by a producer from Nigeria at a conference I recently attended, they are all white males. However, they realize that the absolute majority of viewers live outside the United States and not in English-speaking countries, so they make great efforts to find local storytellers, writers and producers, making sure these companies have a physical presence in various countries.”
“Fauda” was the first series you sold to Netflix, which enjoyed great success with it. How was the sale done?
The cast of Israeli show ‘On the Spectrum.’ Was sold to Amazon Prime.
“In 2015, we screened ‘Fauda’ on Yes. It was a success from the very first episode; it was clearly something special. During that period, exporting Yes series was unregulated and Yes gave the rights to series to anyone crossing its threshold – no one believed they had any value.”
You gave the distribution rights to anyone who wanted to buy them?
“Generally, the series weren’t aired as they were. They were adapted or, more precisely, they were optioned for new local productions, only a few of which were exercised. ‘Fauda’ was also meant to be adapted: the goal was to turn it into an American series, and it was almost a done deal. But in March 2016 the Keshet media group held a media conference where we screened a trailer for ‘Fauda.’ A senior executive from AMC [which makes and screens ‘The Walking Dead,’ among other shows] was in the audience and she wanted to buy the episodes as they were. Her interest drew the attention of U.S. agents, who distributed these episodes to broadcasters. Ultimately, it reached a senior Netflix executive, Larry Tanz, who binged the entire series with his wife one night. He made the best offer and, after long negotiations, I met him in London. We sat on a sofa in a London hotel and reached an agreement on all of the details.”
Challenging time for television
Stern, 50, is an energetic woman. During the course of our interview, it seemed that she was preoccupied with 10 other things at the same time, yet still remained focused on her responses. Her husband is TV journalist Dov Gil-Har and they have three children. She was born in Tel Aviv, where she still lives, though her final high school years were spent in Singapore, where she accompanied her physician father. She did her military service at Army Radio, later getting her bachelor’s degree in English literature and a master’s degree in business administration from Tel Aviv University. She joined Yes 22 years ago, a year before it first went on air, serving as deputy to the first content director. From there, she rose through the ranks.
The satellite TV company’s early years were not easy. “From the get-go, Yes imported content because local productions take a lot of time. Initially, though, content producers had all signed deals with local cable companies and there wasn’t much to choose from. I bought the series that were left over. We bought series from England such as [the comedy-drama] ‘Cold Feet,’ or documentaries such as the ‘Seven Up’ series, as well as shows from the Netherlands. Over time, more content producers appeared and there were more choices. When I managed acquisitions, we’d buy 8,000 hours a year at our peak, including movies, series and documentaries.”
Danna Stern. ‘We sat on a sofa in a London hotel and reached an agreement on all of the details.’
Eyal Toueg
Under Stern’s management, acquisitions at Yes grew, with hits such as ‘Desperate Housewives,’ ‘Grey’s Anatomy,’ ‘Game of Thrones’ and ‘Dexter’ added to the roster.
Is it true that broadcasters made you buy less successful series as a condition for getting the hits? Are there package deals?
“It’s true, but as an organization grows, it acquires more bargaining power.”
How has the world of content changed during your 20 years?
“Twenty years ago, being part of the multichannel TV trend was the sexiest and most global-oriented thing there was. Acquisitions were as a prolonged process; we’d wait and see if a series was taking off, that at least 13 episodes were broadcast, and then we’d start bringing in cassettes for translation. Later, in 2010, video on demand [VOD] appeared, allowing people to view content at any time. And then came the binge option, allowing people to watch episodes back-to-back.”
How do you know if a series will succeed?
“I sense the content, it’s almost physical. I feel it and say, ‘This is going to explode.’ But there have been errors, too. When I saw the pilot of ‘Lost,’ for instance, we realized it was amazing. But I couldn’t see how we could make it into an ongoing series, so we gave it up. Hot bought it and it was a hit. In retrospect, that was a mistake.”
Almost a year ago, the trade magazine Variety published a list of the 500 most influential people in global entertainment. Three Israelis made the list: actress Gal Gadot, Keshet CEO Avi Nir – and Stern. “They called to say I was a candidate and asked for details about programs I was involved with, and six months later, after I’d forgotten about it, I was told I’d been selected. It was nice,” she recounts.
The industry clearly appreciates Stern’s work. However, a senior production executive points out that Israeli television “is going through a challenging period, with many opportunities and risks. Let’s see what it can come up with.”
Priced out
Despite all the changes affecting global media companies, Israel still manages to shine. Numerous series are sold either to be screened or adapted, with creatives such as Avi Issacharoff, Lior Raz, Gideon Raff and Hagai Levi forging successful careers. But the local market is in turmoil, and it is unclear how many players will remain standing in the end.
“There is creativity here, we have the creative ability to tell a story, but the market should be based on entrepreneurship,” says a senior figure in the media industry. “An artist wants to create, but he also wants to own what he produces, to be someone who can maximize profits from it. If you sell something to Netflix, it’s over. Therefore, if such artists realize that there’s no room for them here, that there’s no expression of local creativity, they may leave.” One should note in this context that there is an established policy in Israel that shortchanges producers and creative artists. Keshet has led this policy, followed by Yes and Hot.
As well as boasting the deepest of pockets, Netflix can also undercut its traditional Israeli competitors. So, while a Yes subscription costs 200 shekels ($62) a month, with its streaming service Sting TV costing 100 shekels, Netflix costs 50 shekels a month.
What does a subscriber get from Yes? After all, they can watch “Fauda” and “Shtisel” on Netflix.
“Lots of stuff. First of all, original Israeli productions, as well as children’s channels, news channels and sports. We provide something different. HBO, for example, will not be on Netflix.”
Keshet will soon launch its own streaming platform, to be launched in 2022, which will cost 40 to 80 shekels a month. It is getting set to compete with Netflix. How will Yes compete in a market against companies offering such prices?
“All of us will have difficulties competing with global services. Keshet are entrepreneurs, they’re investors, they take risks. I believe there will be great consolidation in this market. You can already see production companies being purchased by international companies because the local market is too small. The local market can’t remain as it is, because the broadcasters don’t have the money for large and numerous productions, and the market is dwindling.”
How will Facebook affect Yes? It doesn’t produce content and is not subject to the regulation Yes is subject to, yet its revenues in each quarter are tens of billions of dollars.
“Facebook produces various kinds of content, and right now it’s not going very well. It’s difficult to focus when you have conflicting businesses – and the content business requires focus. When you get up in the morning and wonder whether you’re selling ads and pushing posts, you’re inevitably in a bind. The same applies to Apple. It’s nice that they have Apple TV, but ultimately they’re focused on selling phones.”
English
Arabic
Chinese (Simplified)
Dutch
French
German
Italian
Portuguese
Russian
Spanish