Roman Majetić: Americans would buy our series just to put them in a drawer and remove them from the market

The idea that our business should be put out to public tender is as absurd as the thesis that HRT should announce a public tender for the purchase of the series ‘The Sopranos’ or the film ‘The Lord of the Rings’.

Interviewed by: Sandra Babić
[email protected]

The kings of soap operas, Roman Majetić and Tonči Huljić, have recently been under attack from Member of Parliament Miroslav Rožić, who raised doubts about the legality of the operations of the production company AVA and HRT in Parliament, and later provided the contracts to the media. According to Rožić’s claims, the public television station engaged the production company AVA without a public tender and paid 46 million kuna more than agreed. Rožić is submitting the documents to the State Attorney’s Office, while Huljić and Majetić are responding with a criminal complaint. The owners of AVA are convinced that their offensive will bear fruit. We spoke with Roman Majetić, co-owner and CEO of the production company founded in 2003, about the affair and business plans.

• When did you decide to file a lawsuit?
– Initially, we did not react when the discussion started in Parliament, as it unfortunately turned out that our Parliament is indeed often a henhouse where anyone can say whatever they want. But when Rožić showed the intention to make this public, and to promote himself as an alleged fighter against corruption based on false data and claims, I realized that the devil had taken the joke and that this greatly endangers and compromises the business we are doing.

• What are your grounds for the criminal complaint?
– There is nothing controversial in the contract he showed to the media because it states that we received 28.8 million kuna net for 160 episodes of ‘Villa Marija’ and an additional two million based on ratings. Therefore, Rožić’s claims in public are disputed: he claims that we were paid 46 million kuna for ‘Villa Marija’, and later even mentioned a figure of 75 million kuna.
Rožić presented two documents to the public (one of which is, note well, a business secret, which already constitutes a criminal offense): one is the contract for ‘Villa Marija’, which premiered and was paid according to the contract during 2004 and 2005, and the other is the payment list from HRT to AVA for 2006, during which 46 million kuna was indeed paid (including VAT), but for the series ‘Love in the Backcountry’ and part of the series ‘Ordinary People’.
Thus, Rožić’s theses are incorrect. Moreover, they are so absurd that I can conclude nothing other than that he intentionally presented lies to the public or cannot grasp basic data at all.

• How far are you willing to go?
– It is high time to warn that someone who receives a salary from your and my salary is not there to unlawfully slander others, but to responsibly perform their job. I have nothing against him thinking something, suspecting, or giving some documents to the State Attorney’s Office… That is his right, ultimately even a duty as a member of parliament, thus part of the institution that oversees the work of HRT. However, the dissemination of false data to the public to compromise our business and the owners of this company is something that no one, not even a member of parliament, should allow. If the State Attorney’s Office does not deal with our case or if Rožić hides behind his parliamentary immunity, we will appeal to the European Commission, to which we will report the entire case.

• Do you also blame the media for the dimensions the affair has taken?
– In the media, the whole story takes on a personal dimension. It is not shown that AVA collected 75 million kuna, but that Majetić and Huljić pocketed that amount. Just imagine how people react when they read that. Journalists are often unaware or do not care about the consequences of their writing, or they are not aware that the need to create sensations often endangers even the physical safety of people.

• Do you think, as a citizen, that contracts of public television should be public?
– I would have nothing against HRT making our contract available to the public, but I understand their need to protect themselves from competition. You must be aware that HRT, its management, is in a specific situation: on one hand, it runs public television and is obliged to satisfy the interests of the public in various fields, from informative, scientific, educational, children’s programming; on the other hand, these are extremely expensive, yet little-watched programs for which there is no excessive interest from advertisers, so HRT is forced to operate commercially, to engage in a battle with private television stations, because only by maintaining its position in the market can that television satisfy the public interest. And that is why it must acquire programs that will attract viewers, and thus advertisers. And then the question of contract secrecy arises. If the public, for example, wants to watch Denis Latina or Goran Milić on HRT, that interest is not a sufficient motive to keep them there at the moment when competing television stations offer them attractive contracts.

• It is said that external production is a lucrative business.
– This business certainly brings profit; otherwise, no one would do it. We decided to operate with a smaller profit, and even that we mostly reinvest entirely back into the business, into equipment, improving product quality. We decided this way because we are not interested in turning a large profit and then disappearing, but for years we have been patiently building production to sustain ourselves permanently. That is why our profit never exceeds five percent, which is far below the EU average. And here we return to the image created in the media. You will never read that AVA invested 3.5 million euros in a series and then sold it for 3.7 million. The media is not interested in the fact that around 150 people live off our projects, that the average net salary in AVA is 11,000 kuna, that we regularly pay fees, taxes, and dues. Furthermore, to clarify one more thing – AVA is not anyone’s external production. We are an independent company that produces programs and offers them to the market.

• And that is why you do not need to go to public tender?
– That’s right. AVA is a completely equal partner for our televisions as, for example, Warner Bros: we offer a license for broadcasting the program, and it is up to the televisions to decide whether to buy it. The idea that our business should be put out to public tender is as absurd as the thesis that HRT should announce a public tender for, for example, the purchase of the series ‘The Sopranos’ or the film ‘The Lord of the Rings’. And why would HBO then respond to the tender? That’s nonsense! I agree that external productions should be put to tender. But external production is one that, at the request of the television, in accordance with its programming definition, produces a program in whole or in part by order. There are such productions, and tenders are announced for them.

• If you sold the license to HTV, shouldn’t that mean that HTV can sell the series based on that?
– No. The licensing agreement determines the duration of the broadcasting rights, the number of broadcasts (premiere plus the number of reruns), and the price for that. By licensing agreement, exceptionally, if both parties agree, absolute rights of unlimited duration can be transferred to the television, but that then also determines the price.

• What is the profit from secondary sales in foreign markets?
– Minimal, unfortunately. And that is more a matter of prestige. The price is determined by the size of the market, the purchasing power of the population, but also by the fact that today you can buy a telenovela from Latin America for about a hundred dollars per episode. The reason is very simple: all these production companies, including us, primarily produce programs intended for the domestic market. Moreover, in North and South America, there is such hyperproduction of series that they make a profit through quantity, so they can significantly lower prices.

• Who are your biggest competitors in the region?
– In the region, American productions are absolutely dominant, controlling the largest part of the market. Our biggest problem in the region is distribution. We have already tried to operate in a wider region, but it turned out that potential distributors interested in our series are precisely Americans. Although the offer was very good, we had the feeling that they would buy us and put us in a drawer just to remove us from the market.

• What is your current strategy?
– This year we will present ‘The Conspiracy’ at the television fair in Cannes. Everything that exists in the TV business is bought there, and presenting that series could open some doors for us, not in a financial sense, but primarily to establish contacts with televisions and distributors to whom we would then offer our three major series, for which doors have been closed to us so far due to the monopoly of Latin American production.

• Have you offered ‘The Conspiracy’ to all televisions?
– We offered it to HRT and RTL, and both televisions accepted the offer under the same conditions.

• Why did you choose RTL Television?
– Recently, I read that HRT has withdrawn from ‘The Conspiracy’ and that this indicates that our business with that television is endangered. Such a thesis is all the more ridiculous when the same media accused us until yesterday that ‘The Conspiracy’ was a project ‘rigged’ for HRT, and they found the argument in the fact that one of the main characters in the series is an HRT journalist. Along with the basic motive, which is the desire to establish business relations with the second-largest television house in the country, such theses in the media certainly influenced my decision. Because if the thesis about corruption, about unrealistic prices outside the contract, and so on is constantly presented, how then to respond to the fact that RTL bought ‘The Conspiracy’, a high-budget series by our standards, for which it is not easy for any television to close the financial structure.

• How much does an episode of ‘The Conspiracy’ cost and for how much did you sell it to RTL Television?
– The production cost of one episode of that series was 150,000 euros. We sold it to RTL for a significantly lower amount, but we are confident that we will close the budget with revenues from secondary markets and possibly from additional revenues. In any case, we wanted to make such a series primarily as an image ‘maker’. It is very expensive by our standards, but at the same time, it is a production that falls into the category of significantly more expensive series in Western Europe. And all business partners who had the opportunity to see parts of ‘The Conspiracy’, including producers from France and the USA, could not believe that we made it with such a modest budget. Such series in the production of those countries cost at least five times more.

• How do you finance yourself?
– We raised initial investments of 3.16 million euros partly from our own funds and partly from a loan taken out at Hypo Bank. Financing from Hypo Bank was actually like investing in venture capital, as our assets that we guaranteed the funds with, along with the rights to the project, would not be enough for the bank to collect in case of failure. Today, we strive to finance ourselves as much as possible from production, which is why we do not stop with projects. If we only filmed soap operas, we would finance ourselves without anyone’s help, which is still not the case. We have only collected 30 percent of ‘The Conspiracy’.

• Has anyone wanted to buy AVA?
– There have been offers, and they continue to come, but for now, we are not considering them seriously. Moreover, our potential buyers are aware that AVA is essentially a personal business and insist that in the case of a purchase, part of the people, especially in my case, sign contracts committing to work in the company for another 10 years. At this moment, we are more focused on plans to expand in the Croatian market, and we are also considering the possibility of starting production in neighboring markets, primarily in Serbia.

• Will you do this by acquiring some Serbian production company?
– We will not, because there are no such companies that would interest us, or that produce something that would interest us. When it comes to acquisition, we are more interested, if we find such a company, in acquiring some production in Croatia.

• Do you think none are good enough to acquire?
– No, I do not think they are not good. It is just a matter of assessing whether such an acquisition would benefit both us and them.

• Do you plan to engage in other television formats?
– When we started the business, we wanted to engage in everything. In the end, we profiled ourselves as soap opera producers and realized that we are doing very well. We built a thousand square meters of studio intended for the production of scripted programs, and we plan to build a television studio of 1,200 square meters that would meet the needs of filming the most demanding television programs. Of course, we would prefer to tie that project to some of our own programs rather than simply renting out the space.

• You once stated that you should have asked for more for ‘Villa Marija’ and that you will be smarter next time. So, are you smarter?
– That primarily referred to the issue of marketing. Since we produced the entire series before the agreement with the buyer, we took on marketing, specifically ‘product placement’. Then HRT lowered the purchase price based on the estimated revenue from marketing. Unfortunately, that was not adequate to what HRT took from us, so the following year with the new series, we left that job to the television: we know the total price, we do not depend on marketing revenues, for which you cannot say with certainty how much it will be, and HRT found its interest there since it can achieve significantly higher revenue in that field with its marketing and established machinery.