Netflix’s Exclusive Deal For Denmark’s Borgen Could Upset International Sharing Agreements With Broadcasters

Netflix has become so big that it needs to invest in local markets to maintain growth and market share. It just inked a deal with Danish Radio (DR), Denmark’s public broadcaster to fund the development of a 4th season of the smash hit Borgen (The Castle), revived after 7 years. After the Danish premiere, Netflix gets the exclusive rights to distribute the 4th season for 5 years, as well as rights to seasons 1-3. While this might seem like a boon to content creators, the reality is more complicated. In practice, Netflix can cherry pick the best TV series across countries, many of which are produced by public broadcasters and funded by taxpayers. The deal likely disrupts the traditional arrangements among public broadcasters which engage in content bartering or sharing to minimize costs. Instead of contracts with public broadcasters in some 70 countries as DR earlier negotiated for Borgen seasons 1-3, DR only needs to deal with Netflix. The Borgen deal also raises policy questions of about the viability of public broadcasting in a global market for content and demonstrates the challenges (and opportunities) that digitization creates for broadcasters.

Public Broadcasters: The Old Boys Club

British Broadcasting Corporation (BBC), the world’s largest and oldest broadcaster, is the classic model. A charter sets up the broadcaster with oversight by a Ministry of Communication or Culture. The broadcaster is funded by an annual license fee set by the government. Today the mandatory fee is generally applied to broadband subscriptions, increasing the real cost of broadband, a fact not considered in most international comparison (See p. 10 for discussion). The broadcasters also earn revenue from commercial operations. While much content is simply traded amongst public broadcasters, blockbuster shows help the broadcaster earn additional revenue to fund other programming.

Denmark has had success to make award winning series which are popular globally including Matador, TAXA, The Killing (Forbrydelsen), and The Bridge (Broen).Borgenis a gripping political drama about Birgitte Nyborg, Denmark’s first female Prime Minister, a composite of leading Danish female politicians. The idea with Borgen season 4 is that Nyborg transitions to the Foreign Minister. This allows the show to become more international, hire non-Danish actors, and market the content to key countries.

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