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Fighting the producers' corner

22 December 2010

Interview: John McVay, Pact.

At Pact’s small HQ just off the busy Euston Road, the in-tray of chief executive John McVay is piling up. In recent months, the producers’ alliance has found itself having to deal with multiple issues facing the indie production sector, from a C5 payments crisis to a call by the BBC dg to overhaul the terms of trade.

However, McVay, an articulate, engaging Scot who’s not afraid to voice robust opinions about the TV business, says his most immediate concern is that commercial broadcasters spend more money on programmes now that ad revenues are improving.

“Austerity programme budgets” are only sustainable in the short term, he argues, saying broadcasters need to start investing to drive innovation and refresh their schedules. Otherwise, he adds, the public – and advertisers – “will start thinking it’s all a bit samey.”

These austerity budgets are particularly harming smaller production companies, he believes. During the downturn, broadcasters looked for cost-effective, long running series of a kind often delivered by superindies. This meant less slots for single or short run factual shows, a traditional preserve of smaller indies. “It’s put real pressure on our smaller companies,” says McVay.

McVay stresses this point, one senses, because he’s keen to tackle the belief that his superindie members are the ones making life difficult for smaller indies. Indeed, superindies have received plenty of negative coverage for their domination of the sector. The Edinburgh TV Festival, for example, hosted a session this year called “All Superindies Are Bastards.” But, McVay argues, the superindie phenomenon is a reflection of broadcaster demand for big, long running franchises that can be delivered by producers with scale.

And he hits back at suggestions that the superindies have simply become rich off the back of the terms of trade, the agreements that allowed TV producers to own their own IP. Former ITV boss Michael Grade regularly called for the terms of trade to be torn up, believing them to be a bad deal for broadcasters. BBC dg Mark Thompson added to the pressure in August saying that the ‘scale and ownership’ of the indie sector meant it was time to re-examine the terms of trade.

McVay says broadcaster attempts to portray the terms of trade as terrible to their business is simplistic. “The world is much tougher if you are an indie producer than it was 10 years ago. But the rewards if you get something right are far greater.” Thompson’s comments were “disappointing”, says McVay. “They showed a level of ignorance of what the circumstances are. They [broadcasters] always portray it that the terms of trade are somehow a fix, that they are locked into a bad deal.” The truth, argues McVay, is that Pact has negotiated changes to the terms of trade on a regular basis.

Against this background, McVay explains Pact’s position. Broadcaster budgets, he thinks, will have fallen by about 25% between 2007-2012, led by the BBC’s decision to cut budgets by 5% a year in real terms. This has partly been soaked up by indies becoming more efficient. Indies have also stepped into the gap to fund bigger deficits, ranging from 5% to 50% of budget. Pact estimates that producers are now putting up to £220m a year into programmes.

“So the whole falsehood that commercial broadcasters spin that they are taking all the risk and they don’t get any benefit – actually indies are taking risk as well.” Scrapping the terms of trade, he believes, would mean that, overnight, indies in the UK would not be able to raise deficits. “Are the broadcasters really telling us that they could go out and raise that money tomorrow? I don’t believe they can because when they did have the rights, they weren’t very good at it.”

McVay thinks the terms of trade have helped create an entrepreneurial indie sector that delivers globally renowned programmes to broadcasters. “Why would you want to damage that,” he says. “And the broadcasters share in every single penny we make, in perpetuity,” he says. Many commercial broadcasters, he adds, disbelievingly, haven’t bothered to invoice for this share, which includes a 15% split of international revenues. “The whole concept that it is a one way street with indies walking away with all the goodies is just nonsense – it is just politics, it is not true.”

That said, he points out that Pact’s relations with C4 and ITV have improved markedly since their new managements took over. Not so with C5, with McVay decrying their “bullying tactics” over payment terms.

Negotiations about ‘finessing the terms of trade’ so they are fit for the world of VoD and web enabled TV began this summer with C4 and the BBC. There’s also been discussions with ITV about coming to the table too. But, with a new Communications Act likely at the end of 2012 or the start of 2013, McVay draws a marker in the sand: “We will never give up on producers owning IP,” he says.

This interview was taken from the December issue of Televisual.

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