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Time for boom or bust?

Is the media industry heading for the dreaded double dip?

Here's the views and opinions of seven TV professionals – from producers, post-producers, financiers through to lawyers - on how confident the industry is feeling about its prospects in the wake of the government spending review and BBC licence fee deal.

John McVay
CEO, Pact

I don’t think the media industry is headed for a double dip but times are tough and the challenges will keep on coming for some time. Indies are resilient and innovative, and everyone is working harder than ever. There has already been a shift towards exploiting rights and forming partnerships with international buyers. However, it is important that the focus on quality UK content remains to attract viewers. We hope broadcasters are mindful of this when reviewing their programme budgets which have already seen significant cuts. Indies are flexible and can adapt during tough times but broadcasters should not assume that suppliers, particularly smaller companies, are a bottomless pit of efficiencies and savings.

Thomas Benski
Md, Pulse Films

With any change comes criticism, but the key is to ensure that the government spending review makes for a more efficient BBC and a more efficient industry, reigniting the entrepreneurial spirit of production companies and channels. The emphasis on broadband and digital will hopefully accelerate the transition to a stronger multiplatform industry and lead to investment from the BBC, other channels and the private sector. It’s also important that projects such as YouView come to market with a clear proposition – another step in the media’s transformation, and I’m optimistic it will help create new opportunities.

Rose Lewis
Partner, Pembridge

The creative sector has a habit of trailing the general economy into and out of recession. If you are in the BBC, there will be a few more years of cost cutting and job cutting, but if you are in the private sector, assuming the economists are right and we manage to miss the double dip, then life could start to lighten up. Sure, these are not boom times, but as long as you are not reliant on the public purse, life will start to get better. Great news? Well, it’s tinged with an element of caution. Just because you may earn more does not mean the chancellor will not be taking it back in taxes. But all in all the creative sector is in recovery.

Peter Hampden,
Director, LipSync

I was relieved that the BBC cuts were not as drastic as some had first feared. However, as a producer and post-production facility that regularly handles high-end drama and films either directly or indirectly for the BBC, alarm bells are ringing. I think it will certainly mean further belt-tightening in the industry, and possibly more closures in Soho for the unprepared. However, I hope it doesn’t lead to a curbing of ambition in terms of project themes or a reduction in production values; we’ll be getting creative and trying to do more with less rather than limiting our vision.

Liz Mills,
Founder and md, MillsyMac

There is little doubt that the next few years are going to be tough as the recession bites deep. However, the licence fee settlement that the government struck with the BBC does at least bring some kind of certainty. It’s imperative that the BBC carries on providing excellent programming over the coming years. Meanwhile, its main rival BSkyB reports record profits with customers rising to almost 10 million - so there are opportunities for suppliers to develop great creative content that can be exploited on an international and multiplatform level. It’s never easy but as more people are staying at home and searching for something to watch, it’s a real chance to win back the viewers and with them the advertisers.

Simon Vyvyan
Md, Industry Media

The indie sector has always been a risky business and there is no better example of this than drama. When ITV was forced into its credit crunch shell in 2009, the impact hit many hard, but Sky was still a commissioning force. Now, eighteen months later, ITV1 is back. The same thing happened at C4. It was unable to invest heavily in drama in 2009 but, with Big Brother gone, now it can. So, whilst it’s hugely important to the sector for the BBC to be well funded, I am optimistic that the mixed broadcast economy is strong enough to withstand a double dip. And if drama can survive, then so too can other genres.

Gareth Wilding,
Sales and marketing director, Fineline Media Finance

As a publicly funded body the BBC enjoys a privileged position which has gifted it a competitive advantage in the commercial market. All public bodies must cut their costs and the BBC is no exception. However this surely presents an opportunity to reappraise “Producers Choice” – the free-market policy loathed by some within Wood Lane was the lifeblood to many in the private sector and could be again. Value for the licence-payer and a revitalised private-sector broadcast services community in one – simples!

Posted 29 October 2010 by David Wood

Setting a dangerous precedent

The rules of engagement on licence fee renewal are not written down anywhere, but the tradition is that it's a civilised, lengthy and painstaking process. Not the latest deal thrashed out between the BBC and the government, conducted over a week in the run up to the much-anticipated spending review.

In its wake the BBC spin-machine was busily weaving its version of the settlement, portraying the deal with the government to fix the licence fee at £145.50 per household until 2017 against a background of the most severe cuts seen in the public sector since the 1940s, as a result. Or at worst, the best it could have expected.

In truth there are upsides for the corporation. It will enjoy the benefits of a fixed income when most public services are contemplating considerable pain.  Another benefit was that the deal was done so fast there was no time for any of the traditional BBC bashers (BSkyB, commercial television, all right wing media commentators) to mount long and tedious lobbying campaigns arguing for the BBC’s scope to be dramatically curtailed.

Best of all, the corporation escaped the significantly bigger financial burden of taking on the provision of free TV licences for the over-75s – a state benefit from Department for Work and Pension. Plus it avoided being forced into selling its commercial arm BBC Worldwide, which generates big money for the broadcaster. 

On the downside a frozen licence fee equates to a 16% budget cut, when inflation and the huge pile of new responsibilities which the government has piled on the corporation are taken into account.

The quid pro quo of a guaranteed income is the BBC has agreed to fund the World Service and Welsh language broadcaster S4C, two broadcasting institutions previously funded by the government – thereby helping the Foreign Office and the DCMS meet their spending reduction targets.

In addition the cash previously earmarked for funding digital switchover from the licence fee will now be diverted to an annual £150m contribution to the rollout of superfast broadband, and the corporation will also be given responsibility for the roll out of local TV to the tune of £25m annually.

In reality the corporation isn’t really being asked to do anything which doesn’t fit into its public service remit: why shouldn’t its resources be spent on minority language content provision for S4C or reporting on international issues for the World Service? Wider recognition that the World Service is now to be funded by the BBC rather than the UK government is surely better for its journalistic reputation?

To make ends meet it seems unlikely that cutting back on paper clips and croissants will suffice.  The BBC will have to cut something big and expensive. One area almost certain to be hit hard will be the scope of the World Service. Perhaps a digital TV channel will have to be sacrificed - £83m-a-year BBC3 for instance, which has always looked a little suspect in terms of its public service credentials.

But the most significant cost to the BBC may not be the £340m a year dent in its finances but the precedent it has set for taking on commitments dictated by government policy. Now there is a real danger that the BBC will be seen as a bottomless pit of cash, on hand to facilitate any communications objective the government sees fit.

In some respects the corporation only has itself to blame. The principle that it could be a useful agent to facilitate government policy was established when it agreed to fund the social and communication costs of digital switchover in 2006. Many argued at the time that it was a dangerous move by the BBC that the corporation would live to regret. Prophetic words indeed.

Posted 25 October 2010 by David Wood
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