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What impact will a yes vote have on the TV industry

A few weeks ago I spent a Saturday evening watching telly with relatives. We watched Doctor Who and the launch show for Strictly on BBC1. We then turned over for X Factor, then back to BBC1 for News and Match of the Day. My Aunt sat there complaining that ‘that lovely Graham Norton’ wasn’t on at the moment. We were, of course, sitting in the Republic of Ireland.

My Irish uncle, who is not an economist, got to the nub of the Scottish independence debate when he reminded us of how much Graham Norton earned (his salary details had recently been covered in the Irish press). He said to me ‘of course, that Graham Norton dominates the viewing over here. We couldn’t afford to keep him and now his taxes go towards your pension not mine’.

There is much to learn from the Irish experience when looking forward to how an independent Scotland would affect the the TV industry. None of it is encouraging.
 
The Irish Question

Firstly, its worth flagging up that, in Ireland, foreign owned cable and satellite operators control distribution into 80% of TV households. In these homes, Irish channels have 40% of total audience with 28% going to British channels, 10% to US owned channels and 22% going to ‘other’. [1] The 32% going to ‘US’ and ‘Other’ is mainly on channels that are managed out of London.

The challenge for Irish only channels is generating economies of scale or at least, competing for resources against channels which use the whole UK market to  achieve them.

"To understand the impact of this, its worth quoting from a recent report done for the Irish government: ”The combined effect of economic downturn and increased competition has had an unprecedented impact on the audiences and revenues of the two public broadcasters. RTÉ is proportionately more dependent on commercial income than most comparably-sized public broadcasters in the rest of Europe. It has therefore been profoundly affected by the decline in the advertising market.

"TG4 is highly dependent on public funding, which has also been under pressure. In response, the two PSBs have embarked on significant cost-cutting initiatives. Over the past five years, for example, RTÉ has reduced operating costs by €90m or 20%, with more planned. TG4 has reduced its operating costs by a similar proportion.

At the same time, both public broadcasters have tried to maintain their existing scale and scope of services and indeed have expanded into new online and digital activities. This is not a recipe for long-term financial sustainability, or for providing public value to Irish audiences.”[2]

We should also point out that the Irish TV market has not had a great success selling TV back into the UK market, as many of its talented TV people have followed Graham Norton across to the big island. Great Irish TV ‘exports’ like Mrs Brown’s Boys, Father Ted, Ballykissangel and MooneBoy were all made, apart from some location work, here in the UK by Irish talent working for British broadcasters. The attraction and financial power of the UK market (and London in particular) for talented Irish people is too strong – particularly when the results get beamed back to your Mum in Ireland anyway. As we said in our first article, you can change politics but not geography.
 
The Scottish Play

This state of play in Ireland gives a good insight into how a TV industry may fare in Scotland with the introduction of a border across the current UK market. The Irish had the chance, at least to build a national TV industry from scratch, and even they are struggling. The Scots would be pulling together an industry from a very messy divorce. As we point out in our first article on the subject, technical distribution in the Scottish market would be 100% controlled by platforms based in London as, at independence, there will be no Scottish owned or domiciled TV platforms.

So what is the Scottish Government’s intent here? There are two aims of the SNP’s media policy on TV. Independence or not, it wants more Scottish cultural programming and a greater share of the jobs and investment in UK television programming. These issues are worth looking at separately.

SNP Cultural Policy statements claim ‘Evidence also suggests that people in Scotland want more Scottish programming’ – what they describe as Scottish made programming for Scottish people. They have never published the evidence for this, or even explained what question they asked to get that answer, however the definition of Scottish programming is worth examining.

It is interesting to ask which programmes DON’T fit the SNPs definition of Scottish programming.’  If you have a Scottish presenter like Neil Oliver presenting Coast from Fyfe, as he did on BBC recently, that doesn’t count because it is a ‘British’ show made by a non Scottish-domiciled company and targeted at a UK wide audience.

Also, a BBC show like Shetland, filmed wholly in Scotland, with Scottish writers and actors and crew, and a storyline wholly based on Scottish themes also fails the SNP test of Scottishness because it was made for the BBC (a UK broadcaster) by ITV Studios (a London production company) and is also targeted at a broad UK audience. It is not ‘a Scottish programme for Scottish people’.

Technically, the YouTube programmes made recently in Polish by an Edinburgh based Polish Scot, about the trials and tribulations of being a Polish immigrant in Scotland, falls under the required ‘Scottish programming for Scottish people’ definition. Shetland crime? No! The difficulty of buying kielbasa sausage on Sauchiehall Street? Yes!

Everyone recognises the challenges of running a TV production company outside of London.  In this context the Scottish government is right to press ‘ for increased production from Scotland more in line with our population share.’  However, independence would most likely achieve the direct opposite as major broadcasters in the rest of the UK would no longer be obliged to source programmes from Scottish producers.  Scottish producers would have to spend more time in London fighting for commissions.

The difficulty for television is that the Scottish Governments vision for TV is a narrower focus, and the TV industry likes a wide view.

This would not matter if it weren’t for the inevitable increase in government intervention in an independent Scotland. As Ireland has discovered, if you cut yourself off from the commercial power of 60 million English and Welsh audience members, you end up having to subsidise your industry to stop it going under.

That cash will come with political constraints as Claire Enders pointed out this week in the Guardian. Anyone who wants a TV career without those constraints, and with a wide, international focus only need step across the border.

The difficult message, from a UK (and largely London based) TV industry to Scotland is that if you go independent the TV industry will respond.  We will take your youth and your talent into our cities. We will give them careers in TV, help them make great programmes, then beam the results back to you on our UK-owned channels. We will pay them more than you can ever hope to and then use their tax payments to fund our pensions and hospitals.  If you don’t believe me, go to Ireland.

No doubt this same debate is happening in every industry. Think hard on Thursday.

Nigel Walley is managing director of digital consultancy Decipher and publishes a regular blog Decipher "off air". He has published a second piece on the impact of Scottish independence on technical, commercial and regulatory issues here

References:
[1] Athena Media – Economic and Environmental Review for the Broadcasting Authority of Ireland (BAI)
[2] Crowe Horwath 2013 Final Report to the Broadcasting Authority of Ireland Review of Funding for PSBs

Posted 18 September 2014 by Nigel Walley
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