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Production 100, 2013 Back to Reports & survey Listing

The recovery may be anaemic elsewhere in the economy but there are some signs of life in the media – both for commercial broadcasters and for the independent production companies that supply them.

For 2012, PACT reports growth in primary commissions from UK broadcasters to indies for the first time since the recession year of 2008 (thank you Channel 4 and Sky), while international revenues continue to climb.

Mediatique’s own independent analysis confirms the PACT trends, but throws up some sources of potential concern. We haven’t yet felt the full  effects of the BBC’s frozen licence fee settlement while ITV’s aggressive acquisitions of indies over the past 12 months is likely to lead to a reduction in its external spending over time. Channel 4 may not be able to expand on its inflation-busting content expenditure levels of recent years. Sky will continue to spend, but we’d expect the effects of premium rights inflation (particularly in football) to hit original content budgets.

Still, the relative recovery has kept valuation expectations on the high side, so buyers are wary. Some big potential acquirers are focussing on tying in talent rather than paying a premium to buy an indie outright. There have been some deals recently, including ITV’s US purchases, its acquisition of Big Talk, Tinopolis’ acquisiton of Firecracker and the sale of Left Bank to Sony; but the grand-daddy of indies, All3Media, failed to find a buyer.

Relatively modest dealflow reflects both the lack of targets (following the wave of pre-recession consolidation) and perhaps some concern about fundamental trends – not least original content expenditure plans at major broadcasters. While now accounting for far less of indie revenues than five years ago, primary commissions are still the engine, and the short-term outlook here looks mixed.

Mathew Horsman is director of Mediatique, which provides strategic and financial advice to media companies, including broadcasters and indies.




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