The Production 100
Televisual presents its annual survey of the UK television production sector. Now in its 23rd year, the Production 100 ranks the top producers, as well as listing the leading superindies and true indies. It also reveals the industry's favourite indies, br
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Falling budgets and fewer commissions mean that indies of all sizes are busy cutting costs and staff. For many, it’s part of a desperate battle to survive
Money – or the lack of it – is the dominating theme of this year’s Production 100. The recession has forced the indie sector into retreat mode, after the go-go years of 2003-2007. Now, with broadcaster commissions increasingly hard to come by and programme budgets cut by 20-30% in some cases, the focus of many production companies is simply on the bottom line – if not survival. Talk to any indie these days, and the conversation inevitably turns to cuts and cost control.
Tellingly, 88% of indies report that budgets have fallen in the past year, with 11% saying they had stayed the same. Just 1% thought they had risen.
These falling budgets have led to cutbacks at indies of all sizes. For example, superindie Talkback Thames made 30% of the production team of The Bill redundant after ITV cut back on the show’s episodes. Respected producers such as Aardman, Tiger Aspect, Hartswood Films, Raw Cut, Steadfast and Quickfire Media have all reduced staffing levels. Endemol UK CEO Tim Hincks notes: “We, along with everyone else, are making the same stuff for less money. That means you make cuts. There are only so many taxis you can cut before you start looking at the big costs, which are people.”
Meanwhile, hire freezes have been implemented at superindie DCD Media – which has also frozen salaries for senior execs. It’s all in response to the ‘flat’ UK market, says acting CEO David Green. “I’ve been in this business for thirty years, and it’s as bad as I’ve ever known it in terms of new commissions.” DCD is not the only company to freeze pay. Even Reef Television, which has doubled turnover in the past year, has frozen pay levels for some senior staff.
Cutting overheads and costs
The need to reduce overheads and control costs in such a tough climate is a common pre-occupation for indies as diverse as Bwark, Great Meadow, Matchbox and Hardcash Productions. Ben Adler, director of group development at Optomen Television explains: “There are clearly financial constraints industry wide. In response to this we’re budgeting and monitoring spend even more carefully.” John Wyver, chairman of Illuminations, adds that “we have worked to control costs with even greater rigour.” In many cases this means cutting back on freelance employment, which is hardly news to the many freelance production staff who are finding it hard to secure work at the moment. Peter Williams, of Peter Williams TV, says he has “retained staff but trimmed freelancer costs.”
Many indies note, however, that broadcaster expectations haven’t decreased in line with their budgets. This means that the need to manage production budgets has become even more important. Susie Dark, md of Summer Films, says: “The cost of making programmes has increased, but the budgets haven’t. We’ve had to streamline the production teams, condense the schedules and increase production values.”
Investment in technology and training is also suffering, with indies such as Touch Productions saying they are cutting back in these areas. Reef Television’s head of production Paul Hanrahan also says the company is less likely to make high value purchases this year, such as camera equipment. Some, though, are turning to new technology to save money. Blink, for example, says it is looking to cameras such as the EX3 and XDCAM and editing kit such as FCP to help it shoot on lower budgets.
In fact, the recession is really shaking up the way programmes are being made, with more production tasks now being handled by fewer people. Glyn Middleton, chief executive of Leeds-based True North, explains: “The proportion of self-shooting has increased and the volume of work we take to facilities houses, rather than doing it inhouse, has decreased.” Fulcrum head of production Adam Berman makes a similar point; Fulcrum’s response to falling budgets has been to “keep overheads low and bring as much third party expenditure inhouse as possible.”
Middleton says the downturn has also changed the way True North has sold projects to broadcasters: “We have agreed lower-price deals to secure the work, to make sure we continue working and to keep a talented group of individuals together.”
Still, interminable delays in commissioning decisions because of broadcaster funding problems are making life tough for all indies. “We have noted that projects are taking longer between pitch and sign off, and that more detailed budgets, schedules and development tapes are required,” notes Outline Productions md Laura Mansfield.
The commissioning crunch also means that the cost of financing programme development is becoming more and more difficult for many indies. Companies such as Icon Films, Lambent and Touch Productions flag this up as a key concern for the year ahead. As a result some indies, like Steadfast, are trimming back on development for the time being. Executive chairman Charles Thompson explains: “We have reduced overheads by cutting our development team and making three members of staff redundant. We have let those people go who were not winning commissions, because that is the best way of combating a recession. Development is suffering as a result, but we will start reinvesting in development once we see how the recommissioning of our returning series goes later this year.”
Other indies are concentrating on targeting their development efforts more effectively. “We are focusing our development slate more in accordance with information provided by the commissioners,” says Hartswood Films’ general manager Debbie Vertue.
In many cases, this means development teams concentrating their energies on peak time schedules
as broadcasters have pulled money out of the margins of the schedules, out of daytime and out of ‘medium-sized’ programmes. Broadcasters, say numerous indies, are playing it safe by focusing simply on high volume, low cost series or high end prime time material; their appetite for non-mainstream and original programming has seriously diminished.
This has affected the strategies of indies such as Aardman. Its head of broadcast Miles Bullough says: “We laid off staff at the end of 2008, have cut back on overhead expenditure in all possible areas and cut right back on risky projects and speculative development.”
With increasing competition for a smaller number of commissions, the quality of development has become even more crucial – particularly in areas like drama which have been hardest hit by the slowdown. Jon Williams, director of production and finance at Mammoth Screen notes: “There have been fewer drama commissions hence the competition for those slots that are available has been fierce. We have to focus even more on the quality of our drama development as well as looking at areas for diversification.”
In fact, diversification is a key challenge for many indies in the year ahead – both in terms of funding and sources of commissions. With budgets plunging, there’s now a common acceptance that there is a greater need for raising co-production finance and for tapping into alternative revenue streams. Some indies, such as Zig Zag, have made a name for themselves by producing shows for the likes of Five and non-terrestrial channels like Bravo and Discovery, and for expanding out into the US. Says managing director Danny Fenton: “Our turnover and profitability has actually grown in the recession as we have cut overheads and found new funding models to fill the drop in broadcaster funding.”
In particular, indies are looking abroad, particularly to the US, for growth. “The UK market has slowed significantly, so we have switched attentions to the US market, opening a small office there,” explains Raw TV md Dimitri Doganis. The US is seen as a real opportunity – especially for the likes of superindies Shed, RDF, Shine and DCD Media.
For now, however, most indies remain resolutely focused on traditional broadcasters for their earnings. According to the Production 100 survey, some 81% of total indie revenues come directly from broadcaster funding, with 9% from their exploitation of programme rights and 2.3% from new media.
Looking ahead, many indies accept that they will have to work incredibly hard just to stand still. “We have been forced to work harder, be more resourceful and creative and strike better deals with suppliers,” says Toby Dormer, joint md of Remedy Productions.
Of course, the news coming out of indies isn’t all dire. Numerous companies such as RDF through to Silver River, Flame TV, ETV, Glasshead, Illuminations, Thumbs Up, Oxford Film and Television, Redkite Animations, Cicada, Walsh Bros and World’s End report that, so far, the recession has had little effect on their business. Many of these companies have actually seen turnover rise over the past year.
Yet even the most buoyant companies tend to admit that the climate around them is worrying, and has made their outlook more cautious. It means, for example, that companies are thinking extremely hard before committing to add extra overhead. And, unfortunately, it doesn’t seem as if things are going to improve in the next 12 months. 68% of indies think their business prospects for the year ahead are looking worse than the past year. Only 22% think business prospects are the same, while just 11% believe they are better.
Against these challenging market conditions, we asked indie owners what their business plans were for the year ahead. The vast majority – 90% – said they intended to remain independent, while 6% said they were looking to sell to another indie. Only 4% say they plan to raise corporate finance over the next twelve months. Their answers suggest that a new realism has taken hold; the days when indie owners could sell up and cash in look to be over.
For now, it seems there’s a heads down, let’s get on with it attitude that prevails. Asked how he intends to cope with the challenges of next year, Rise Films’ md Teddy Leifer speaks for many when he jokes: “A bit of crapping ourselves and a bit of working even harder.”