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November 2018

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  • The Facilities 50
    Jon Creamer launches Televisual's 31st exclusive annual Facilities 50 survey featuring the top post production houses in the UK and 48 pages of analysis of the sector
  • The Commercials 30
    Jon Creamer introduces Televisual’s exclusive Commercial 30 survey, reporting on a year of highs and lows for commercials producers.
  • The Drama Genre Report
    With competition from streamers intensifying, UK broadcasters are exploring new drama strategies. Tim Dams reports
  • Primary Colours
    Five leading movie colourists tell Michael Burns the secrets of their craft, and explain the techniques they use to grade movies like The Danish Girl, Peterloo and Baby Driver
  • Up, up and away!
    Thanks to advances in camera technology, the possibilities of aerial filming are greater than ever before. Pippa Considine reports on some of the year’s standout aerial projects
  • OB: Which Way Now
    The OB industry is embracing major change as it adapts to the worlds of UHD, HDR and IP. Michael Burns reports
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Production 100 2009 Back to Reports & survey Listing

It’s a tough market out there. Televisual’s 16th annual Production 100 reveals an independent TV production sector going through its most difficult year ever, says Tim Dams

Welcome to the Production 100, Televisual’s 16th annual survey of the independent production sector. One of the big surprises about this year’s survey is how similar the rankings look to last year. The indie sector might be going through the worst downturn in its short history, but there have been very few stories about indies going to the wall. Entertainment Rights, which ranked eighth last year, fell into administration in April and was sold immediately to US outfit Boomerang Media. Factual indie Gecko Productions closed in February, blaming the economic slowdown for putting unsustainable pressure on the business. Town House, which used to make Five’s axed chatshow Trisha, ceased trading in June.

Few, however, think it will be long before more casualties start to appear. The indie sector thrived during the good times of 2003-07. But, now that broadcasters have cut back on commissioning and are paying far less for programmes, the finances of many companies are under pressure. RDF Media CEO David Frank comments: “The last 12 months have been the toughest ever in the independent market – it’s been unprecedentedly challenging both for indies and broadcasters. That is going to pile huge pressure on some organisations. I think we’re going to see some fairly dramatic developments in the next 12 months – some sizeable businesses are going to go to the wall, or will have to be rescued, or will have to sell because they are in difficulty.”  Ten Alps chief executive Alex Connock adds: “The market is oversupplied. More supply was created than demand ever justified. So you will see an inevitable shakeout.”

Survival mode

Many indies, it seems, are in survival mode right now. They have got through the last 12 months by cutting back heavily on overheads, including staff. One indication of the hard times is that far fewer indies chose to take part in this year’s Production 100. Entries were down by at least 20% compared to previous years, with many indies preferring to keep their finances out of the public spotlight. In the process of compiling the survey, Televisual phoned one small indie which said it was shutting up shop the next day. Two long established, medium sized indies declined to take part because they had slimmed down to just one or two staff.

The picture isn’t uniformly bad though. Many companies report higher turnovers compared to last year’s survey, including Shed Media, Endemol, RDF Media, Shine, Avalon, Aardman, Pioneer, Diverse, Left Bank, Raw Cut, Raw TV and Reef Television. There’s also a number of new entrants – such as Bwark, Blink, Big Talk and Summer Films which have grown quickly in just a few years. Shed Media’s turnover, for example, has leapt by £20m since last year’s survey. However, CEO Nick Southgate says the UK is a very difficult market to operate in. “We’re running really hard just to stay flat,” he explains, adding that Shed’s US operation is where key growth is coming from.

In fact, a key theme to emerge in this year’s survey is the focus on the US market of many of the larger indies – from Shine, All3Media, RDF Media through to Love Productions&keyword_name='>Love Productions. All3Media’s chief operating officer, Jules Burns notes: “It’s one market where if you are successful, people can see growth – and good growth.”

The nations and regions are also cited as a major opportunity, now that the BBC is concentrating more of its commissioning spend outside London. Superindies have scented the opportunity, with RDF very active in Glasgow through the rebranded RDF Scotland, DCD Media funding Matchlight in Glasgow and Ten Alps investing in Below the Radar in Belfast.

Deal-making freeze

However, the economic downturn has cast a freeze across most deal-making in the independent sector. The frenzied round of consolidation that was sparked by the Communications Act of 2003 has now ground to a complete standstill. All3Media’s Burns says this is partly because not many indies are selling. “We imagine there aren’t that many companies up for sale because they can’t get the kind of price they used to be able to get.” It’s a point echoed by Endemol’s creative director Tim Hincks: “It’s less about the recession and more because there aren’t the opportunities to buy.”

Symbolising the constrained nature of the UK market, the biggest acquisition of the year took place outside the UK, when Elisabeth Murdoch’s Shine Group&keyword_name='>Shine Group acquired Scandinavia’s Metronome Film and Television for £60m in April.
In fact, few superindies say they are looking to buy in the UK in the year ahead, with most preferring to hire experienced talent or to back new start ups than to spend heavily on acquisitions.

The downturn has also focused attention onto the debt levels that some of the superindies incurred during their acquisition sprees between 2005 and 2007. Endemol’s debt levels have been the subject of particular attention, ever since it was bought by John de Mol's Cyrte, Mediaset and Goldman Sachs in 2007. The Big Brother producer has reportedly been buying back some of its Euros 2.59bn debt in a move that would reduce the risk of a breach of debt covenants. Meanwhile, All3Media reportedly owed the banks £281.2m at the end of August last year – five and a half times EBITDA. “We are very comfortable with our capital strucure” says Burns.

All independents are busy readjusting to new ways of doing business in the post-credit crunch era. The last 12 months have demonstrated that their broadcaster clients no longer have access to programme finance in the way they did. It means that independents are now routinely faced with huge budget shortfalls on programmes. Effectively, independents are now becoming the co-financiers of programmes rather than simply services for hire. But, in many cases, the business model simply doesn’t work as independents cannot find the secondary revenues to support the gap that the broadcaster would like to leave them with.

“I suspect more commissions are now falling as a result of the business model not matching the creative ambition than would have been the case 12 months ago,” says All3Media’s Jules Burns.

In fact many indies express concern that creative ambition is being sacrificed in this downturn, as volume deals are favoured by broadcasters in a bid to save money. “It’s not a good market for experimentation,” notes Shine Group&keyword_name='>Shine Group’s president Alex Mahon.

Carmi Zlotnick, IMG head of global media operations, concludes: “Today’s difficult environment for production tends to drive a fear based sameness and avoidance of risk, but we know that doing the same thing that everyone else is doing delivers zero value.  The key is to push ourselves creatively and back passion and innovation.  That’s ultimately the best practice for all of us.”

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