Televisual’s exclusive annual report into the TV indie sector, the Production 100, is out now with Avalon in the number one spot once again.
Avalon posted a turnover figure of £260m. The top 100 indies collectively turned over £2.5bn over the past year
RAW TV was voted the producers’ producer in the report’s annual Peer Poll in which indies vote for the rivals they most admire.
The survey also asked respondents to rate their broadcaster clients. The BBC was voted as the best broadcaster to work with and Netflix the best streamer.
All3media International took the crown as the indies’ best rated distributor.
Below is the introduction to the survey. The full 53 page report is out now in the Autumn issue of Televisual Magazine.
Last year’s Production 100 was a portrait of a sector in recovery mode as it emerged from a hugely disruptive Covid hiatus. By contrast, 2022’s survey paints an altogether different picture. A gold rush is the image that springs to mind.
For many (but certainly not all) production companies, business has boomed as never before amid a post-lockdown demand for content from a growing number of streaming platforms as well as traditional broadcasters.
The well-documented surge in drama production in the UK has been a key contributor to growth. Hartswood Films, for example, has produced six high-end series in the past year for the BBC, Netflix, Amazon, HBO and Sky.
But the growth isn’t just confined to scripted: producers report growing demand in genres such as animation through to unscripted.
“The UK production sector is growing and thriving, with the country still considered among one of the best producers of high-quality shows,” says A Productions. “British content seems to be thriving and sought after,” confirms Douglas Road Productions.
Others note that the pound has weakened by nearly 12% over the past year to $1.20, making the UK even more competitive to US buyers in particular. And it’s still falling.
The side effects
As in any gold rush, there have been undesirable side effects. Productions have struggled to crew up with experienced talent; costs and rates have risen; facilities and kit have been in short supply.
At the same time, Covid continues to be a strain for indies, adding to the time and cost of producing. It might not be in the headlines as much, but producers are still having to pay for precautionary measures and to deal with absences caused by Covid spikes.
There are plenty of other challenges that are buffeting indies which will be explored in detail over subsequent pages: budgets are tight at traditional broadcasters; the market has become increasingly crowded and competitive; there are worries about the future of key clients such as Channel 4 and the BBC.
And of course, there is the spectre of recession in the coming year. Will the cost-of-living crisis cause households to cut back on streamer subscriptions, in turn causing platforms to cut spend?
For now, though, it’s important to stress the sense of relative optimism that emerges in the 2022 Production 100 survey.
“We will all face challenges with the cost-of-living crisis and SVODs being hit by subscriber loss,” says Collective Media Group. “However, it is still a seller’s market for now for the right sort of high-end projects.”
ITN Productions reports that it has had an unprecedented number of hours TX’d and / or commissioned – more than 1000 for the first time. Indies as diverse as True to Nature, Expectation and Sister say they have healthy order books for the next 12 months.
Many production companies say they are feeling bullish and positive about the immediate future. “We have just secured new commissions which will take us well into 2028,” says Wildstar Films. Adds The Whisper Group: “Despite the significant headwinds in the UK market (wage and cost inflation, likely recession and FX volatility) we feel positive about the year ahead due to growth areas we see emerging in the international space.”
Hartswood Films sums it up neatly: “The plurality of buyer and financing models for UK production remains the best it has ever been. There are some doom mongers out there and conditions are definitely hardening – from a macro economic perspective; labour difficulties; production costs; squeezed margins; tightened licence fees; limited facilities – you could go on and on. But it is undeniable that if you have a great script and a great team around it, the potential to set that show up in the UK at the highest levels continues to be better than it has ever been.”
The top 100
The turnover of the top 100 indies stands at £2.5 billion this year, a 31.6% increase on last year’s figure of £1.9 billion.
These figures are a good indicator of how the sector has grown in strength since last year, when it was still profoundly disrupted by the pandemic.
For the second year in a row, Avalon is the top ranked production company in the UK. The producer of Taskmaster, Breeders, Starstruck and Last Week Tonight With John Oliver saw its turnover climb from £223m to £260m for the year. Established back in 1989, the production / talent management and distribution giant had more than 30 shows in production, including 11 new commissions.
The Tinder Swindler and Stanley Tucci: Searching for Italy producer Raw TV took second place, its best ever Production 100 ranking – and up from seventh place last year – thanks to an £80.9m turnover.
Lime TV also climbed to third place last, up from ninth last year. The Hollyoaks, The Only Way is Essex and Geordie Shore producer reported a turnover of £72m.
Vienna Blood maker Endor Productions broke into the top ten for the first time ever, securing fourth place thanks to a £69.7m turnover.
His Dark Materials producer Bad Wolf climbed further, rising from 10th to fifth place on the back of £66m in revenues.
Two other drama producers – Sherwood and Life after Life indie House Productions and Time Traveller’s Wife maker Hartswood Films – also made it into the top ten for the first time ever. Gangs of London producer Pulse Films once again featured in the top ten.
The number of scripted producers in the top ten neatly reflects the boom in high end drama production. It’s hardly a surprise either, given that the Production 100 is ranked by turnover – drama budgets are now so significant that just a few shows can propel a production company right up the table.
Other indies to have done well this year include sports specialist Whisper Group, The Responder producer Dancing Ledge and The House of Maxwell and The Lateish Show with Mo Gilligan indie Expectation. Each has made it into the top 20 of the Production 100 for the first time.
There’s also a swathe of new entrants, including Wildstar Films, HiddenLight Productions, Wonderhood, Mindhouse, Transistor, Like A Shot, The ATS Team, Ten66 Television, A Productions, Collective Media Group and Curious Films. Each deserves congratulations. It’s no easy thing to make it into the Production 100; the cut off point for entry is £3m and the median turnover of a P100 indie is £16.4m.
It’s important to note that the Production 100 doesn’t capture the full output of the UK indie sector. Several well-known production companies cannot take part because they now belong to publicly listed companies that don’t break out individual turnover figures; they include The Garden, Big Talk, Plimsoll and 12 Yard (all part of ITV Studios), Wall to Wall and Ricochet (part of Warner Bros. Television Studios UK) and IMG (part of Endeavor Group Holdings.
However, we’re confident that the Production 100 represents the lion’s share of UK production.
UK and international
As always, the UK market remains key to most indies. Some 52.9% of an average indie’s revenues are derived from UK broadcaster clients.
Traditional UK broadcasters such as the BBC, Channel 4, ITV, Channel 5 and Sky remain cornerstone clients of most indies.
Producers as varied as Douglas Road Productions, West Road Pictures, King of Sunshine, Stellify Media, CPL Productions and Cactus TV earn over 95% of their revenues from UK clients.
But international streamers and networks are increasingly important, now accounting for an average 32% of an indie’s turnover.
Indies such as Endor, Keshet UK, Wildstar Films, Nutopia, October Films, HiddenLight and Pacific Productions now generate over 90% of their turnover from international clients.
“Demand is increasingly from outside the main UK broadcasters,” reports Impossible Factual.
“The launch of numerous new SVODs over the last year, with more on the horizon, means there is more opportunity in this space than ever before,” says Dragonfly.
This is having a knock-on effect as traditional broadcasters adapt to compete, both in terms of what the commission and how they schedule. “The emergence of ITVX has increased and diversified ITV’s appetite for new programming, iPlayer is increasingly the BBC’s priority and the same is true for All4/Channel 4,” says Initial.
Element Pictures, meanwhile, says the majority of its growth has come from “a combination of deals funded by both UK broadcasters and streamers looking for compelling and distinctive stories to deliver to a global audience.”
Building relationships with both UK and international players is now the key strategy of most indies. Wonderhood Studios, for example, continues to “look at opportunities in the UK as well as expanding into international markets.”
The difficulty of securing experienced crew for productions was one of the themes of last year’s Production 100. In 2022, talk of talent shortages has become louder than ever.
“One of the greatest difficulties has been surrounding the talent bottlenecks. Finding freelance staff across the board has become incredibly difficult,” says Cardiff Productions. “The skills shortage is a real concern and has slowed down the execution of some shows.”
HiddenLight Productions points out that “the best people are being booked up months in advance.”
The talent crunch can be harder still in the nations and regions. “The Midlands does not have any resident broadcasters, so it is difficult for the region to retain a pool of talent with the right skills,” says FirstLookTV.
The lack of experienced crew means “many grades in all areas are being promoted before they are ready which, of course, causes further issues down the line,” says Merman TV.
The jobs most cited as being difficult to fill include series producers, senior APs and PDs, production managers, production co-ordinators and editors – but go right through to HGV drivers and caterers.
“It feels like there has been a huge drop in available talent,” says King of Sunshine Productions. “There is definitely a problem with training in the industry and post lockdown after so many experienced people left the industry. I think we are seeing the problems now.”
“It feels like we’ve reached maximum production capacity as an industry, with so many broadcasters and streamers choosing to make programmes in the UK or with UK staff,” says Ten66 Television.
Many drama indies are also watching closely for the outcome of the Pact and Bectu negotiations over crew pay and working conditions. “There is the potential for strikes or projects not being able to be made” if terms cannot be agreed, warns Merman.
Costs v budgets
The talent shortage has, in turn, led to cost inflation. Whenever several big shows are crewing up from the same pool of talent, rates have gone up – although budgets haven’t always grown to fit them. “This puts pressure on teams and means people are stretched,” says Initial.
IWC Media says that inflationary pressures – from crew to kit, travel, accommodation and production staff – are not being matched by a commensurate rise in production budgets from broadcasters, squeezing margins. It’s a point echoed by multiple indies, from Bad Wolf through Expectation and Two Brothers Pictures.
Yeti Television comments: “The biggest challenge continues to be budgets which are not keeping pace with rates, talent costs and riders, and the amount of deficit funding we have to put in to top up budgets. It means our margins are tiny and we have less and less to invest in development, staff retention and training. The pressure on production teams is becoming unsustainable – all due to budget squeezes.”
Covid continues to be a significant challenge for productions. Infections spiked in the winter and spring, putting teams under pressure and forcing shoots to be rearranged at the last minute.
“In some ways it has been harder than ever, with infection rates meaning teams are rarely at full strength and protocols making production more challenging and complex,” says Shine TV.
Changing Covid rules add to the challenge of filming internationally, say indies like Transistor Films, Cornelia Street Productions and Dash Pictures.
The winding up of the government’s £500m Film and TV Production Restart Scheme (PRS) has also “created a complicated situation with different approaches from commissioners,” says Expectation TV.
“We are still being impacted by Covid on our shoots and with the end of the DCMS Restart Scheme we’re navigating new waters,” says Merman.
More people are now working from home as a result of Covid, and this has created issues for many indies. ClearStory believes that commissioning is now slower “both in editorial direction and in business affairs and contracting, mostly because of working from home.”
“It’s very hard to have personal meetings with broadcasters due to Covid restrictions,” says Company Pictures. Others say that younger staff are finding it harder to learn on the job while working from home.
It’s been a year of significant change for the broadcaster clients of many indies, which in turn has affected their business.
The merger of Discovery and Warner Media was completed in April, and the newly minted Warner Bros. Discovery has since embarked on a major restructure involving significant lay-offs and cost-cutting.
This is already impacting UK indies, many of whom have become key suppliers to Discovery.
“Consolidation in the US and global media has meant significant change that has created some choppiness in the market, particularly with certain valuable buyers,” says Lightbox.
“The US environment has been in flux for some time, with multiple mergers disrupting the business-as-usual model,” says Baby Cow. “We are hoping this settles down in the year to come.”
Closer to home, the possibility of Channel 4 privatisation has worried many indies. And with good reason too: the publisher broadcaster spent £671m on content in 2021 and worked with 164 independent producers. “The possible sale of C4 would profoundly affect the industry and we anticipate the uncertainty around this to also impact the UK industry in the short term,” says CPL Productions.
Naked Television backs up this point, saying it will be interesting to see if the change in Prime Minister will have any bearing on the decision to sell off C4. “The decision will obviously have a massive impact on the indie sector further down the line but will also impact confidence and business decisions in the meantime.”
“The government’s arguments for privatising Channel 4 make no sense and will reduce the number of suppliers in the sector,” says Studio Lambert.
The government’s decision to freeze the BBC licence fee is also a concern for many indies, a number of whom report that the corporation is spending less as a result and express worries about BBC4 and CBBC moving online only in a few years.
“It feels the BBC actively wants to commission less and the looming talk of the privatisation of C4 could have dire consequences for the indie sector,” says Curious Films.
Producers in the nations and regions are particularly worried, given that C4 and the BBC have ramped up out of London commissioning in recent years. “We’re extremely concerned like most of the sector about the potential privatisation of C4 and a watering down of their remit, and shrinking budgets at the BBC,” says Outline Productions, whose Outline Wales division is based in Chepstow. “The potential impact on nations and regions indies in a year or two could be chilling.”
The cost of living
Looking ahead, indies are concerned about the deteriorating state of the economy, and what that might mean for business.
At the time of writing, the Bank of England had just warned that the UK is expected to face its longest recession since the global financial crisis. Inflation is set to rise above 13%, while household income will “fall sharply” in 2022 and 2023.
Many predict that streamer subscribers will fall as a result and could lead to platforms cutting back on commissions or asking for different kinds of programmes. “There has been a significant shift in the US and SVOD markets recently, and there is a sense that buyers will become more cautious while the fight for subscribers deepens if share prices continue to drop,” says Raw TV. “We have experienced a significant number of unscripted projects delayed or impacted in some way by the uncertainty in the market.”
Raw reckons there could be a growing streamer appetite for “lower cost programming / lower volumes” as a result.
“With subscriptions falling for Netflix and the like, our production boom may well go bust quicker than anticipated,” warns Woodcut Media.
Lime Pictures, meanwhile, thinks the outlook is uncertain. Lime says that political factors (possible Channel 4 privatisation and BBC licence fee freeze) combining with macroeconomic factors (the cost-of-living crisis and a likely squeeze on SVOD subscriptions) are “likely to reduce the commissioning momentum that has been generated post Covid.”
Going into 2023, it’s important not to underestimate the many concerns that indies have about the economy.
The outlook is unpredictable, says Blink Films. “Will broadcasters feel bullish and scale up commissioning. Or will they fear tricky times ahead and make conservative decisions. All remains to be seen.”
Amongst it all, there are also concerns that the arrival of the international streamers has led to the creation of an unequal production system in the UK – one where UK focused broadcasters find it increasingly hard to compete with the budgets of deep pocketed SVODs – amid rising fees and expectations.
“This needs to be monitored carefully to ensure that, in the gold rush, we don’t lose sight of the things that are really important – and that starts with healthy and world class domestic films and series that speak to us and our country, as well as trying to appeal globally,” says Dancing Ledge.
Dancing Ledge concludes: “We are at our strongest and most vital when we are first and foremost making shows for ourselves. We have to ensure that we somehow don’t price those shows out of our own market and end up with a trickle of great UK content, as opposed to the river we currently swim in, by chasing the global streamer dream.”
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