Rhodri Evans, Senior Associate, Acuity Law on why indies should consider employee ownership
Recent PACT research finds the UK production industry in excellent health – accruing a record-breaking high of over £3 billion in revenues last year. The demand for content also makes it a highly competitive industry when it comes to attracting and retaining the best employees, since this is an industry where freelance and part-time work structures are common.
Employee ownership can help retain your best employees and attract good future candidates as well. Whilst it isn’t a new concept, it has gained prominence with successive governments touting its benefits and using the old favourite John Lewis as a successful example. More recently, employee ownership has picked up traction within the production sector with two companies – Scotland’s MacTV and Wales’ Cwmni Da – making the transition to become employee owned companies.
Employee ownership can build a more prosperous and long-term business. Giving employees a share of the company can increase their loyalty and reduce churn. By retaining loyal stakeholder employees, you can focus on developing your content rather than interviewing and training replacement staff. Employee owned companies tend to have better employment relations with stakeholder employees having a better understanding of the difficult but necessary decisions management teams sometimes have to take. It can help foster a more entrepreneurial and collaborative working environment where employees genuinely feel they can share an idea because a part of that company is theirs. Above all, employee ownership gives the employee that sense of ownership and duty to protect what they own and to work better to make it a success.
There are wider social benefits to employee ownership as well – both MacTV and Cwmni Da produce significant Scottish Gaelic and Welsh language content for BBC ALBA and S4C respectively. They are assimilated with their local culture and language and have decided to be headquartered outside of the larger media centres and within the local communities they represent on TV. Former BBC director general Mark Thompson recently warned the portrayal of UK culture in the media is at risk with the rise and dominance of global US companies such as Netflix. This risk is greater for the smaller Welsh and Scottish language audience and Cwmni Da and MacTV’s close affiliations with their nations and their culture are important to minimising this risk and to the identities of their business and the culture that permeates through their employees. Being employee owned means those companies are more likely to stay within the communities where they were established and support the culture they uphold.
With the M&A bull market for independent production continuing, employee ownership can also be a means by which a founder can retire without selling to a consolidator (or at least leaving such a decision to the new employee owners) and employee ownership offers a way for a founder to protect the independent nature and culture of their company. With its co-founders retiring, Aardman also recently restructured its business into an Employee Owned Trust with the stated aim of safeguarding its independence and culture now and into the future. Notably for Aardman, the profit sharing extends to its freelancers and not just its full-time employees – a perk non-full time workers do not typically enjoy. In an industry where short term contract work is so widespread, this can improve the bonds of loyalty and sense of contribution to a business from freelance staff, even if they are keen to maintain their current flexibility of work.
Employee ownership is unlikely to become as mainstream in the TV production industry as, say, a full sale to a consolidator. The content market is hot and there are rich and well-deserved rewards for producers to sell to networks or consolidators. Nevertheless, employee ownership offers an alternative exit route for some producers and we’ll no doubt see a few more examples in the near future.