Oliver Wolf...On 'Cindies' Going To The Ball

Oliver Wolf...On 'Cindies' Going To The Ball

Thanks to the recent Independent Television Commission's programme supply review recommendations, it seems that the "Cindies" of the television industry, namely the independent production companies, may yet go to the Christmas ball.

Certainly the wicked stepmothers, cunningly disguised as programme buyers, will be less able to exploit their dominant positions in future.

Meanwhile, media secretary Tessa Jowell, cast as the fairy godmother, is waving her magic wand over the "Sleeping Indies". With some notable exceptions many indies have been caught in a time warp for nigh on 20 years, but they now have the chance to emerge as more attractive business entities.

While it's too early to count on a fairy-tale ending, the wholesale changes to the independent television production sector ushered in by the ITC review and reinforced by the Government's forthcoming Communications Bill, are a step in the right direction.

Since its inception in 1982, the sector's development has been hindered by a number of structural issues. In its review, the ITC examined some of these issues, notably the contrast between the size and strength of the broadcasting channels and the diminutive indies in their highly fragmented, yet ruthlessly competitive, sector.  

As well as having considerable buying power, most of the programme buyers also undertake television production in-house. With the exception of Channel 4, the indies' customers are also, effectively, their competitors.

Indies are also characterized by a lack of external investment. In the current market, however, their business economics are fairly unattractive. This is because independent television production companies are generally commissioned on a short-term or project contract basis with their revenues limited to a cost-plus formula or a fixed price. This delivers an unpredictable earnings stream with future earnings dependent on the indie continuing to win new commissions - a hand-to-mouth existence that does not appeal to external investors.

Perhaps most crucially, commissioning broadcasters typically retain most, if not all, of a production's intellectual property rights. The programme maker has a one-off revenue "hit" when the programme is sold. However, little asset value is retained in the company with the indie missing out on the "super-profit" potential of product licensing and/or merchandising. 

If independent producers can retain the rights to their work, their businesses will be far more attractive as business concerns. This raises the possibility of attracting higher levels of external investment and creates a virtuous circle. Raising private backing will enable the indies to self-fund all, or part, of their productions and empower them to automatically retain the rights.

It had been hoped that the review would recommend the indie quota be restated to apply to value, rather than volume, of programming and the "qualifying hours" system adjusted to increase the real percentage of commissioned content.

Even so, the impending changes should provide enough momentum to bring greater transparency to the deal-making process and take the sector to the next stage. This encompasses full-scale consolidation, resulting in larger, stronger, more business-oriented companies enjoying economies of scale and offering a better quality of programme production.

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