Multichannel, international broadcasters drive £3BN UK TV production industry

Editor | 25-01-2013

Despite what it calls the turbulent economic climate of recent years, a study by Apex Insight has revealed that the UK TV production market is vying for an industry with a total commissions value worth over £3 billion.

Apex argues, perhaps worryingly in the context of the proverbial Chinese curse, that the industry is now at "an exciting point" and will develop, but with "significant areas of uncertainty". It sees traditional broadcasters remaining the major commissioners of content but says they will face revenue challenges from the Internet, which now takes the largest share of the advertising pie, and also from the licence fee freeze. Even though this appears a very healthy state of affairs, with the survey revealing that the largest television producers remain the two major in-house production arms of the leading networks, BBC and ITV, commissions in the traditional public service sector are being usurped by the multichannel market and from international players.
The PSB market accounted for over three-quarters of the market in 2012, actually down from around 80% the previous year, yet growth in the market is being driven by the multichannel segment, led by BSkyB, which has in recent years increased its commissioning of original UK programming.
The survey argues that the most important driver of value in TV production remains the one which it says is the hardest to predict: hit rate in developing the highly successful formats such as Big Brother, Who Wants To Be A Millionaire? and Downton Abbey. Apex says that shows of this nature help production companies deal with the relatively low revenue visibility which they have in a project-based business, as it is generally more profitable and less risky to invest in extending the life of an existing successful format than to create another new hit.
Making a prediction for 2013 and beyond, Apex say that new funding models, such as deficit funding, are changing the economics of an increasingly international industry. It sees as likely that there will be further acquisitions in, and consolidation of, the independent production sector.