UK TV production in rude heath but reforms may be necessary


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Editor

| 24 December 2015




Even though UK TV production is profitable, the country’s TV regulator is still exploring possible reforms that it believes could make the sector share its riches on a wider basis.



Following a request from the Secretary of State for Culture, Media and Sport in August 2015, Ofcom has published an analysis of the regulatory framework for TV production in the UK.

The review recognises that the independent TV production industry has seen significant change over the last 18 months or so such as the consolidation and acquisition of some of the largest UK producers by global media companies. Ofcom asserts that the investigation shows that the industry continues to perform well, and regulation of the sector continues to meet the objectives set by Parliament.

Despite the consolidation, Ofcom found that at the end of 2014 there were around 230 small producers — defined as those with revenues under £10 million — with at least one programme aired by the main public service broadcasters, that is the BBC, ITV, Channel 4 and Channel 5. Yet levels of market entry remained high: just under a third of all producers were new to the market in each year since 2009, and in 2014, 84 producers were companies that were new to the market. The result was that buy the end of 2014 the UK production market had developed into a very successful sector, generated £2.9 billion in revenues in 2014, growing at an annual compound rate of 2.5% since 2008.

This success notwithstanding, Ofcom noted concerns about the effects of M&As in the sector, most pointedly those by non-UK firms such as American media giants NBC Universal and Warner Brothers. Indeed at present seven of the ten largest UK producers are owned by large foreign media corporations.

These findings plus other concerns have sparked Ofcom to consider options for reform. First of all it is proposing that the definition of an ‘independent producer' could be tightened, with the possibility of a size cap being introduced to ensure that larger producers are not inappropriately protected by the regulatory regime. This option, Ofcom believes, would maximise the opportunity available to small producers and help ensure new entrants continue to come into the market.

Secondly it suggested that there could be reform to the rights and revenue shares between public service broadcasters and producers. Ofcom stated that it had a strong preference for agreements on rights and associated revenues to be reached through commercial negotiation. To date it says it is satisfied that commercial negotiations have been able to balance broadcasters' need for rights which meet the changing expectations of viewers, with producers' need for rights which they can use more widely. However it warns that as viewing patterns continue to change, the regulatory framework may also need to evolve to maintain the right balance.

Moreover, Ofcom believes that complete deregulation of the sector would be uncertain and risky. Broadcasters would, in all likelihood, continue to be able to choose from a range of producers. But deregulation may lead to fewer opportunities for small producers, and as a result there may be fewer opportunities for new creative people to get programmes on air and grow new businesses.