Two new reports from Pact published in September revealed the impact of the COVID-19 pandemic on the UK independent production sector. The findings of the annual Pact Census and a specially commissioned COVID Long Term Impact Study raised particular concerns in the context of the Government’s proposal to privatise Channel 4, with small and medium-sized indies especially concerned about their future prospects.
Additionally, a further study commissioned by Pact found that the independent sector is at risk of losing £3.7bn over the next 10 years if the Government goes ahead with privatising Channel 4, potentially losing £80-£100m in the first year of a sale.
Pact Census
The Pact Census is an annual survey detailing the characteristics and evolution of the television production landscape within the UK and has been conducted by Oliver and Ohlbaum since 2008.
UK TV production sector revenues were hit hard by the pandemic in 2020, resulting in a 14% decline from 2019 to £2.9 billion – the lowest figure since 2017.
International revenues remained above £1bn for the second year running – despite falling by 13% -driven by international primary commissions and sales of finished programmes.
Revenue generated by commissions from on-demand services such as Netflix and Amazon Prime grew year-on-year, although at a much smaller rate than recent years, by 6% reaching £356m.
Domestic TV revenues were hit hardest, declining by £257 million (13%) as a result of a reduction in primary commissioning spend from the UK – the lowest since 2011.
However, secondary revenues increased to over £500 million as indies looked to make money by other means while productions were paused or even cancelled.
Covid Long-Term Impact Study
Earlier this year Pact conducted a separate piece of research from 3Vision which looked at the difficulties faced by UK independent production companies throughout the COVID-19 global pandemic, as well as assessing the recovery and reflecting on indies’ experience of working with UK and international commissioners.
The number of pitches made by production companies surveyed increased year-on-year to all national UK broadcasters by 18%. The total number of commissions also increased, with the commissioning rate also rising from 13% in 2019/20 to 16% in 2020/21.
Production companies in London have been the main beneficiaries from the increased number of commissions year-on-year, most notably from Channel 5. In line with their Charter commitments and targets for national representation, the BBC commissioned the most from outside of London, with Channel 4 also acquiring content particularly from the rest of England.
A quarter of all respondents had a show cancelled between April 2020 and March 2021, with the majority having one cancellation. Production companies based in the Nations were more likely to have a show cancelled than those based in England.
The financial impact of the pandemic affected all sizes of production company based across the UK with most experiencing a notable decrease in cash reserves, with those with lower revenues in the previous year the most likely to feel the effects.
Channel 4’s Impact on the UK’s International Competitiveness and Global Profile report
As part of its submission to the Government’s consultation on the potential sale of Channel 4, Pact commissioned Oliver and Ohlbaum to assess the potential impact of a Channel 4 ownership change, with an emphasis on the implications for the UK’s international competitiveness and global profile.
The report found that Channel 4 provided an estimated £940 million of value to the independent production sector in 2019 – through commissions, secondary sales of Channel 4 programmes, and through its contribution to the ‘creative economy’
It also found that a change in ownership would likely result in an erosion of Channel 4’s remit, especially the qualitative public purposes including innovation. As a result it would cut and change investment in independent production over time. In the first year after the sale, O&O estimate that c.£80 million of value would be lost in the independent production sector, largely driven by an initial push to move Continuing Drama, Entertainment and some types of Factual Entertainment programmes in-house. After three years, the cumulative impact is estimated as c.£400m, driven by reduced creative economy growth and further programmes brought in-house. In years five and ten, the cumulative impact is estimated at £1 billion and £3.7 billion, respectively – showing the significant impact of losing Channel 4’s creative spur and reliable source of commissions for independents.
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