Dynamic? Entrepreneurial? Or What?



US Studios: International Sales: 2007-2009

  Yesterday David Cameron, speaking to the CBI, said: “I want to create a new economic dynamism in our country. I want the years ahead to be the most entrepreneurial and dynamic in our history.”

He mentioned some items, an Innovation fund, infrastructure investment – but as some commentators said, it would be good to hear more about the plans for our export led recovery.

A year has passed and, once again, there are new figures for UK TV exports.

It may be unfair to compare us with the US studios but it is always worth noting what they are doing. What they have done in the last two years is striking indeed.

The six studios are the main sources of new US comedy and drama, which they both produce and distribute. In the face of declining licensing revenues in the US and a drop of nearly two thirds in DVD sales, they managed to grow International by nearly 37% in recession-hit 2009. (We are studying how they did this in a detailed report which will be out shortly).

The UK TV export figures from PACT show some encouraging signs: 9% growth in format licensing and a very big increase (from a smallish base) in revenues from overseas production. Two positive messages.

But the big item in international sales, half the total, £550m, remains TV series. 10% growth is not to be sniffed at. But what we have to recognise is that Drama is the big seller around the world, the biggest internationally-traded genre. UK drama sales are not broken out in the UK report but I estimate that our drama sales, perhaps £350 or £400m, are only about 7% of the total US sales in the same category. The six studio’s international TV sales reached nearly $9bn in 2009!

Every year we get a similar message in these reports. “International sales were hindered by the low number of episodes per run produced for the UK market and a shortage of returning series.”

Mark Thompson in his MacTaggart lecture in Edinburgh in August admitted that the UK was a “minnow” in international terms. Perhaps we would not need to worry if we did not have competitive advantages in this area, but PACT tells us that overseas buyers affirm that we actually do have significant advantages in perceived quality, innovation and language. The main problem is we just don’t give our potential customers what they want. They want long-running shows, good enough to play in prime time.

It seems that some new driver or incentive is needed. As of now, our TV “culture” is not behind a bigger global presence. One senior executive said in Edinburgh that short runs and variety were a positive benefit and that he saw no reason to change anything just to be able to “take it to MIP”, the twice yearly “market” where made programmes are sold.

But are we so unique? Everyone else likes long-running series. They work And can't we have both?

Now that it has dealt with the BBC License Fee, perhaps the new administration should do some serious thinking about how to motivate UK producers and broadcasters to think harder about international sales. What about Europe, well-used to English language (dubbed or subtitled) drama in prime time? Adam Crozier of ITV seems to have got the message (“We need to focus on more long-running renewable series”), and Paul Abbott spoke passionately about the benefits of creative collaboration on long-running series at Edinburgh.

Some thoughts: the Terms of Trade for independent producers profoundly influence behaviour. Should they be redesigned to stimulate export-led growth? I raised the Terms of Trade in a recent blog.

The BBC is looking more and more like a public body with its new burden of “duties”. Should BBC Worldwide, probably the largest distributor outside the US studios, be privatised? Could this raise capital for investment and liberate energies?

Any other ideas?

Will the Sun Set on the Terms of Trade?

Last week’s The Royal Television Society’s conference (28.9.10) had a number of themes. One is getting more insistent. The UK commercial broadcasters do not like the Terms of Trade for independent producers and want to make more content in-house, thus controlling its exploitation.

Public interest set the Terms in the first place. (OK, effective lobbying should get some credit, too.) A public policy perspective can often yield perceptions and insights that do not come up when you look, as most of us do, to the immediate interests of your firm or industry. That is why, back in the 90’s, broadcasters vigorously opposed them.

For those who are unfamiliar with the Terms, Ofcom eventually introduced them in 2002 because, in Britain, the public service broadcasters, collectively, dominated the commissioning of new content. Producers and others also accused them of “warehousing” content, -- that is, starving satellite and cable channels of available content. The result? Producers got ownership of the secondary rights to the content they made for broadcasters (where previously they had ceded rights) and could license it to domestic and overseas players. This made some producers extremely rich and helped to build some very large companies – like Shine, All3Media, and Tinopolis.

The Courage to Compete, PACT, 1997

 Our company, Attentional (then called DGA) strongly supported this initiative and helped to make the terms happen. With support from producers’ trade body, PACT, and a hugely talented steering group, we wrote The Courage to Compete, a key document in the campaign, published by PACT in 1997. The document promised – and the reforms delivered – a boost to exports from the UK creative industries, a much more dynamic production sector, and a new global media profile for the UK.

However, things move on.

Now many of those producers have created very large companies, some larger than the broadcasters subject to the Terms.

Moreover, some might argue that the Terms have, in their way, frozen the very situation they were intended to free up. First, they made the traditional public broadcasters the preferred destination for larger producers. Second, they drove a wave of energy and innovation among independents, helping the traditional channels to get access to the best content available and keep their dominant shares.

Now some of the larger independent companies are being bought out by even bigger firms – such as Hollywood studios – controlled from overseas.

If over time these Terms are “sunsetted”, as similar rules were in the US many years ago, it should not happen quickly. There will be many arguments, many questions to think about. What, for instance, of the smaller producers, whose gains from the Terms have been modest? Would it mean revisiting the quotas for independent production? What are the appropriate rules for a new era? What new models will emerge for the production of expensive content? Should broadcast policy now aim to encourage a new level of diversification in the commissioning of content? Or is that best achieved by simple deregulation?