What’s Your Future Return On Investment?

What's Your Future Return On Investment?

Re-reading my Word Of Mouth pieces over the last few months, I realise that there are three firm themes.

Theme 1: The television production industry is changing fast, and you must change with it, or you may become isolated and abandoned as it moves on without you.

Theme 2: People at large are watching more filmed content, in more ways, than ever before. Single-platform broadcasting is in trouble, not television production. So as a programme-maker you should be fine in the longer-run.

Theme 3: We know that our industry is in transition, but your guess is as good as mine about what are going to be the most popular media, how they will be funded, and who will be controlling them, even within a five-year timescale.

Times of transition are financially tough. The old paymasters are struggling and the new ones have not become apparent yet. Below are some of the reasons that television freelancers are finding contracts harder to find with the production companies.

Pact worked on behalf of the independent production companies to forge revolutionary terms of trade with broadcasters, which meant that the indies could keep rights to most of the back-end income (repeats, international distribution, format sales, DVDs etc).

The upside of this was that indies could have real business growth potential by growing their asset base – at last indies could become truly rich corporations. The downside was that it favours larger companies that have the scale to invest and exploit their intellectual property to the full, and it works against small companies that depend on taking a given percentage of the production costs to cover overheads. Fewer small companies can actually afford to make the kinds of broadcast TV productions that they used to.

Commercial broadcasters knew in the past that they could rely on advertising income to cover their costs, with a nice surplus. The productions they commissioned were almost fillers that they put on in between the adverts. This meant that they had the luxury of seeking critical acclaim rather than the best income for the least spend.

Now, with their spot-advertising money evaporated and programme exploitation rights largely given over to Pact’s members, broadcasters can either find a lot of money elsewhere, which they are trying to do with limited success, or they can cut their programme production costs, and that is quicker and easier.

At ITV, commissioners now must convince the Channels Commercial Director that any given commission will give a good return on investment before they can be green-light it, which means that risky big-budget production is less likely than cheaper, high-volume, easily repeatable factual content.

It gets worse. At Five, it seems that commissioners are offering to greenlight a production only if the production company proposing it can provide the entire production budget (from sponsorship, or advertiser-funding, or similar third-party sources) as well as the creative package. An advertiser-funding arrangement can take a minimum of six months to put together, so this works against smaller indies which need to keep up production turnover just to survive.

It will be increasingly attractive for broadcasters to acquire popular pre-made productions, instead of paying-out for new commissions which might not get the required audience. So we can expect the number of broadcast hours commissioned to reduce further and, of course, if fewer programmes are being commissioned, then there are less productions for everyone to work on.

As many indies are already financially pressed they need to save money and some of the most effective ways to reduce costs are to cut back on the size of production crews, use lighter cheaper kit operated by multi-skilling crew, pay lower freelance rates, and reduce the amount of time in post-production. The consensus seems to be that a drop in production standards is an acceptable factor in keeping the broadcast industry going in the meantime.

So, what do we do to survive and thrive among the changes? The trite answer is to say look at new media, the vast corporate communications industry, the internet, and consider carefully where the broadcast television industry goes from here. However, hundreds of people are reading this, and most are already working to secure their future in an informed and imaginative way.

* On Saturday 29th August 2009, ProductionBase is sponsoring the Save our Sector event at the MediaGuardian Edinburgh International Television Festival