Archive for August, 2010

Broadcaster-bashing league table

NB Health warning: Without analysis of whether the references are pro-, neutral or anti- BBC  the following table shouldn’t be taken too seriously.  Though if Google had existed in the 80s Channel 4 would probably have been much higher up the table!

25 years of BBC Bashing

Another MediaGuardian Edinburgh International television Festival is over. The Armani suits, killer heels and expense accounts have left the George Hotel.  The McEwan Hall quietly reverberates to the last whispers of BBC boss Mark Thompson’s deft McTaggart speech, defending the licence fee and the Beeb’s role as the cornerstone of quality TV against calls for the further liberation of broadcasting from the fetters of regulation. Festival staff clear away the promotional brochures and pack up the 3D television displays to the echoes of Paul Abbot’s plangent (if at times incoherent) plea for more long-running drama on British TV.  Like Life on Mars if you listen really carefully the ghostly voices of TV executives past mingle with the present and seem to be saying…well rather similar things.  As a delve into the archives (source of all 1985 quotes) of long gone eclectic left-nationalist leaning magazine Radical Scotland will reveal…

Back in 1985, a year before British Satellite Broadcasting went on air a young(er) Andrew Neil told the delegates that the BBC/ITV duopoly was a “conspiracy against the public to avoid competition” while David Graham (then a ‘young turk’ of the independent sector and producer of the ground-breaking current affairs programme Diverse Reports for Channel 4) argued that multi-channel TV, cable and the like made the existence of a ‘state-regulated, centrally controlled and ideologically centrist institution indefensible’

Well not much and everything has changed –  the Peacock Committee Enquiry into the BBC was in full swing and many in the television industry fully expected the Thatcher Government, fresh from defeating the Miners after a bitter year-long strike, to abolish the licence fee and throw the BBC to the commercial wolves.  Delegates were abuzz with revelations of MI5 vetting of BBC staff and the banning of At the Edge of the Union, an allegedly incendiary documentary on Northern Ireland which provoked the NUJ to organise a blackout of BBC news coverage in protest.

Advertising men (and back then they always were men) like Rodney Harris painted a halcyon picture of niche channels targeting upmarket audiences and ploughing the resultant ad revenue back into high quality programming.  Fast forward to 2010 and the future turns out to be not so bright. We have Paul Abbott’s heartfelt plea for greater investment in British TV drama to match the quality of long running shoes like The Wire and The Sopranos while Mark Thompson points out a growing investment gap in quality programming which Sky TV ought to be able to help address out of its £6bn turnover but shows no sign of turning over a new leaf.

Your correspondent, then a twenty-something would be cultural activist and sometime journalist (unpaid) for Radical Scotland, was just one of many alarmed by the seemingly unstoppable rise of (Media) Baron Murdoch:

1985:The prospect of unlimited cable TV channels, satellite TV, non-broadcast video, cheaper printing technology, etc, may give the illusion of ‘the democratisation of the means of communication’.  But in reality the ownership and control of those media which reach the vast majority of views and readers will remain firmly in the hands of the Murdochs and Maxwells…”

Well here we are a quarter-century on and, as Mark Thompson pointed out on Friday evening:

2010:Sky is already a far more powerful commercial counterweight to the BBC than ITV ever was. It is well on its way to being the most dominant force in broadcast media in this country. Moreover, if News Corp’s proposal to acquire all of the remaining shares in Sky goes through, Sky will not just be Britain’s biggest broadcaster, but a full part of a company which is also dominant in national newspapers as well as one of the Britain’s biggest publishers.”

It’s not all bad news however.  The cheerleaders for laissez-faire in broadcasting have not had it all their way.  The BBC has actually done not too badly in licence fee negotiations over the past couple of decades and the failure of the marketplace to deliver the full range of competitive high value programming, indigenously produced drama in particular, has undermined the arguments first articulated by the likes of Peter Jay back then:

1985:At bottom, broadcast material [is] ideally suited for the market place, i.e. individual units (programmes) which can be wanted by, and supplied to, one customer and rejected by another, for which everyone has a demand [and] which nobody needs’).”

However the wolves are never very far away and while Culture and Media Secretary Jeremy Hunt would not be drawn on whether he intends to cut or simply cap the Licence fee, the BBC’s argument to retain its position as the cornerstone of UK Broadcasting requires constant updating and finessing.  This weekend’s performances by Thompson and Hunt were simply the opening skirmishes in a battle which has been going on for over two decades and may last a third.

Time to call ‘turn over’ for greater TV turnover

Last night, on the eve of the TV industry’s annual migration to Edinburgh from London (where notwithstanding the BBC’s efforts to shift production into the nations and regions, most of it remains domiciled) a vision of televisual growth and opportunity was unveiled by Tern TV’s David Strachan in the august surroundings of the National Library of Scotland.  “Growing the Television Broadcast and Production Sector in Scotland” is the much anticipated report of the working group set up in the wake of the Scottish Broadcasting Commission, which published its closely argued and impassioned final report (‘Platform for Success’) back in September 2008 to be followed by Scottish Enterprise’s rather more prosaic contribution “Building the ‘Platform for Success’” in March 2009.

In a nutshell the report argues that television in Scotland is looking at a three-year window of opportunity to achieve 60% growth in commissions and employment.  That would see turnover grow from £215m to £346m and employment from just under 3,000 to the full –time equivalent of over four and half thousand jobs.  However as the report notes:

“This will only happen with collective and coordinated action across broadcasters, independent production companies and the public sector”.

While the major driver of this anticipated growth is the BBC’s commitment to increase network production in Scotland to account for 9% of its spend, an increase of £50m a year by 2016, the report also expects higher levels of commissioning by Channel 4 and, in the longer term, other broadcasters to be part of the mix.

But there are significant barriers to achieving this step change and, as in the film sector, a key one is the question of scale and diversity of companies.  Skills gaps are another barrier, the Catch 22 of growing network production in genres that Scottish companies have historically not been adept at is that you can only become adept at developing and producing entertainment or drama if you have had commissions that allow you to grow that expertise!  Lacking a domestic market of sufficient scale to give companies both the business base and the range of genre expertise that can migrate to network, the danger is that increased demand from network commissioners will be met by local branches of London companies importing talent and skills ‘known’ to network commissioners.  This is nothing new – it’s been the central issue facing indies and broadcasters in Scotland since 1982 and the creation of Channel 4.

The solution to this market failure?  Coordinated action (which includes significant public investment) to address the questions of scale, sustainability and skills that can get Scotland’s producers – indie and in-house BBC/STV –  into the premier league across the full breadth of programme genres. 

Who will deliver this?  The report suggests Creative Scotland should take the lead, building on the model of the Creative Industries Partnership Reference Group, but calls more broadly on the ‘public sector’ to provide up to £10m a year (though some of that might come from the BBC and Channel 4) through various mechanisms ranging from Seed Equity Finance of £50k to new start-up companies through to Production Incentive Finance of up to £500k a shot to support ‘productions of scale’.  The report suggests that the latter investment could itself lever an additional £12m a year securing or creating around 240 jobs a year.

How will it be paid for?  According to insiders one of the reasons the report has taken so long to hit the streets has been Scottish Enterprise’s seeming reluctance to sign up to hard figures on the necessary pump-priming investment – presumably for fear that the larger portion of it might have to come from its budget with no guarantee of the Government chipping in, particularly in the current climate.

So it boils down to whether the potential return of an extra £130m to the Scottish economy, 1700 jobs a year and a step change in Scottish broadcasting and production with significant wider cultural and economic benefits (e.g. to the ‘creative supply chain’ of writers, directors, designers, actors, facilities and technology companies etc.)  is worth the risk of around £10m a year in investment – around a third of the cost of the proposed new Forth Bridge or what the Government currently spends on supporting air services to the further reaches of the country. 

Assuming around half of the necessary investment – say £5m – were to come from Scottish enterprise that would be just over 2% of its annual investment budget.  On its own figures the current Gross Value Added (GVA) of the sector is £153m a year.  Taking the mid-point between its worst case and best case scenarios gives an additional £76m a year GVA, even if the return were only £50m that would still be a ten-fold return on investment.  In opportunity-cost terms that seems like a pretty competitive proposition and arguably at a considerably lower risk than in many (most?) other sectors.

Realtime Risks

In a pattern familiar to producers in the independent television production sector the games industry has been squeezing out middle sized development companies as development costs, overhead and the risks attached to banking on a hit to support the business become ever greater.  Back in February Investment Bank IBIS Capital’s Tim Merrill commented on

“In the middle, the solution seems to be either dream outrageously big and take major risk capital (like RealtimeWorlds with APB), or get bought out by someone with the muscle to take on the majors.”

Well the gamble that Realtime took with APB has, sadly, not paid off, dealing a major blow to the staff and to Dundee.  Though I rarely agree with the Scotsman’s George Kerevan his observation today that tax breaks and competition from Canada aren’t, in this instance, the real issue is a point well made.  Which to be clear isn’t to say that the fiscal treatment of the games sector and other support mechanisms aren’t a real and pressing issue if the industry is to stay internationally competitive, just that its misleading to finger them as the cause of Realtime’s demise .

There is no avoiding the high stakes of entertainment product development. As in the rest of the entertainment business, the games industry is increasingly hit driven (industry observers generally accept that 80-90% of revenue comes from 10-20% of titles) and just like film production  if you can’t spread risk across a number of products the stakes become very high when you have to gamble a lot of development cash over a sizeable period of time on a single bet.  APB isn’t the first online game to fail to get into orbit. Back in 2003 the eagerly anticipated The Sims Online, which reportedly racked up $20m in development costs, needed to garner 1 million subscribers and fell far short with paying customers in the low hundreds of thousands.  Electronic Arts could afford to take the hit from its lack of a hit, a company the size of Real Time Worlds couldn’t and its far from being the first UK company to call in the receivers having pinned all on a new product launch.  (see

None of this is news to games developers, indeed RealTime Worlds Chairman and Chief Strategy Officer Ian Hetherington has made the point forcefully, noting recently that “Some Risk is inevitable!  Are we still too risk averse? What are we waiting for?”  As in the movies no amount of fiscal engineering can remove the risk of the audiences staying away in droves and when independent UK companies take the risk onto themselves and their backers (to get a bigger share of the rewards) rather than sharing it (at a cost) with the deeper pockets of the distribution sector, it becomes even more of an all-or-nothing game.

Let’s not pit TV against film

A couple of years back in a contribution to the book Scottish Cinema Now I wrote

Over the past twenty-five years filmmakers in Scotland have benefited from a protected support system which has privileged their claims to both cultural subsidy and direct financial investment in screen content. That situation is changing rapidly, as television, games and new media producers demand equal status in the subsidy game, basing their claims on economic, cultural and democratic grounds.

Today’s Sunday Herald article on television in Scotland highlights the sector’s growing case for greater public investment to underwrite the domestic production sector’s capacity to secure a greater share of network commissions.  The BBC is the key objective, as it rolls out its promise to up Scotland’s share of network spend, but Channel 4 and, to a lesser extent, ITV are additional prizes on the horizon.

The suggestion that film in Scotland has enjoyed a ‘privileged’ status akin (STV’s Alan Clements is quoted as saying) to ‘snobbery’ in the eyes of Creative Scotland’s predecessor Scottish Screen echoes the comments made in evidence to the Scottish Broadcasting Commission in 2007 by PACT CEO John McVay “The obsession with film was a big mistake. “ and well as former Scottish Enterprise CEO Jack Perry who claimed films supported by the Glasgow Film Fund had ‘negative value to the economy’.

Now public investment in talent, skills (both creative and business), development resources, infrastructure and professional support services are all perfectly legitimate claims for any industry – creative or otherwise – to make on the public purse but in a period of swingeing cuts to public sector spending its even more vital that legitimate and important conditions are met by any investment regime.

Firstly public funding mustn’t be used to substitute for or ‘crowd out’ rather than ‘crowd in’ investment that could (and indeed should in the case of public service broadcasters) be made by the central industry players in the market. Where public funds leverage new additional investment either from end-users (broadcasters, distributors etc) or from private finance that’s undoubtedly a good thing. There is certainly a case for additional investment in the development capacity of independent producers but if this simply leads to a transfer of risk e.g. from broadcasters to public funds without a significant net increase in overall investment nothing will really been achieved. 

Secondly we need to be careful that public funds raised and designated for one purpose e.g. Lottery Funding explicitly designated to support ‘The Arts’, amongst other ‘good causes’, are not used to substitute for the lack of appropriate and necessary investment from other branches of Government. 

The perfectly legitimate case for pump-priming investment in television production companies producing revenue generating, employment creating, profit-maximising product in a context where they have been at a historical and structural disadvantage in the market place shouldn’t be confused with mechanisms to address a wider cultural, social and industrial deficit in the production, distribution and appreciation of indigenous screen content.  They are, of course, intimately intertwined but they remain separate policy objectives in need of co-ordinated but nonetheless in some respects distinct forms and criteria of intervention.

Thirdly we need to be wary of what economists call ‘regulatory capture’ – “the process by whereby beneficiaries of government decisions gain control over the relevant decision-making machinery.” – a charge usually leveled at cultural rather than economic players (see David Throsby, 2010. The Economics of Cultural Policy,  Cambridge University Press).  

Consultation, participation in deliberation, expert advice and opinion are all vital to the formation of policy but we always have to ask if any one interest group is exercising undue prominence or obscuring the wider picture and if the evidence, analyses and option appraisals they offer up are as objective and robust as the public have a legitimate right to expect when scarce public funds are at stake. 

As the Sunday Herald article rightly notes, there is in prospect a much more joined up approach to growing the economic (and indeed the cultural and democratic) contribution of television in Scotland. Likewise the television production sector has an absolutely legitimate place in the debate over public intervention in the screen sector, but so do filmmakers, the audience(s) and a host of interests from Gaelic speakers to community cinemas.  That said we need  to avoid setting television (or games or any other screen based creative content) against cinema and confusing the criteria by which each has a claim on public support. 

As I suggested in that Scottish Cinema Now essay, some in the film community were a little too eager in the 1990s to obscure the cultural case for film in order to make somewhat inflated claims for the (currently achievable) economic impact of indigenous production.  By the same token those now pressing, quite understandably, for a more serious approach to growing the broadcast sector shouldn’t see film as a competitor for attention and funds.  In reality television drama for example (a must for the long term health of television in Scotland) and film-making for the cinema are mutually inter-dependent.  Amongst their shared interests both rely on the same talent base from writers and directors (look at Paul McQuigan) to post-production SFX specialists and commissioners (think Andrea Calderwood) and there are important synergies to be found at a business level as a recent report on the corporate finance of SMEs in the UK film industry for the UK Film Council found.

When it comes to film and television, as in so many other walks of life, united we stand, divided we fall.

Number crunchers at (the) stake

One of the many good things at risk if the UKFC does get sacrificed on the Coalition Government’s QUANGO bonfire is its Research and Statistics Unit (RSU). They have done all of us with a professional interest in film a huge service over the past few years by producing a steady stream of  research both wide and deep.  One of the many questions to be answered by the DCMS and Jeremy Hunt is whether, and if so by whom, this vital if unglamorous part of the UKFC’s work will be carried on.

Delving into the RSU’s latest annual yearbook of film facts, as always there is a wealth of important and revealing data to be found, albeit too little of it disaggregated to provide the Scottish dimension.  Amongst the sections which are, we find that Scots in the central belt continue to go to the cinema more than anywhere else in the UK with 3.5 admissions annually per person compared to the UK average of 2.8 per year which happens to be exactly the frequency at which Northern Scots take in a movie.

Scottish movie taste appears to be more diverse than most of the UK apart with over 5 ‘specialised’ screens per million of population compared to the UK average of 4.  Only London, perhaps not that surprisingly, has more at 10 per million.

One of the more obscure facts buried in the yearbook but none the less still interesting is a comparison of the top movies on free-to-air and subscription channels.  ITV2 clocked up 5.8m viewers for Ice Age 2 while Sky Movies scored 5.3m for National Treasure: Book of Secrets.  The interesting bit is that whereas Ice Age was screened just 5 times on the free channel, garnering an average audience of just over a million, Sky had to press the playout button on National Treasure no less than 184 times for an average audience per transmission of around 30,000.  Two very different patterns of viewing it would seem to get roughly the same number of eyeballs.

A related but much less obscure fact is that contrary to expectations UK pay-movie channels have experienced a decline in audience over the past nine years from 647 million views in 2000 to 559 million last year.  Though over that period the total audience for movies on TV rose above then fell below its 2000 level of 3.5million viewers, it has more or less recovered, mainly thanks to Freeview (with the help of those Artic critters and their friends) to stand at 3.4 million.

What matters most about these numbers is that movies generate a substantial part of the broadcasters’ audience and thus revenue, which the UKFC estimate at around £1.1 billion a year of which around 20% – £200m – are UK films.  Although the majority of these are US backed UK films such as Charlie and the Chocolate Factory or Love Actually, there remains an important argument that whether free-to-air public service, licence fee based, advertising or subscription-based, UK broadcasters should be investing more of their revenue in UK production, both on cultural grounds for those with serious ‘public value’ intent (i.e. the BBC) and/or as part of their self-interest in ensuring the continued existence of a UK film industry that can continue to supply film content for their audiences i.e. us.  UK Broadcasters currently invest only about £25m in film production, low compared to other European countries.

These are just a few, almost random, bits of data from the over 200 pages of the 2010 yearbook, a taste of the crucial research that the RSU undertake, collate and analyse so that serious discussion of the film industry is possible and we are not reduced to exchanging anecdotes and guess-work about what’s really going on.  Or as one sage put it:

“Where facts are few, experts are many.”

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