TV's big generational shift
Plus big announcements in documentary production.
This week, I’ve written about a little observation that doesn’t seem to come up very often: are we seeing a big generational shift within TV production, right at the point the market is undergoing seismic upheavals? And if we are, where is the next generation of production companies coming from?
I’ve also touched on how and why the UK’s TV production market developed in the way it did, and whether there is an opportunity for a fresh government intervention to help drive growth for this sector into the 2030s and beyond.
Plus I’ve also done a little on two big announcements in the documentary genre - one from Sky News and the other from A24.
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The generation game
Changing audience behaviours and different demographics is a subject that comes up regularly, as it is essential to understand not just broad changes but the distinctive behaviours in all the myriad of subgroups. Just this week
wrote about different audiences and their demographic patterns.However, one area I’ve not seen discussed much is how TV production itself is undergoing a big generational shift, and it is happening right at the moment when the TV sector is facing seismic upheaval. I’m specifically talking about the UK here, although it is possibly happening in other territories too, but triggered by different factors.
To understand why there is a generational pattern, we need to go back to the 1980s. The rise of independent TV production in the UK was in large part driven by the setting up of Channel 4 in 1982 by then Prime Minister Margaret Thatcher and the Conservative government.
As David Olusoga wrote in this 2021 piece in response to the plan to privatise Channel 4:
The Thatcher government intentionally designed Channel 4 to be disruptive. Its function was to unleash a culture of entrepreneurship and to bring this about the channel was structured differently to the BBC and ITV. Channel 4 did not make its own programmes. TV producers were encouraged to set up companies and seek commissions from the new broadcaster. Channel 4’s function therefore was to incubate a culture of risk-taking that was very much in keeping with the Thatcherite vision of a share-owning, home-owning Britain of small business owners.
From that point, many jumped into TV production, however it remained somewhat of a cottage industry where people often made individual films rather than series at scale. This was in large part due to the ongoing source of frustration around the thorny issue of rights: where the broadcasters kept the rights of the programmes they commissioned and the producers were largely work for hire. Sometimes these programmes were sold internationally: growing up in Australia in the 1980s and 1990s, British shows such as The Bill, Grange Hill, Press Gang and Inspector Morse were routinely on our screens. However more often than not, these rights were warehoused, where the broadcasters didn’t exploit them, and the producers couldn’t either.
The shape of our TV industry today is in large part thanks to John McVay, the team at Pact plus a whole host of independent TV producers; together they mounted the campaign back in the late 1990s/early 2000s to persuade the incoming 1997 Labour government that the current model was unfair and inhibited growth. They were successful despite much opposition from the BBC and Channel 4. As the then BBC Director General Greg Dyke famously said: ‘[I’m] not in the business of making independent producers rich’.
However the government listened and along came the 2003 Communications Act. Called ‘the terms of trade’, it was a revolutionary piece of legislation that in one fell swoop handed the rights of TV shows and their underlying IP back to the production companies that made them. Not only could producers sell the completed shows internationally, they also could sell the format rights as well as a whole host of ancillary rights such as DVDs, spinoffs, merch and more. The then Secretary of State for Culture, Media and Sport, the late Tessa Jowell, called for the BBC licence fee to become ‘venture capital’ for independent TV production, and the campaign for the terms of trade won Pact the title of the UK’s most effective campaigning organisation by Campaign Magazine.
This act was a truly transformational government intervention that triggered a bonanza. For some companies who had been established in the 1980s and 1990s, it put them on rocket boosters. For other people, working as freelancers or employees within broadcasters or other production companies, it was the lightbulb moment that meant by setting up company, you could own what you produce and sell it internationally. And so many companies did exactly that, and grew enormously as a result. Think of all the hit TV shows from the last couple of decades, and you’ll often find production companies that exploded off the back of the terms of trade: RDF, TwoFour, Endemol, Kudos, Baby Cow, Maverick, Mentorn, Darlow Smithson, Shine, Ginger, So Television, Optomen, Talkback, Tiger Aspect, Betty, Shed, Hattrick and so on. Some have been since been bought by super indies, others remain independent.
A BBC review into the independent production sector from 2005 stated:
In its earliest days, the independent sector was characterised by “one-man bands” of talented programme makers, content to win a few commissions from broadcasters each year, and to cover their expenses. Today, there are seven companies with revenues in excess of £30m, and four significantly sized companies (The Television Corporation, Ten Alps, Shed Productions and RDF Media) with stock market listings. Private equity investors currently back Hat Trick Holdings, Zenith Entertainment, Shine and All3Media (all of them possible contenders for a stock market listing), and at least three non-broadcaster aligned production companies (All3Media, Endemol and HIT Entertainment) are likely to post revenues in excess of £100m in 2005.
Scrolling forwards to 2015, and Ofcom reported:
In 2001 only eleven of around 500 producers had revenues over £10m and only two had UK revenues over £50m. By the end of 2014 thirty three producers had revenues over £10m while eleven producers had UK revenues over £50m and five had UK revenues over £100m.
If you look at Televisual’s Production 100 from last autumn, there are 20 companies with turnovers over £30m (adjusted for inflation) in comparison to seven in 2005. And the size of their revenues are enormous - the top company is Avalon, turning over £263m, Sister with £205m, Studio Lambert £144m, Bad Wolf £137m. When looking at the groups, All3Media posted £995m in 2023 (of which some of the companies listed above are included, such as Studio Lambert).
Obviously this growth had other effects, as noted by Ofcom in 2015:
a more concentrated market with a smaller number of producers
increase in vertical integration between broadcasters and producers
increase in foreign ownership.
And as previously discussed, both Ofcom and Pact have reported on the state of the sector in the last few turbulent years, finding these patterns continuing alongside the contraction in spending following the peaks of the streaming wars commissioning battle.
So here we all are, 22 years after the moment producers were handed their rights. We are facing the biggest upheaval the TV and film markets have ever seen - technological and user behaviour disruption that is not a blip or a temporary situation where things will ‘return to normal’. This is our new normal, indeed, we may look back on this as a simpler time once the AI revolution really starts to take effect and change all our lives. Being entrepreneurial; ducking and diving to finding opportunities and models is the way forward for all of us. Building direct to consumer relationships is increasingly an important and expected part of a producers’ portfolio, despite the B2B nature of TV and film production thus far.
Looking again at the top 100 indie producers in Televisual, it is striking how many of the companies were set up before 2010, and even those set up after then, how many were set up by industry veterans with long and illustrious careers either in broadcasters or other successful companies. And not to put too fine a point on it, many of the owners of these independent companies are now in their 60s or some into their 70s. So what happens to the companies of this generation who drove the enormous explosion of independent production from the cottage industry in the 1990s to the enormous juggernaut it is now? The founders may be totally ready for the next fight - their creative entrepreneurial spirit excited by the new opportunities - ready to lead their companies through these turbulent times. Others might step back and handover the running to talent they’ve grown and nurtured either from within their own companies or hired in from organisations or even other industries. We may yet see more consolidation in the market, and some smaller labels also may decide that they’ve had a great run and close the doors.
Some companies will successfully transform into direct to consumer/B2B hybrids, where they run a portfolio of perhaps TV commissioning, feature films, podcasting, branded, direct to consumer channels. Others may decide to stay as pure play TV and/or film producers, thus accepting they are fishing in a smaller pool relative to the bubble of the streaming wars. There are other opportunities on the table - diversifying through branded, for example. And further afield, there are more opportunities such as software, products and services, data analytics or AI tools - all might appeal to some of the more technical or investment minded producers out there.
Thinking of where the new generation of creative and entrepreneurial talent will come from, I’m reminded of something a very wise colleague said to me nearly twenty years ago. She was worried about the next generation, pointing out that back in the 80s, the hip young cool things got into print, magazines and newspapers. And then in the 90s and early noughties it was TV. And maybe in the later noughties the exciting new creative space became games or digital. The mid-2010s up to now, talent is drawn to the creator economy.
With that in mind, are we attracting the best and the brightest creatives, storytellers and entrepreneurs to the TV, film and online content industries? Or are they being attracted into other markets - and if so, what can we do to appeal to them?
Some - if not the majority - of the next generation companies will be hybrid in nature working across TV, film, branded and direct to consumer, however we may also see a new class of high end TV and film production labels - perhaps who use direct to consumer/creator activity as a development pipeline.
Thinking of these new companies, what skills will they be missing and where will they get their finance from? For those companies that don’t come through the broadcaster ecosystem - say are creator-native or focus on branded content - then there could be quite important knowledge gaps. Here I’m thinking specifically about legal and compliance issues, editorial sensibilities and contributor management that is such a core part of working in TV production.
Going back full circle to governmental intervention. Despite the terms of trade, certain types of commissions by broadcasters are still outside of these set of rights, such as digital projects. In the US, Jon Voight’s Make Hollywood Great Again plan is talking about greater rights protections for producers in deals with streamers, with the return of the financial interest and syndication (FINSYN) rules that were ditched more than three decades ago. Proposals in the draft document would see producers who strike global deals with streamers being paid a minimum guarantee and retaining a non-exclusive license following a period of exclusivity. In other territories too, there are growing calls for government intervention. Screen Producers Australia for example, last week stated that the Australian screen industry is in a state of ‘ongoing market failure’. They say commercial broadcasters are prioritising spending on sports and reality TV instead of ‘culturally significant content’ such as locally produced drama and kids content.
Meanwhile in the UK there are grave concerns around the government’s approach to copyright and AI, right at a time when protection of IP is needed to enable producers to innovate with generative AI so they can become the market leaders of this major growth industry. There are also worries about the latest rights proposals from Ofcom which are intended to help UK broadcasters compete with streamers but Pact has warned could undo 20 years of growth by allowing broadcasters to warehouse rights again.
Plus the other key lobbying issues seem to be about widening tax credits to other genres; training and development; nations and regions quotas.
Beyond this list, what is the next big leap that could be made to put the next generation of creatives across TV, film and the creator economy on steroids, the same as Thatcher did with Channel 4 in 1982 and the terms of trade did for the whole sector in 2003?
Indeed, is there a single, game changing intervention that could be made that has a similar explosive effect on innovation and entrepreneurialism?
Ups and downs in documentary
Back in March, Jane Featherstone appeared in front of a select committee to discuss concerns within the TV and film sectors, where she said ‘Netflix can't do everything’. While she was talking about scripted, this reflected a similar concern amongst investigative journalist programme makers that with the pressure on public service broadcasters, there would be less of these types of films being funded.
To this point, last week it was announced that Sky News has created a new documentary production unit called ‘Full Story Films’; hiring multi-award-winning producer Siobhan Sinnerton as Creative Director who has a long track record in groundbreaking investigative journalism documentaries such as Lyra and Oscar nominated For Sama.
This is a very clever move from Sky, entering the market for journalistically important films that are not primarily commercial in nature; the type that cause major compliance headaches but can have a big impact on the world, let alone an organisation’s reputation. It is also a welcome announcement to all those who have been worrying these types of films could wither as the usual commissioners (such as a public service broadcasters) faced their own financial pressures, never mind that streamers avoid commissioning this genre completely.
Plus, it is also a reminder of the shape-shifting nature of markets in flux: organisations might retreat from one area, thus creating a vacuum into which others might step.
Worth also reading the article below which is a look at Sky, seven years after Comcast's acquisition:
Meanwhile, in less positive news for documentary film makers and producers: A24 revealed it was shutting its feature documentary division to focus on more commercial scripted titles (although wasn’t ruling out working with individual documentary film makers in the future). This follows the shuttering of Participant Media last year.
C21: HiddenLight alum Siobhan Sinnerton joins Sky News to lead doc unit Full Story Films
Variety: A24 scales back documentary division, lays off five
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