Insight

Timescale: The latest Pact census questionnaire will be distributed during the first week in September for completion and return by the end of the same month. The results of the census will be presented at a launch event planned for February 2008.

Areas of growth: Total revenue generated by the sector was £1.88bn. On average revenues increased by 17.4%. UK commissions remained virtually unchanged, whilst international commissions increased by £109m and rights exploitation in the UK was up by £34m. New Media and other non-TV activities have more than doubled, but still contribute a small part of the sector’s revenue (£191m).

Profitability: Independent production companies as a whole are generating higher margins than last year. On average margins are 8.4%, but the group of companies in the £5-10m turnover band are averaging just 3.5%.

Sources of commissions: Multichannel commissions are an ever larger source of revenue for the sector, having grown from 4.2% to 9.4% of TV revenues. These figures exclude the BBC and ITV sister-channels; factoring these in brings total multichannel commissions to 16%.

Consolidation: There is now a clear top five holding companies, which between them generate 41% of industry revenues. 33% of companies in the £5-10m turnover band state an intent to mege, acquire or be acquired. But overall 80% of independent production companies see their situation as being stable.

Raising finance: 36% of independent production companies sought to raise finance during the course of the year. The amounts raised varied by type: The average debt finance was £1.5m; equity finance £1.1m and soft finance (grants and similar) £90k.

Outlook and prospects: The outlook for the independent production sector looks strong, as the largest companies gave confidence scores averaging nine out of 10, while 70% of respondents overall responded with seven or higher.

More details: The census was researched and written for Pact by Digital-i. To order a copy or discuss the findings in more detail, please contact us.

One of the greatest concerns for terrestrial channels launching digital sister channels is the risk of sacrificing audience from their parent. However by applying a special methodology for measuring audience cannibalisation, Digital-i has shown that Five lost practically none of its audience share as a result of the launch of sister channels, Five Life and Five US. The biggest losses were sustained by ITV as over 20% of Five Life and Five US viewers were won at the expense of ITV2 and ITV3. This amounted to a loss of 0.54% of these channels’ combined audience. Other major contributors to Five Life and Five US audiences appeared to be Living (7.5%), Film4 (7.1%) and BBC3 (6.0%). For this analysis, viewing behaviour was measured over a 20-week period in the run-up and following the October 2006 launch (excluding the Christmas holidays).

This detailed examination of the health of the independent production sector is being published to an invited audience in London on Monday 30th April 2007.

Highlights and discussion of the results will be published here shortly after this time. It will include a detailed look at what is making the most profitable indies – large and small – successful. It will also explore the one set of companies which is lagging significantly behind the rest of the industry and analyse what their counterparts are doing differently. It will also look at how better rights exploitation and other new sources of business are contributing to profits in our industry.

If you would like us to email you a copy of this information as soon as it is available, please send us your contact details.

The 2007 census of the independent production sector was commissioned by Pact, together with sponsors KPMG and Bank of Ireland. It was compiled by Digital-i.