UK TV Production: market insight 2014

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Published: February 2014
Pages: 39 (full report)
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Description

About this report

This market includes the production of programmes for UK television networks television as well as associated, or spin-off, revenues from sources such as overseas programme sales, format licensing and exploitation of digital rights.

It excludes other types of production such as films and corporate productions as well as commissions from overseas broadcasters.

The report reviews the trends which are impacting the television production industry, at the global level in what is increasingly an international industry, as well as specifically in the UK.

It also quantifies the UK market size, historical growth rates, segmentation patterns and sets out the trends which have driven these figures. This includes an in-depth analysis of television industry revenue and the factors behind it as well as spending patterns.

Our forecast for industry growth by segment is based on this analysis of historical trends and our understanding of how growth drivers impact the key customers and segments.

Why is it useful?

The UK television production industry has continued to grow in recent years despite the economic downturn.

It is now a significant export-earning industry for the UK.

The pace of change both in technology and business models looks likely to increase in the future with the BBC Charter renewal creating further uncertainty, and potential opportunity.
Despite recent market consolidation, the industry is relatively fragmented with potential for further mergers to occur.

Who is it intended for?

TV Production companies
Broadcasters and television networks
Investors in these businesses
Market regulators and policymakers
Banks, analysts, consultants and other parties with interests in the sector

Summary

Market growth and drivers
The total value of UK television commissions is now over £3.3bn in value, having experienced modest but sustained growth during the turbulent economic climate of recent years.
Although they still account for most of the market, growth in demand for TV production has not been driven by the traditional PSB channels but the multi-channel segment, led by BSkyB, which has, in recent years, started to commission more original UK programming than in the past.

Key industry issues
The most important driver of value in TV production is the one which is hardest to predict: hit rate in developing the highly successful formats, such as ‘Big Brother’, ‘Who Wants To Be A Millionaire‘, ‘The X-Factor’ or ‘Downton Abbey’, which become major successes and generate large profits over a period of years. Shows of this nature can help production companies to deal with the relatively low revenue visibility which they have in what is a project-based business.
Formats have a lifecycle and eventually they become stale and have to be replaced. Given that it is generally more profitable and less risky to extend the life of an existing format than to come up with a new one, careful management of formats to prolong their life, is also important.
This requires working with the broadcaster to ensure that the show is deployed in the right time slot for its target audience and not overexposed.
Television is increasingly becoming an international industry. The UK production industry is a global leader and enjoys significant and growing export sales. It is aided in achieving this by the consolidation of the industry internationally which has led to many of the leading producers being part of international groups which are well placed to market their capabilities and content worldwide.

Competitive landscape
The largest players in the UK television production market remain the two major in-house production arms of the leading networks, BBC and ITV.
The market has traditionally been fragmented. Barriers to entry were historically relatively low allowing a large number of small and mediumsized players to thrive.
However, acquisition activity in recent years has led to significant consolidation. Several large groups, which now have extensive international operations and are sometimes known as ‘superindies’, have emerged.

Outlook
The industry is at an exciting point and continues to develop, leaving significant areas of uncertainty.
The traditional broadcasters remain the major commissioners of content but they are facing revenue challenges, whether from the internet competing for their ad revenues, or the licence fee being frozen until the next BBC Charter renewal in 2016.
However, there is increased production demand from the multi-channel segment, led by BskyB and many believe that the BBC will increase its use of external productions beyond current levels in the future.
New funding models such as deficit funding, are changing the economics of the industry as it becomes increasingly international and multi-platform.
New initiatives are being launched, such as IPTV, which are starting to drive to demand for production activity – both incremental production and, more importantly, by supporting the economics of ongoing production.
In this environment, we expect to see the industry to continue to grow, potentially at a higher rate than in recent years.

Contents

2 Introduction
2 About this report
3 Summary
4 About Apex Insight
5 Contents
8 List of charts and tables

9 The UK television production market
9 Market definition
9 History
9 Programme genres
11 Customers
11 BBC
12 ITV
12 Channel 4 and Five
12 BSkyB
12 Other commercial multi-channel
13 Value drivers
13 Market power of customers and suppliers
14 Traditional and new sources of revenue
15 New programme funding models
15 Trends towards consolidation and internationalisation
16 Impact of market trends on production formats

17 Market size and growth
17 TV Production market size & growth
18 Trends in in-house vs outsourced production spending
18 Independent production company revenue segmentation
18 Trends in in-house vs outsourced production spending
19 Volume and price trends
19 International comparisons
21 Market drivers
21 Discussion of market drivers
21 TV viewing
22 Channel share of viewing
23 Television Industry revenue
24 Competition to TV advertising from other media
24 Cyclicality of advertising revenue
24 Trend growth of subscription TV
25 BBC licence fee
26 Seasonality

27 Competitive landscape
27 Overview
27 BBC Production
28 ITV Studios
28 BSkyB
28 All3Media
28 Introduction & Ownership
28 History
28 Recent news
28 Financial performance
29 Genre Focus
29 Endemol
29 History
30 Countries
30 Financial performance
30 Key Shows
30 FremantleMedia
30 Introduction & Ownership
30 International operations
31 Fremantle in the UK
31 History
31 Financial performance
32 Genre Focus
32 Key Shows
32 Shine
32 Introduction & Ownership
32 History
32 Latest News
32 Financial performance
33 Genre Focus
33 Key Shows
33 Zodiak Media
33 Introduction & Ownership
33 Acquisitions
33 Strategy
33 Countries
33 Financial performance
34 Key Shows
34 Shed Media
34 Introduction & Ownership
34 History
34 Latest News
34 Financial performance
34 Genre Focus
34 Key Shows

35 Forecast
35 Forecast UK TV Production market size & growth
36 Key forecast assumptions - BBC
36 ITV / C4 / 5
37 Multi-channel
37 Other

38 Appendix: Abbreviations used in this report

List of figures (UK Television Production Market Report)

1. Public service broadcasters / hours broadcast by genre
2. UK TV industry: programme spending by customer / £m
3. Commercial multi-channel content spending by genre / £m
4. UK spending on television commissioning by type of channel / £m
5. UK spending on television commissioning split between in-house
vs independents / £m
6. Independent production company revenue segmented by
source / £m
7. Average programme cost per hour broadcast (main five PSB
channels) / £’000
8. International comparisons of TV industry revenue per head / £
per year
9. Average daily hours of viewing (total TV)
10. Audience share by channel / %
11. UK TV industry revenue by type / £bn, % year on year change
12. Share of UK advertising spend by selected media / %
13. Change in number of new Sky TV subscribers / m
14. BBC licence fee (colour TV) / £ per year
15. Average daily viewing by month during 2011 / hours and minutes
per person per day
16. UK TV production market revenue share estimates / £m
17. UK spending on television commissioning by type of channel / £m
18. Forecast share of UK advertising spend by selected media / %

Companies mentioned in the report
All3Media
Apollo Global Management
BBC
Bridgepoint
BSkyB
Channel 4
Chernin Entertainment Company
Core Media Group
Cyrte
Discovery
Endemol
Five
FremantleMedia
Goldman Sachs
ITV
Mediaset
NBC Universal
News Corporation
Permira
RDF
Shed Media
Shine
UKTV
Warner
Zodiak Media

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