U.K. Indie Sector Posts Revenues of £2.14 Billion

LONDON, February 20: According to the Independent Production Census for 2007-2008, developed by trade body Pact, Bank of Ireland Corporate Banking and KPMG, the British indie sector has generated £2.14 billion in revenues, a 9.4-percent increase since last year.

Revenues for the British indie sector had increased from £1.6 billion in 2005 to £1.95 billion in 2007. With revenues now reaching £2.14 billion, this marks a compound annual growth rate (CAGR) of 15.6 percent since 2005.

Increased commissions from British broadcasters are responsible for the majority of the growth in the indie sector, with spending up by £156 million since the 2007 Census. Non-television work now accounts for 11 percent (£242 million) of all revenues; while new media revenues have fallen slightly, from £42 million to £39 million, the overall trend is still positive, with a recorded growth of ?20 million since 2005. In addition, international sales totaling ?310 million continue to contribute significantly to revenues, with the U.S. accounting for 84 percent.

The 2007 Census had revealed that multichannel was shown to be a rapidly growing source of revenue, and this year’s figures confirm sustained and significant growth in this area, with revenues now accounting for ?240 million of total industry revenue.

Additionally, independent production companies have seen average operating profits climb from 6 percent in 2005 to 9.3 percent in the 2007-2008 period, although this varies within different revenue bands.

The British indie sector has taken increased interest in debt finance, and the average amount raised has more than doubled from £1.5 million in the 2007 Census to £3.4 million in the 2007-2008 Census. Within the same period, grant awards have fallen from an average of £84,000 to £54,000.

In the 2007 Census, 7.2 percent of independent production companies reported raising equity finance with average value of £1.07 million; the latest figures indicate that this has now reduced to a 4-percent success rate, representing an average value of £150,000. The year also witnessed the continued consolidation of the sector with a high level of transactions.

Pact’s chief executive, John McVay, said: “We are very pleased with this year’s report, which is fast becoming the most reliable source of information on the growth of the industry. With the combined data from the last three years we are now in an even better position to provide evidence of the viability of the industry as it goes from strength to strength.”

Bill Greaves, the head of global technology media and telecoms at Bank of Ireland Corporate Banking, commented: “Our continued sponsorship of this year’s Census reinforces our strategic commitment to the independent sector and we believe this data will enable informed decision making by highlighting future insights and challenges for the industry. The results show increasing challenges in the sector, in particular evidence that the production of fully-funded programming has further declined and the increased need to raise finance or investment to facilitate growth. We believe that Bank of Ireland is well positioned to support the independent sector to achieve this.”

Added David Elms, a media partner at KPMG, “2007 will be remembered as the year that the pace of consolidation in the U.K. independent production sector noticeably quickened. The numbers of completed transactions in the sector speak for themselves as numerous independent producers were bought out by larger, better-funded corporate acquirers in the drive for scale to front up to the opportunities and challenges facing the sector. The current volatility in global capital markets is likely to impact M&A within the sector, as it has across other industries, but longer term the logic for continued consolidation remains unquestionable, albeit there may be some time lag before the pace of activity is fully restored.”

—By Irene Lew