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The evolution of the TV content production sector

A discussion document

Prepared for Ofcom by Oliver & Ohlbaum Associates Ltd

September 2014

Introduction

Data on the UK external and UK independent production sector

The data on the UK indie production sector includes data for non-qualifying independents, i.e. previously independent productions groups

who are now owned by broadcasters (such as Shed, Shine and Carnival). This is to maintain consistency between data sources over time

and the available breakdown of data from public sources.

The indie data does not include external production by traditional broadcaster production units for other broadcasters (such as ITV

Studios, BBC Production)

The report uses the following definitions and distinctions for external content production:

External production

Output produced both by indies and by a broadcaster related production house for another broadcaster (NBCU, Sony, Discovery, ITV etc)

Non-qualifying independent

Previously independent super indie production groups now part of a broadcaster related group (Shed and Shine)

Future non-qualifying independent

Recently purchased super indie production groups that will now be part of a broadcaster related group (All3Media, Endemol)

Programmes made within 2 years of being commissioned retain independent status if an independent production company loses its

qualifying status after commissioning has taken place

The TV content production sector CONFIDENTIAL

2

Definitions and caveats

3

The evolution of the UK TV content production sector

Appendix

- Main trends in originated output

- The UK external sector

- Terms of Trade

Contents

1,147 1191 1347

1508 1395 1,356

1,247

1,539 1,668

103 107

118

107

115 154

165

185

147

36

28

63 70 87

119

152 156

215

351

310

279 369

495 652

670

755

16

32

43

38 32

26 25

41

40

46

16

21

22 17

27 18

2

14

1,527

1,732

1,867

2,016 1,999

2,145 2,227

2,588

2,779

0

500

1,000

1,500

2,000

2,500

3,000

2004(2005

Census)

2006(2007

Census)

2007(2007/2008

Census)

2008(2010 Census

- restated)

2009(2010 Census

- restated)

2010(2011

Census)

2011(2012

Census)

2012(2013

Census)

2013(2014

Census)

£ million

The UK indie sector showed strong growth up until 2008. The recession put pressure on UK commissioning budgets with

indies relying on international revenues. UK commissioning bounce back in 2012 boosted total sector income


Independent producer TV-related revenues*

The independent sector has experienced a significant increase in revenues

*Definitions: ‘Other international income’ - revenue from companies overseas operations and any primary commissions received from non-UK broadcasters; ‘Int’l sales of UK

finished programmes’ - sales of first run UK programming sold as finished product abroad; ‘UK rights income’ – UK secondary sales, publishing, formats, DVD sales etc.

Source: Oliver & Ohlbaum analysis, Pact census

OTHER INT’L

INCOME*

PRIMARY UK

COMMISSIONS 5.5%

CAGR

2004 - 07 2008 - 13

39.0%

-

OTHER UK

PRE-PRODUCTION

UK RIGHTS INCOME*

(23.0%)

13.0%

2.0%

1.1%

20.0%

(9.0%)

22.0%


4

INT’L SALES OF UK

FINISHED PROGRAMMES*

6.9% 6.6%

4.7% 6.7%

REVISED METHODOLOGY

100 108 121

139 148

181 191

230

277

340

425

464

523 570

593

0

100

200

300

400

500

600

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Index (1998 = 100)

Source: BTDA / TRP / UKTI / PACT, Oliver & Ohlbaum analysis

CONFIDENTIAL

1998-2003 CAGR 12.6%

2004-2008 CAGR 22.2%

2008-2012 CAGR 9%


Terms of Trade

Introduced

TV exports have seen significant growth

Following the introduction of Terms of Trade there was an initial significant boost to TV exports followed by healthy growth

in more recent years.

The TV content production sector

5


5% 5% 5% 4% 4% 4%

6% 6% 7% 9% 9% 9%

12% 15% 17%

20% 22% 22%

21% 21%

19% 16% 15% 15%

55% 53% 52% 50% 50% 50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013

Per cent

There has been some consolidation of mid-tier indies

Some consolidation of smaller

companies into mid tier

Small amount of consolidation at top

end of the sector


6

There was some consolidation into mid-tier indies up until 2010/11. The distribution of companies has remained stable in

more recent years

CONFIDENTIAL

Source: Broadcast Magazine, Oliver & Ohlbaum analysis

Distribution of number of indie companies by turnover brackets – 2008-2013

#Indies* 141 122 137 152 140 152

£70m+

£25-70m

£10-25m

£5-10m

£1-5m

*In addition to the companies above, we estimate there are circa 500 small prodcos with a turnover of less than £1m

There has been a much higher concentration into non-qualifying ownership than vice versa. Prior to 2008 most

consolidation did not affect indie status as this was indies buying other indies, creating the so called “super indies”



7

CONFIDENTIAL

The sector has attracted external investment, now consolidated in trade buyers

Source: Oliver & Ohlbaum analysis

NON-

QUALIFYING

QUALIFYING BBCWW

Left Bank Pictures*, Hardy &

Sons, Cliffhanger Productions,

Clerkenwell Films, Baby Cow, Big

Talk**, Sprout Pictures

ITV

12 Yard

DISCOVERY/LG

All3Media

RTL

Fremantle

TIME WARNER

Shed

21 CF

Shine

2006 2014 2007 2008 2009 2010 2011 2012 2013

ITV

So Television, Big Talk**,

The Garden Productions

DISCOVERY

Betty TV

SONY

Victory Television, Left Bank Pictures*

All3Media

Cactus TV

21 CF/Apollo

Endemol

NBCU

Carnival Films

NBCU

Monkey Kingdom, Working Title,

Lucky Giant, Chocolate Media

*BBCWW retains a smaller minority share in Left Bank Pictures after it was sold to Sony

**BBCWW sold stake in Big Talk 2013 when purchased by ITV

SKY

Love Productions Programmes made within 2 years of

being commissioned retain indie status

if an indie prodco loses its qualifying

status


0

0.5

1

1.5

2

2.5

3

3.5

Total indie revenue £bn

Number of indie companies

£10-

25m

Revenue is concentrated among the biggest indies


8

The top 6 indie production companies represent almost 45% of total revenues

CONFIDENTIAL

Source: Broadcast Magazine, Oliver & Ohlbaum analysis

Indie revenues by turnover band – share of revenue and number of companies - 2013

<£1m

£1-5m

£70m+

£25-70m

£5-10m


46% 44% 40%

46% 47%

37%

32% 33%

23%

36% 29%

40%

13% 11%

29%

10%

16% 14%

5% 7% 2%

4% 3% 6%

3% 4% 6% 3%

6% 4% 0% 0% 0% 0% 0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013

Percent

Increased share of UK commission spend, smaller indies are claiming more share


9

The largest indies’ share of UK commission spend has declined over the last year, i.e. the so called “super indies” with

more than £70m in turnover. The indies in the £25-70m turnover bracket have gained the most from this shift in spend

CONFIDENTIAL

£70m+

£25-70m

£10-25m

£5-10m

£1-5m

Less than £1m

Note: *Primary commissions expenditure data excludes all expenditure on news and sports programmes and rights but includes expenditure on

all regional and nations and regions programmes

Source: Ofcom Communications Reports, BARB, Company reports, O&O / Pact Census, Oliver & Ohlbaum analysis

Share of spend on UK externally produced primary commissions turnover band of producer, 2008 to 2013

9%

51%

7%

3% 1% 5%

5% 0%

14%

3% 1% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Indies (including currently qualifying indies and current and future non-qualifying indies) generate approximately £300m in

content rights from UK commissions.



10

CONFIDENTIAL

Indie revenues from UK content rights by category - 2013

Indies have been able to generate secondary revenues on rights retained

£303m

UK SECONDARY TV SALES

PUBLISHING

FORMATS

MOBILE

OTHER MERCHANDISING REPEAT USE OF PROGRAMMING

DVD & VIDEO SALES

DISTRIBUTION ADVANCE

INTERNATIONAL FINISHED

PROGRAMME SALE

NEW MEDIA

OTHER*

Source: Pact census, Oliver & Ohlbaum analysis

* ‘Other’ includes advertising, PRTS, and other activities such as music publishing, live events, gambling, product integrat ion, ancillary & digital rights and cable relay

1st TX

6 12 18 24 36 Months

DTO (from TX+7; May be TX+1 in some cases)

DVD release (tends to be seasonally driven)

Primary licence commercial holdback

(typically 2 years, can be longer)

SVoD release

UK secondary release

Illustrative revenue windows for UK content rights


7.0%

8.4%

9.3%

8.0% 8.5%

13.0%

6.7%

5.0% 5.3%

0%

2%

4%

6%

8%

10%

12%

14%

2004

2006

2007

2008

2009

2010

2011

2012

2013

Percent


11

Indie sector profitability has seen some recovery, but remains challenging

Sector average net margins improved only slightly in 2013


Net margins, 2004 to 2013

12


Appendix



- Terms of Trade

Contents

2,157 2,255 2,239 2,323

2,188

187 200 196

173

153

387 367

522 540

597

94 103

122 122

124 2,825

2,925

3,079 3,157

3,062

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2009 2010 2011 2012 2013

£m

There has only been modest growth in spending on UK content since 2009. This growth has been on the back of

increased multichannel spend on UK content rather than PSB spend, although PSBs remain the main spenders

Trends in originated output


13

CONFIDENTIAL

Spend (incl news and sport*) on UK content by main PSB networks and multichannels – 2009-2013

Growth in spend on UK content has been modest in recent years

Source: Ofcom broadcaster returns, COBA, O&O analysis

PSB FIRST RUN

COMMISSIONS

PSB SECONDARY

RIGHTS

MC SECONDARY

RIGHTS

MC FIRST RUN

COMMISSIONS

0.4%

(5.0)%

11.4%

7.2%

2.0%

CAGR 2009-13

* Sport excludes rights for multichannels, inlcudes rights for PSBs

1,202 1,151 1,304

1,209 1,265 1,127

1,111

1,006

951 1,030

1,058

1,062

196

187

200 196 173

153

289

238

244 185

160

163

2,798

2,581

2,700 2,620 2,656

2,504

0

500

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011 2012 2013

£m

PSBs have been cutting back on programme spending across the board



14

CONFIDENTIAL

Content spend by main PSB networks (incl news and sport)– 2008-2013

PSB spend on content has been cut back

Source: Ofcom broadcaster returns

FIRST RUN IN-HOUSE

COMMISSIONS

FIRST RUN EXTERNAL

COMMISSIONS

ACQUISITIONS

REPEATS

(1.3)%

(0.9)%

(4.9)%

(10.8)%

(2.2)%

CAGR 2008-13

2246 2355 2355 2321 2546

2702 2207 1997 1943 2091

3674 3232 3868

3169 3541

2142

1942 2353

2289

2094

1505

1657 860

1185 1228

12,269

11,393 11,432 10,906

11,500

0

2000

4000

6000

8000

10000

12000

2006 2008 2010 2012 2013

Hours

First run output hours have also declined although with some recovery over the last year. Genre focus has changed in

favour of factual entertainment and factual. The cost per hour has been largely static apart from a dip in 2010



15

CONFIDENTIAL

First run origination hours (excl news and sport), 2006-2013

Total originated first run output has decreased

Source: BARB, Ofcom, Oliver & Ohlbaum analysis

BBC1

ITV1

BBC2

Channel 4

Channel 5

4,401 3,826

3,226 3,483 3,545

1,404 2,298 2,551

2,576 2,719

1,317 1,391 1,713 1,466

1,632

2,048 1,288 1,198 1,370 1,586

1,262 1,174 1,086 1,064

1,191

920 589

384 118

87

915

827 1,274 829

741

12,269

11,393 11,432 10,906

11,500

0

2000

4000

6000

8000

10000

12000

2006 2008 2010 2012 2013

Hours All day – by channel All day – by genre

Factual

Entertainment

Children’s

Drama

Current Affairs*

Fact Entertainment

Other

* The Increase in Current Affairs output in non-peak 2013 is mainly down to programmes such as Cowboy Trap, The Sheriffs are Coming and Don’t Get Done Get Dom on the BBC

Cost per

hour £K 147 129 145 141

921 954 998 945 994

901 954 914 1091 999

799 784 877 915 929

726 736 951

943 912 378 394

476 465 502

3,726 3,822

4,215 4,360 4,336

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2006 2008 2010 2012 2013

Hours

There has been an increase in first run originated peak time output. The genre focus has shifted in favour of Factual

programmes. Cost per hour is showing signs of recovery



16

CONFIDENTIAL

First run origination hours (excl news and sport), 2006-2013

Peak time originated first run output has grown

Source: BARB, Oliver & Ohlbaum analysis

BBC1

ITV1

BBC2

Channel 4

Channel 5

1,165 793 891 1,042 1,152

1,071

1,009 895 893

980

701

746 848 1,028

912

355 857

949

987 900 263 318

533

304 321

171 98

99 106 71

3,726 3,822

4,215 4,360 4,336

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2006 2008 2010 2012 2013

Hours Peak time – by channel Peak time – by genre

Factual

Entertainment

Drama

Current Affairs

Fact Entertainment

Other

Cost per

hour £K 318 265 276 288

The volume of new commissions has declined at an annual rate of 8.3% since 2006 with a slight recovery in 2013.

Returning commissions have continued to grow over the period



17

CONFIDENTIAL

UK: New versus returning commissions (excl news and sport), first run output hours on main PSB networks

The share of new versus returning commissions has declined

Source: BARB (Attentional), Oliver & Ohlbaum analysis

4244

2823 2922 2155 2308

8024

8570 8510

8750 9192

12,269

11,393 11,432 10,905

11,500

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2006 2008 2010 2012 2013

Hours

NEW

RETURNING

(8.3)%

2.0%

CAGR 2006-13

(0.9)%

18


Appendix



- Terms of Trade

Contents

1,132

828 1,012 920 879

94 536

541 888

798

492

580

575

514 711

68

86

345

347 400

735 324

253

329

376

98

137

130

195

222

1

2

25

59

44

2,620

2,492

2,882

3,251

3,430

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2006 2008 2010 2012 2013

Hours

Following a drop between 2006 and 2009, the major independent producer groups have recovered their volume of first run

origination output on the main UK networks

The UK external sector


19

CONFIDENTIAL

UK: First run output hours on main PSB networks by independent producer group*

The major independent producers have recovered their output hours on PSBs


ENDEMOL

SHINE

ALL3MEDIA

FREMANTLE

ZODIAK

SHED

NBCU

• Endemol and Fremantle have both seen a

decline in programming output on the main UK

networks since 2006

• All3Media made good recovery in 2013. It lost

significant hours in 2012 with the sell back of

Cactus TV to its founders

• Shed, Shine, Zodiak and NBCUniversal have all

improved their position, albeit coming from a

lower base

• Shine’s big increase in hours from 2010 to 2011

was due to the commissioning of chat/current

affairs shows Live with Gabby, The Vanessa

Show and The Wright Stuff Extra, although it

experienced a drop in 2013

*Measured according to prodcos that were part of the groups in each respective year

External hours on the BBC have increased slightly, while there has been a decrease in external hours on ITV. Channel 4

and Channel 5 have remained largely unchanged in recent years



20

CONFIDENTIAL

External commissioning share of all hours - 2006 to 2013

There has been some movement in the use of external commissions by networks


23% 25% 23%

26% 28%

42%

33% 35%

33% 30%

100% 100% 100% 100% 100%

82%

97% 99% 99% 99%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2008 2010 2012 2013

Share of hours

ITV

BBC

Channel 4

Channel 5

The trend remains when looking at qualifying hours, excluding news and sport



21

CONFIDENTIAL

External commissioning share of hours (excl news and sport) - 2006 to 2013

The use of external commissions by networks – excl news and sport


34%

39% 39%

46% 48%

54%

43%

47%

42% 42%

100% 100% 100% 100% 100%

92% 94%

98% 99% 99%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2008 2010 2012 2013

Share of hours

ITV

BBC

Channel 4

Channel 5

The major independents have seen their share of new commissions fall significantly since 2006 (with the exception of

NBCUniversal). Shed and All3Media have remained more stable



22

CONFIDENTIAL

UK: New commissions, first run output hours on main PSB networks by independent producer group

The share of new commissions by the major independent producers has fallen


151 132 190

124 178

112 125 54

106 82

202

90

284

41 81

62

49

58

89

81

169

114

154

90 62

173

114

35

48 26

1

14

27

24 17

870

640

802

522 528

0

100

200

300

400

500

600

700

800

900

1,000

2006 2008 2010 2012 2013

Hours

ENDEMOL

SHINE

ALL3MEDIA

FREMANTLE

ZODIAK

SHED

NBCU

2.4%

(4.3)%

(12.2)%

3.9%

(13.3)%

(23.7)%

CAGR 2006-13

61.9%

• Fremantle, Zodiak and Endemol have seen the biggest drop in new commissions from the main networks. All other major indie groups have performed better

than the market average growth.

• All3Media has recovered somewhat in 2013 and continues to be the biggest single supplier of new indie output. The market share of the next four groups has

evened out in the last few years.


12%

26% 29% 30% 31%

41%

37% 28%

34% 29%

25% 12%

12%

15% 17%

7% 6%

7%

7% 8%

2% 3%

3%

3% 5%

7%

5%

3%

1% 1%

6% 11%

18%

10% 10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2008 2010 2012 2013

Hours

Genre specialisms of independent producers – a move out of entertainment


23

There has been a move out of entertainment and into factual entertainment specialism among indie producers. Factual

has regained some ground in recent years

CONFIDENTIAL

Source: BARB, Oliver & Ohlbaum analysis

Factual Entertainment

Factual

Entertainment

Drama

Current Affairs

All day – by genre

Hours 6,065 6,009 6,025 6,211 6,056

Children’s

Other

The increase in “other” in 2010 is largely down to an increase of Nightscreen programming and “The Zone – Netplay / QVC” on ITV

Since 2006, Endemol has seen it return to predominantly having entertainment shows commissioned (mostly Big

Brother), whilst Fremantle has diversified away from entertainment towards factual entertainment



24

CONFIDENTIAL

Major independent producers: Genre mix*, 2006 versus 2013: Endemol and Fremantle

Genre specialisms of major independent producer groups (i)

Note: Genre mix on 5 main PSB networks only


26%

51%

84%

74%

38%

20%

7%

13%

3%

26% 12%

2% 2%

29%

7% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Share of hours

Children’s

Drama

Entertainment

Factual

ENDEMOL FREMANTLE

2006 2013 2006 2013


Current Affairs

Other

Drama

Entertainment

Factual Factual Entertainment

Other

All3Media and Zodiak have both had more hobby and leisure output commissioned, moving away from entertainment,

factual and drama, and in All3Media’s case sport



25

CONFIDENTIAL

Major independent producers: Genre mix*, 2006 versus 2013: All3Media and Zodiak

Genre specialisms of major independent producer groups (ii)



17% 11%

6%

36%

13%

13%

49%

10% 23%

53%

23%

48%

24%

22%

5%

1%

1%

1%

4%

1%

3%

1%

20%

13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Share of hours

ALL3MEDIA ZODIAK

2006 2013 2006 2013

Drama

Entertainment

Factual


Current Affairs

Other

Children’s

Drama

Entertainment

Factual


Current Affairs

Other Children’s

Shed is still mainly focussed on factual programming, whilst Shine has seen most commissions coming from its

entertainment strands. Both have seen a drop in drama output



26

CONFIDENTIAL

Major independent producers: Genre mix*, 2006 versus 2013: Shed and Shine

Genre specialisms of major independent producer groups (iii)



0%

14%

61% 60%

53%

45%

7% 6%

17%

18%

18%

30% 23%

19%

9%

3%

1% 3% 3% 4% 5%

1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Share of hours

SHED SHINE

2006 2013 2006 2013

Drama

Entertainment

Factual


Current Affairs Other

Children’s

Drama

Entertainment

Factual


Other



27

All3Media – Key deals over time

Over the longer term, qualifying status has only been affected by broadcaster / studio deals in recent years. Prior to this

was the creation of the “super-indies” (indies buying other indies) which did not affect indie status

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Bentley Productions

North One

Cactus TV

Company Pictures

Lion Television

Lime Pictures

Maverick

Objective Productions

Zoo Productions

Studio Lambert

One Potato Two Potato

Optomen

John Stanley Productions

Little dot studios

Apollo 20

Cactus TV

Management buy out of Chrysalis TV Purchased by Discovery / LG

2014



28

Fremantle – Key deals over time

The sale of Channel 5 has marked the only significant event of a non-qualifying production group becoming a qualifying

indie

2011 2012 2013 2014

Thames

Talkback

Boundless

Retort

Newman Street

C5 sold

2002 2003 2004 2005 2006 2007 2008 2009 2010



29

Endemol – Key deals over time

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Initial

Zeppotron

Cheetah

DSP

Remarkable Television

Tiger Aspect

Tigress

Artists Studio

Purchased by 21 CF / Apollo

2014



30

Shine – Key deals over time

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Shine TV

Shine North

Kudos

Princess Productions

Dragonfly

Brown Eyed Boy

Channel Flip

Bossa Studios

Organic creation Purchased by 21CF

2014



31

Warner Bros. Television Productions UK (formerly Shed) – Key deals over time

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Shed Productions

Watershed

Yalli Productions

Shed Media Scotland

Ricochet

Wall to Wall

Twenty Twenty Television

Studio Lambert

Renegade

Organic creation Purchased by Time Warner

2014



32

Zodiak – Key deals over time

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

IWC Media

Touchpaper Television

The Foundation

Bullseye Productions

Lucky Day Productions

Red House

RDF Television

The Comedy Unit

Presentable Productions

Bwark Productions

2014

33


Appendix



- Terms of Trade

Contents

2001

Pop Idol premieres

on UK television

1999

Millionaire

premiers in the

US on ABC

1993

Independent quotas

become a statutory

requirement for

PSB channels

1986

Peacock

Committee

recommends 40%

independent quota

1982

Channel 4 launch

stimulates growth

of independent

sector

Terms of Trade Timeline of key events in the run up to Terms of Trade

CONFIDENTIAL The TV content production sector

2000s 1990s 1980s

1990

Broadcasting Act

introduces 25%

independent

quota

1997

Launch of Channel

5 as new PSB

broadcaster

1996

Broadcasting Act

introduces 10%

independent

quota on DTT

channels

2004

Negotiated

‘Terms of Trade’

come in to force

2003

Communications

Act mandates

broadcaster Codes

of Practice

1998

Channel 4 agrees

out of London

quota of 30%

2002

ITC PSR

recommends

negotiated terms

of trade to

counter-balance

inequality in

bargaining power

1998

Millionaire

premiers in the

UK produced by

Celador

2003

Chrysalis TV

(All3Media)

MBI backed by

Bridgepoint

(Euro 72m)

2006

Following Ofcom

TPSR, Heads of Terms

agreed between

broadcasters and Pact

for new media rights

34

Prior to ToT the indie sector was highly fragmented and was highly dependent on the main PSB network groups. There

was little scope to negotiate on production fees or take strong positions in rights against which to build up an asset base

89% 90% 85%

82% 85%

8% 6%

10% 10%

7%

3% 4% 5% 8% 8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2008 2010 2012 2013

Primary UK commissions continue to constitute the main source of revenue covered by Terms of Trade, although

international sales are now as important as UK secondary rights income

Terms of Trade


35

CONFIDENTIAL

Indie revenues by window covered by Terms of Trade – 2006-2013

Revenue covered by Terms of Trade by window

PRIMARY UK

COMMISSIONS

UK RIGHTS INCOME*

INT’L SALES OF UK

FINISHED PROGRAMMES*

£1,334m £1,678m £1,597m £1,876m £1,971m

*


Terms of Trade


36

Windows and platforms collapsing

1st TX in

originating

country

UK

commissions

US Imports

6 12 18 24 36 Months

DTO (from TX+7; May be TX+1 in some cases)


Primary licence commercial holdback (typically 2 years, can be longer)

SVoD release (moving earlier)

UK secondary release (UKTV)

1st Pay window (moving to 12 months exclusive)

DTO (from 1st run series end)


SVoD release (moving earlier)

FTA or 2nd pay TV window Sky use threat of side-loading

from DVR to secure more VoD

rights, otherwise can use this

to limit SVoD window value

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