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Monday, 3 August 2009

Reformatting television

I am not a great fan of television. I do not own a TV and rarely have the chance to watch it, although when I do I find it has the fascinating awfulness of a car crash. I do listen to the radio from time to time and came across a programme on Saturday morning on Radio 4 which described the growth and development of independent programme makers.

UK independent programme makers such as Hat Trick and Celador were given their big break by the Conservative government in the 1980’s who decreed that not less 25% “of the total amount of time allocated to the broadcasting of qualifying programmes included in the channel is allocated to the broadcasting of a range and diversity of independent productions" on BBC and Channel4, with the same provision extended to ITV in 2003 and policed by Ofcom.

The idea was laudable because it meant that a sizeable proportion of network programming would be conceived and produced by people outside the BBC and ITV, hopefully leading to more entertaining and perhaps better value programming. What was not foreseen was how the businesses would develop, but perhaps it could have been foreseen from the ways other similar businesses behave.

The two closest businesses that I can see are the software industry and merchant/investment banking. Let us start with the latter. Merchant bankers (i.e. those with relatively little capital) started out as intermediaries, facilitating transactions, advising customers on the best way to raise finance, advising on acquisitions and disposals. A merchant banker has to live off his wits and be ahead of the game, always pitching new ideas to stay ahead of the pack.

And worst of all, he is only as good as his last deal. When that deal is closed, he has to start again on the next deal, with nothing to show for it other than a success fee and a "tombstone". Compare that with the investment banker who can use his bank’s balance sheet to underwrite and trade securities and derivatives, or who persuades others to allow him to manage their investments in return for annual and performance fees. This is just as competitive a business but with greater stability of income. No wonder that many "merchant" bankers find that the idea of investment banking becomes nmore attractiv when they no longer have the stamina to chase deals.

Consider also the software industry. Twenty five years ago the biggest names in software outside the computer manufacturers were contracting software houses such as Logica and Scicon who would deploy large teams of programmers to develop bespoke software systems, but much like the merchant bankers, once the project was completed they had little to show for their troubles apart from their fees and a mention on of the project on their corporate CV. Compare that with the Microsoft and Oracle of today, where the value of the company lies in the products that they have created not in their ability to implement a finished computer system.

There are obvious parallels with independent TV production companies. Clearly the idea behind requiring independent production was to encourage creative minds to work unfettered by large bureaucracies, but that entailed risks for the independent companies, namely that ideas might not be bought or that the investment in an idea might not be recouped. Worst of all is the merchant bankers’ problem that once a programme is made there is nothing enduring to show for it apart from an entry in a BBC commissioning editor’s Rolodex.

The independent production company is only as good as its last production, which is why they follow the software company’s approach and maximise the value of their product, and at the same time worry less about the quality of any particular “implementation”. In other words, they do not aim to be successful by producing great programmes to fill the schedule of the BBC or ITV, but to produce formats that can be repeated and sold overseas.

Whether or not it makes any money from the UK programmes, what drives the business is the creation and exploitation of a “format”. The quality of the programming is secondary the replicability of the format, and it shows in the quality of the UK TV programming.

To understand how much the business is driven by formats, look no further than Celador and “Who wants to be a millionaire?”. Celador are not interested in the content of programmes sold overseas, but they are interested in royalties for the format. Better still, the music that permeates the show fills the coffers of Lusam Music, Celador’s affiliated “music publisher”.

After taking into account the airtime taken by news reporting, films, soap operas, sport and childrens’ programming, much of the rest of airtime is taken up by the 25% independent quota with its low grade programmes in marketable formats, which is why television is not worth watching any more.

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