Pact today announced the publication of its third annual Independent Production Census 2007/08, which provides an examination of the overall health of the sector. The report highlights the strong growth of the sector, with revenues increasing from £1.6bn in 2005 to £1.95bn in 2007, and now reaching £2.14bn, marking a 9.4% growth since last year and a compound annual growth rate (CAGR) of 15.6% since 2005.
The Census, based on financial data from the period January 2007–December 2007, reports on growth, profitability and consolidation, analysing critical success factors and considering the investment opportunities.
Revenue Sources and Profitability
Increased commissions from UK broadcasters have generated the majority of growth, with spending up by £156m since the 2007 Census. Non-TV work now accounts for 11% (£242m) of all revenues, and while New Media revenues have fallen slightly, from £42m to £39m, the overall trend is still up with growth of £20m since 2005. In addition, international sales, totaling £310m, continue to contribute significantly, with the USA accounting for 84%.
In the 2007 Census, 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 £240m of total industry revenue.
Aligned with continued growth, independent production companies have seen average operating profits up from 6% in 2005 to 9.3% in 2007/8 although this varies within different revenue bands.
Current Financing and Ownership
The sector has taken increased interest in debt finance, and the average amount raised has more than doubled from £1.5m in 2007 Census to £3.4m in the 2007/08 Census. Within the same period grant awards have fallen from an average of £84m to £54m. In the 2007 Census 7.2% of independent production companies reported raising equity finance with average value of £1.07m; the latest figures confirm that this has now reduced to a 4% success rate representing an average value of £150k. The year also witnessed the continued consolidation of the sector with a high level of transactions.
The Census is published by Pact, and sponsored by Bank of Ireland Corporate Banking and KPMG LLP (UK). This year’s report includes comment pieces from all three parties.
Pact 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, 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 or 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.”
David Elms, Media Partner, KPMG comments: “2007 will be remembered as the year that the pace of consolidation in the UK 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.”
-ENDS-
Further information:
Catherine Mulrine Marketing Executive, Pact
020 7067 4379 | catherine@pact.co.uk
Notes to editors:
Pact is the UK trade association that represents the commercial interests of independent feature film, television, animation and interactive media companies. Pact is the largest representative group of screen-based content producers in the UK and the largest trade association in the film, television and interactive media sectors.
Bank of Ireland Corporate Banking has a dedicated Technology, Media and Telecoms Team, headed up by Bill Greaves, representing the most experienced team of corporate media bankers in the UK. Their remit is the provision of debt facilities, including working capital, contract discounting, asset finance (especially Intellectual Property Assets) and term lending (including both corporate and leveraged transactions) to the whole of the media sector, which includes publishing, marketing services, radio, TV broadcasting and production, music, technology and telecoms, games publishing and ancillary services, in the UK, Europe and the US. The team also specialises in providing finance for structured tax products in the film finance market.
Bank of Ireland has an established representative office in Los Angeles to facilitate the provision of short-term structured film and television production finance facilities to production companies an in April 2007 established a media team operating in Stamford, Connecticut. The team offers senior and mezzanine financing to media companies in the publishing, information services, broadcasting, out-of-home, cable television and digital media sectors and has a specific focus on transactions in the mid-market space.
Bank of Ireland Group is the leading provider of financial services products in the Republic of Ireland and has a significant and growing presence in the UK market. It employs c. 16,000 staff, has assets of EUR 200 billion and generated pre-tax profits of EUR 1.09 billion in the half-year ended 30 September 2007.
