Blimey, another year has flown by – and what a year it has been!
In December 2020 we were all preparing for a lockdown Christmas whilst receiving news of the recently approved first vaccine. Twelve months on and with the threat of further lockdowns in abeyance, it may feel like we have not made much progress; but there really is quite a lot to celebrate.
Whilst 2020 was undeniably a metaphorical train-wreck for many businesses involved in TV and film production, it has been pleasing to see the losses incurred have been mostly recovered in 2021, in what – according to the BBC, has turned out to be a bumper year with £4bn spent on production, almost double the amount spent in 2019.
This in itself would have been extraordinary; but this increased service has been successfully delivered, not just against the continuing backdrop of CoVid and its increasingly transmissible variants, but also whilst production and post-production companies have had to contend with redesigning their workflows, accommodating social-distancing, and remote working for staff, clients, and talent. They have also had to deal with impaired availability of experienced crew and a global shortage of semi-conductors, which has caused a subsequent delay in equipment supply-chains – this being further impacted by an unsuccessful three-point-turn attempt in the Suez Canal!
In a recent Deloitte report, computer chip shortages are expected to continue at least through 2022, pushing the lead times out for the shipment of some components into 2023. This is already significantly affecting prices in the second-hand car market and we should all expect to see similar rising prices across technical broadcast and film equipment, as supply chains are being stretched to breaking point.
None of this has slowed the voracious demand for studio space and production facilities in the UK though.
Pinewood Group has announced the further expansion of both its Pinewood and Shepperton sites – and the impact of the major US based content owners, FHAND, – Facebook, HBO, Apple, Netflix and Disney, cannot be overstated. A recent BBC report confirmed that Netflix contributed £132M to the South West economy this year, whilst HBO’s Game Of Thrones generated £251M for the Northern Irish economy. Meanwhile it seems that not a week goes by without the launch of another new studio facility somewhere in the UK, or the expansion of an existing one. These include the new SKY Studios in Elstree, RD Studios in West London and Versa Studios in Leeds and Manchester. We all have the ongoing international magnet of the HMRC Film Tax Relief scheme, more recently in tandem with completion insurance backed by the Film & TV Production Restart Scheme, to thank for this continued growth.
Pinewood Group has announced the further expansion of both its Pinewood and Shepperton sites – and the impact of the major US based content owners, FHAND, – Facebook, HBO, Apple, Netflix and Disney, cannot be overstated. A recent BBC report confirmed that Netflix contributed £132M to the South West economy this year, whilst HBO’s Game Of Thrones generated £251M for the Northern Irish economy. Meanwhile it seems that not a week goes by without the launch of another new studio facility somewhere in the UK, or the expansion of an existing one. These include the new SKY Studios in Elstree, RD Studios in West London and Versa Studios in Leeds and Manchester. We all have the ongoing international magnet of the HMRC Film Tax Relief scheme, more recently in tandem with completion insurance backed by the Film & TV Production Restart Scheme, to thank for this continued growth.
It’s all looking so positive…
However, the recent announcement that a significant live broadcast services company had ceased trading with immediate effect, cannot go unremarked. This news was quickly followed by rumour and counter rumour of financial “irregularities”.
The BBC and the Times/Sunday Times both attempted to piece together disparate scraps of information and came up with half a story about the “Glastonbury Broadcaster”. Early reports from the BBC referred to two banks who had been involved, and the Times went one better and named three. However, this figure may end up in excess of 55 different lenders that have been the victims of a fraud exceeding £500m, of which almost £300m is still outstanding with limited expectation of any recovery. The numbers are extraordinary; without doubt the largest financial bombshell ever to hit the media sector, and an awful shock for the staff, just before Christmas.
Before anyone says, “the banks should have done their due diligence, it is their own silly fault” it is important to note that this appears to have been a systematic criminal event, probably dating back over 15 years. The fallout from which could have implications for anyone looking to borrow money in the media sector. The impact on the banking sector of two camera rental businesses phoenix-ing in 2020 felt significant at the time, but this new issue now makes them look like cottage industries. It will get very messy and very legal over the coming months.
Nevertheless, the demand for content remains the driver and well-run businesses will still be able to borrow money to provide the services to complete the work that is so clearly abundant. Just be prepared for things to take a little longer, and we are already seeing a requirement from the banks for a little more hoop-jumping, especially around asset inspections and proof of title. We are also seeing the majority of funders increasing their rates slightly.
The Government-backed CBILS and Bounceback schemes were, without doubt, a great success in helping businesses borrow during the past 18 months. It is concerning, however, just how susceptible the Bounceback loans were to fraud, and we may well see some eye-watering costs of these to the State. The CBILS seemed better administered, notwithstanding the extraordinary saga of Greensill Capital, and this scheme certainly helped many SME businesses continue to borrow through the year. The Recovery Loan Scheme has now replaced CBILS and, whilst not being quite as beneficial for the borrower or the lender, it does assist more CoVid affected businesses to borrow, helping them grow.
So, in roundup, it has been a good year for broadcast business, despite some unforeseen challenges, and we at Adamantean wish you all continued success for the year ahead.
We remain here to help, at the start of what looks to be the most demanding and unpredictable year since… well, the last two.