building a world-class content sector for the digital age

UK production sector manifesto2010

03 preface

the sector’s success so far04 a creative catalyst05 driving economic growth

growth in the digital age06 our core aims08 television10 digital media12 feature film14 exports

Pact is the trade association that represents producers inindependent television, feature film and digital media. Ourmembership creates, exports and invests in UK content, andgenerates annual revenues of more than £2.1 billion and aGVA of £4.3 billion.

contents

Crucially in the current climate, the sector is reinvestingrevenues from its global success back into UK contentcreation. The Government’s Digital Britain review concludedthe cost to UK broadcasters of programmes had dropped25% as a result.

This increasingly important role as a driver of activity in thecreative economy is, of course, in addition to the sector’slong-standing renown as a creative force. The hundreds ofcompeting companies in the independent sector help ensureUK audiences enjoy the highest quality home-grown content,and that that content represents a diverse range ofviewpoints from across the entire country.

Going forward, the digital era creates challenges andopportunities. Investment in UK content is under threat asviewing fragments. But emerging services potentially offergreater choice for viewers, and new ways to raise investmentby monetising content.

Pact’s UK Production Sector Manifesto sets out a plan forencouraging growth in the digital age across contentproduction in television, film and digital media.

Firstly, this paper proposes using public funding moreeffectively. While this means containing costs, we also wantfunding to be more ambitious. Investing in individualproductions is vital, but with some relatively simple

adjustments public funding can deliver an improved businessmodel for production companies, empowering them to betterattract investment and take advantage of digitalopportunities.

Secondly, we need to unlock the value of IntellectualProperty (IP). A competitive IP market, in which creatorslicense rights to re-use content to multiple services, increasesaudience choice and facilitates the generation of revenuesthat can be invested back into production. Public entities, orcompanies benefiting from direct or indirect public support,should not restrict the re-use of UK external producers’ IP.

This manifesto details proposals for public funding and IP sector by sector. We are not asking for a penny of publicmoney over and above current spending. In fact, ourproposals may increase efficiency, and generate newrevenues for the public sector. We therefore believe ourmanifesto contains practical, but potentially far reaching,proposals for delivering a world-class production sector inthe digital age.

Debbie Manners Pact chair and chief operating officer Hat Trick ProductionsMarch 2010

A decade ago, UK independent television production waslargely a cottage industry. Now, the sector is competing to bethe biggest in the world, with a GVA of £4.3 billion. Since theCommunications Act in 2003, independent producers have builtglobally successful companies, doubled sector turnover, andhelped increase overall television exports by 39%.

preface

03

UK PRODUCTION SECTOR MANIFESTO

UK PRODUCTION SECTOR MANIFESTO

the sector’s success so far:a creative catalyst

UK-made content represents, questions and, at its best,unites our society in a way that imported programming never can. Ofcom’s consumer research shows that anoverwhelming majority of people – as high as 84% – supportthis view.ii

Producers in the independent television, film and digitalmedia sectors help ensure UK creative content is worldclass. They are behind half of all UK television programmes,iii

Academy Award-winning films like Slumdog Millionaire, andinnovative digital content, such as delivering regionalhealthcare services via broadband.

Stimulating creative competitionThe contribution of independent companies is not just aboutsheer volume of production: having a range of contentsuppliers competing for commissions drives creativeexcellence. Testifying to their creativity, independentsregularly win around 50% of total commissions frombroadcasters, twice the minimum 25% independent quota.iv

Last year, external producers won 17 out of 20 BAFTAs.

Representing diverse viewpointsIndependent producers provide a genuine range of voices so that diverse communities from across the entire UK arerepresented. About 40% of Pact member companies are

based outside London; in the last six months, the PactDiversity Advisor has helped nearly 100 companies formallycommit to delivering measurable diversity goals.

Delivering efficiencyWith hundreds of companies competing with each other, the independent sector delivers cost-effective, high qualitycontent, and offers a benchmark for broadcasters’ in-houseproduction departments. An independent report for theDepartment for Culture, Media and Sport found thatcommissioning from the independent production sectorcould reduce programme costs for the BBC.v

Leadership and skillsPact’s training policy focuses on linking businesses withSkillset and the training sector on a coordinated basis, aswell as helping develop training to meet industry’s needs. We support a number of nationwide career developmentprogrammes, such as Nesta’s Creative Business MentorNetwork.

We don’t celebrate enough these British indies, whose flow ofgood ideas has made such an impacton viewing in the UK and exportsaround the world.” Andy Burnham, then Culture Secretary i

04

Indie creative success in 2009� TV: External producers won 17 out of 20 TV

BAFTAs

� Film: Slumdog Millionaire won eight Oscars

� Digital: Pact members won two out of threeinternational digital Emmys, the digital world’sequivalent to the Oscars

The UK independent television production sector is one ofthe biggest in the world, with a GVA of £4.3 billion.vi In the lastdecade, annual turnover has doubled to hit £2.1 billionvii andthe sector has become a bigger employer than the mainbroadcasters’ combined television divisions.viii Whereasindependent production was once a cottage industry, well-capitalised companies of some scale have emerged: annualturnover for the top seven independent producers is now£1.1 billion, more than double 2003’s equivalent figure, asshown below.ix

Annual turnover of biggest independent producers

Sector growth at a glance� Turnover has doubled to £2.1 billion since 2003

� GVA of £4.3 billion

� Sector employs 20,000 people, more than combinedtelevision activities of main broadcasters

� Top seven companies generate £1.1 billion pa

How did this transformation happen? The 2003Communications Act introduced the principle that producersshould be able to re-use the Intellectual Property (IP) rights totheir programmes. This created an IP market, with producersbuilding globally successful businesses on the back ofexploiting rights.

Global salesThe impact of the Communications Act is most marked inexports. Since 2003, overall UK television exports (includingin-house and independent programmes) have risen by 39%,reaching nearly £1 billion per year.x Independent producershave played an important role in driving this growth,accounting for more than 80% of sales by volume in somekey growth areas.xi

Domestic investmentRevenues from global exports create a virtuous circle,enabling creators to reinvest in UK content creation. Largelyon the back of selling IP rights, the independent productionsector raises investment of up to £190m per year for creatingUK television programming.xii This has increased the riskprofile of the independent sector and provided a priceflexibility in the programme market that has proved crucial inthe current climate. The Government’s Digital Britain reviewconcluded that the cost to broadcasters of makingprogrammes had dropped by 25% as a result.xiii

THE SECTOR’S SUCCESS SO FAR

driving economic growth

An important part of the UK’sinternational success in content todate has been driven by a successfuland entrepreneurial independentproduction sector.”Digital Britain, interim report

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2003

7 6 5 4 3 2 1

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UK PRODUCTION SECTOR MANIFESTO

The digital era is ushering in a structuralshift in content delivery, as audiencesincreasingly take control of when andhow they access content.

This evolution creates challenges andopportunities. Investment in UKcontent from broadcasters is fallingdue to advertising fragmenting acrossdifferent services.

Yet digital services also offer choiceand creative innovation for audiences.Licensing re-use rights to suchservices, so they can make UK contentavailable, can help them develop.Monetising Intellectual Property (IP)rights in this way opens up potentialnew revenue streams that creators canuse to fund the production of content.

Our aim is to create public value by consolidating theproduction sector’s position as a driver of economic growthin the digital age. To achieve this, our manifesto addressestwo issues: maximising effectiveness in public funding forproduction; and ensuring a competitive IP market.

USING PUBLIC FUNDING EFFECTIVELY

With investment under pressure, we must use existing publicfunds as effectively as possible. Our proposals are costneutral, and can mostly be achieved through relatively simplyadjustments in the following areas:

� Containing costs: We want to maximise the amount ofpublic funding that is spent on content by curtailingunnecessary bureaucracy.

� Fostering sector growth: Public investment inproduction can help develop stronger business models,enabling companies to better attract investment and takeadvantage of digital opportunities.

� Prioritising content: The BBC should prioritiseinvestment in UK-made content. The BBC’s strategyreview must go further in this area.

The consequences of reduced funding Ofcom predicts a decline in investment in UK content of up to£235m per annum by 2012.xiv This decline is expected tolead to a reduction in the volume, range and quality of UKcontent, with the market cutting costs per hour and movingto cheaper genres and imports. For the foreseeable future,digital or online services are unlikely to invest sufficiently tomitigate this decline. In some areas, the BBC is expected tobecome a monopoly provider. Core public service genres arealready under severe pressure: new UK children’sprogramming has fallen by 50% since 2004.xv

growth in the digital age:our core aims

06

GROWTH IN THE DIGITAL AGE: OUR CORE AIMS

UNLOCKING THE POWER OF IP

In just a few years, the UK has undergone a step change inhow television programmes are financed. The 2003Communications Act enabled the television productionsector to exploit IP rights to its programmes. By licensingthose rights to broadcasters and other services around theworld, the independent television production sector nowinvests up to £190m per year in UK content.xvi Whereas oncethe producer nearly always relied on the broadcaster as theprimary source of funding, more and more producers areinvesting in content themselves.

How we approach IP is key to whether the UK content sectorremains a leading global player in the digital age, or losesground. We must have a balance between the legitimateneeds of commissioners and producers, and we must notlose sight of the overriding goals of maximising economicgrowth, creating high quality UK content, and increasingconsumer choice. Commissioners need an initial exclusivewindow to exploit content, and the flexibility to secure IPrights for innovative new services. This has successfullyoccurred in broadcasting, where the Communications Actlaid down high level principles, but left the details to regularmarket negotiations in the form of Terms of Trade. TheGovernment’s Digital Britain report concluded that this policyframework ensured sufficient flexibility for all parties for thedigital era.

For their part, producers need to be able to re-use anappropriate level of IP rights if they are to raise productionfunding and develop their businesses, and they need to beable to do so on a reasonable basis that does not destroytheir profit margins. Production sector profits have stalled, asbroadcasters have reduced the prices they pay forprogrammes and producers have provided more production

investment. Average profit margins fell from 9.7% in 2007 to8.2% in 2008, and are expected to continue declining.xvii

Our approach to IP is therefore based on two underlyingprinciples:

� Unrestricted re-use: Public sector entities, orcompanies that benefit substantially from direct or indirectpublic support, should not prevent the re-use of IP rightsto content from UK external creators after their initialexclusive window.

� Pay less, get less: If commissioners seek to reduce theprices they pay, they should also reduce the rights theyreceive in return.

The consequences of restricted IP ownershipFor audiences, restricting the re-use of external creators’ IPrights limits the number of services able to make UK contentavailable, potentially reducing innovation and choice. For theproduction sector, the loss of IP rights would underminerecent growth, and prevent the sector from raisinginvestment on the back of IP exploitation, cutting off a sourceof funding for UK content. This would have a furtherconsequence for audiences: there is a risk that lostinvestment would not be replaced by broadcasters, who areincentivised to restrict IP re-use in order to protect marketshare, and are unlikely to increase spending when advertisingincome is under pressure.

07

The Terms of Trade havebenefited both broadcaster andproducer.” Digital Britain, final report

08

The independent television productionsector is one of the success stories ofthe UK’s creative industries. On aglobal level, it has delivered strongexport growth and become asignificant player in overseas markets,particularly the US. Domestically, it isan important investor in UK productionand a bigger employer than the mainbroadcasters’ combined televisiondivisions.xviii

We want to build on this success sothat the television production sectorcan continue to help drive growth in thecreative industries, with companiesmaximising the value of IntellectualProperty (IP) across different platformsand global markets, and reinvestingback into UK production.

USING PUBLIC FUNDING EFFECTIVELY

Refocus the BBC on UK content, prioritising children’sWith the market struggling to maintain investment in UKprogramming, the BBC’s current strategy review rightlyprioritises funding for home-grown content. Yet the BBC’sproposals do not go far enough. We estimate that theproposal to increase investment in content and distribution to90% of licence fee expenditure is only a 2% rise on currentlevels. Of the reprioritized £600m, children’s programming isto receive less than 2% (£10m), despite being a supposedpriority. Investment in children’s and other areas of UKcontent could be substantially raised by cutting back theBBC’s annual spending on imports of £100m beyond itsproposed reduction of just 20%.

OUR PROPOSALS: � The BBC should provide a truer picture of spending by

benchmarking increased funding for content againstgroup expenditure (excluding grants for BBC WorldService and Monitoring), rather than the licence fee.

� The BBC should substantially increase overall spendingon UK content, not just divert investment from othercontent. To do this, the BBC should reduce costs insuch areas as imports and costly building programmes.

� The BBC should raise investment in children’s so that it is a genuine priority.

Increase competition in commissioningBroadcasters with in-house production have historicallytended to unduly favour internal producers. Yet the hundredsof competing companies in the independent sector haveproven that they can provide high quality, cost-efficientcontent without broadcasters incurring overhead costs fromin-house production. Illustrating this, an independent report

television

UK PRODUCTION SECTOR MANIFESTO

09

for the Department for Culture, Media and Sport found thatcommissioning from independents could reduce costs for theBBC.xix Commissioning from independents also createsspillover effects for national, regional and local economies,ranging from independents’ subsequent exploitation ofprogrammes, to goods and services used by producers andthe jobs they support directly and indirectly. Channel 4’sstatus as a publisher broadcaster without in-houseproduction exemplifies this virtuous circle, providing seedcapital for the independent production sector, which in turnhas delivered the programmes that have defined thebroadcaster’s reputation for innovation.

OUR PROPOSALS: � Channel 4’s publisher broadcaster status should be

maintained across all its output, including broadcast and new media.

� The BBC’s Window of Creative Competition, whichenables in-house and external producers to compete for 25% of commissions on top of the 25% independentquota, has proven successful and the BBC shouldconsider how to further increase competition incommissioning.

Investing across the entire UKCommissioning programmes from the devolved nations andEnglish regions helps grow different production centresacross the country, and ensures that content representsviewpoints from the entire UK. Pact supports the BBC’sambitious commitment to increase Out of Londoncommissioning to 50%. The BBC is by far the biggestcommissioner of UK television programming, and itscommitment will help build capacity in the Out of Londonsupply base for other broadcasters.

OUR PROPOSALS: � The BBC should achieve its 50% Out of London target

before 2016 and ensure that an appropriate level ofcommissioning is from external suppliers.

� Channel 4 should over time increase its Out of Londoncommissioning from 35% to 50%, includingcommissioning an appropriate level and range of contentfrom both the devolved nations and the English regions.

UNLOCKING THE POWER OF IP

A competitive market in IP rights is critical. By licensing IPrights, independents drive exports and raise investment formaking UK content, as well as help emerging services todevelop. In television in particular, restricting the re-use ofcontent may raise competition concerns. In recent years,however, the production sector has shown signs of strain,with profits stalling as broadcasters have reduced the pricesthey pay for programmes and producers have provided moreproduction investment. Average profit margins fell from 9.7%in 2007 to 8.2% in 2008, and are expected to continuedeclining.xx Producers therefore need access to IP rights, buton a basis that does not destroy their profit margins.

OUR PROPOSALS: � After an initial exclusive window, publicly-owned

broadcasters and services benefiting from substantialdirect or indirect public support should not restrict the re-use of IP rights to programmes from UK externalsuppliers.

� If commissioners reduce prices they pay for programmesthey should receive fewer rights in return.

GROWTH IN THE DIGITAL AGE: TELEVISION

10

digital media

UK PRODUCTION SECTOR MANIFESTO

USING PUBLIC FUNDING EFFECTIVELY

BBC onlineCompetition in commissioning encourages creativeexcellence and can drive down costs, with the highlycompetitive external supply sector providing cost-efficientcontent without commissioners incurring overhead costsfrom in-house production. BBC broadcasting historicallytended to unduly favour in-house, but took steps to address this with the Window of Creative Competition(WOCC), which enables in-house and external producers to compete for 25% of commissioning over and above theindependent quota. BBC online is, however, repeatingbroadcasting’s past failures, having consistently failed tocommission external suppliers beyond the minimumrequired. We are also concerned the BBC’s strategy review is proposing to cut online investment by 25%. The BBC must focus on core values, but cutting total investment does not in itself deliver efficiency or ensure a tighter remit, and instead reduces seed capital for the external digital sector.

OUR PROPOSALS: � The BBC should focus online on core values by

tightening its remit, not cutting investment.� The BBC should ensure competition in commissioning

by introducing an online WOCC of at least 25%, withrobust and transparent definitions for qualifying content.

Channel 4 onlineChannel 4 has an important role in new media, drivinginnovation and fostering growth in the digital media sector. Its new media offering, 4IP, is majority funded by publicinvestment from regional and national screen agencies,rather than Channel 4’s customary advertising-driven model,

UK digital producers are pushingboundaries in the commercial sector by creating and financing digitalcontent for global broadband andmobile telephone services. They arealso at the forefront of providing publicservices online – a Pact membercompany provides West Midlands’broadband medical service, helpingmillions of people access healthcareonline.

To capitalise on their proven flair for innovation, digital media companiesneed to be able to compete for theBBC’s new media investment on a fairbasis, and realise the value of theircontent by exploiting it on newplatforms.

11

GROWTH IN THE DIGITAL AGE: DIGITAL MEDIA

and therefore has a particular role to play in stimulating thedigital media sector outside London.

OUR PROPOSAL:� 4IP should broaden its remit to ensure as many suppliers

as possible can compete for funding.� 4IP should not produce content in-house.

UNLOCKING THE POWER OF IP

BBC/Channel 4The BBC and Channel 4 will require an exclusive window formaking content available to the public. However, outside ofthis, they should not restrict the re-use of external suppliers’content. Doing so dampens competition in the market forIntellectual Property (IP) rights and prevents externalsuppliers from realising the full value of content. Over time, ashas occurred in television, a healthy IP market for new mediacontent could enable digital media companies to raiseinvestment by licensing re-use rights. This would lead tothem sharing the upfront costs of content creation with theBBC and Channel 4, as well as providing commissioners witha share of exploitation sales. The BBC has alreadyacknowledged this principle and introduced frameworks thatshare IP rights for online commissions, while providing theBBC with the flexibility it needs.

OUR PROPOSALS: � The BBC should continue to ensure its New Media

Frameworks are effectively implemented.� Channel 4 should adopt a similar approach.

Public Sector ProcurementThe public sector represents a substantial source ofinvestment in digital media. Central and local government,NGOs and other public bodies represent a third ofinvestment in UK online contentxxi – far more than the BBC’sinvestment online. Yet the public sector wastes much of theresulting IP. Despite Government guidelines to the contrary,public bodies typically take all IP ownership when theycommission external companies, although they rarely usecontent beyond its original purpose. Enabling the creator tore-use IP rights would allow companies to develop themarket. As has occurred in broadcasting, this could lead tocreators raising investment to share the upfront costs ofcontent creation with the public sector, as well as providingthe Government with a share of exploitation sales.

OUR PROPOSAL: � The next Government should commit to implementing

existing guidelines to stop the public sector preventingthe re-use of IP.

Much more content productionshould be outsourced: this should notonly help develop more innovativecontent, and the development of theindependent sector, it may also… helpreduce overall service costs.” Graf report on BBC Onlinexxii

12

feature film

UK PRODUCTION SECTOR MANIFESTO

Public intervention directly or indirectlyprovides up to 40% of overall fundingfor UK feature films.xxiii This is largelyfocused on project financing, iecontributing to the costs of makingfilms. This is vital, but the same fundscould do more: with a few relativelysimple adjustments, they could alsohelp deliver an improved businessmodel for film companies.

Stronger companies with greaterfinancial resources and a larger shareof Intellectual Property (IP) rights will bebetter placed to fund their filmsthemselves and, from a stronger base,diversify to take advantage of newdigital outlets for their content. Ratherthan quick fix solutions where thepublic sector tries to pick winners, weare proposing growing the UK filmsector with an organic, market-ledapproach that empowersentrepreneurial companies.

USING PUBLIC FUNDING EFFECTIVELY

Containment of costsThe UK has a complex network of disparate national andregional funding agencies which often use differing criteria forinvesting in films, increasing red-tape and legal costs forproducers. Wasting further resources, some agencies areinvolved in unnecessary activities, becoming de factoproducers, insisting on final cut or creative rights, orautomatically requiring a completion bond where suchpractice is not commonplace in the market.

OUR PROPOSALS:� Public entities should agree a pro-forma set of principal

legal documents which would apply to all their films.� Public bodies should curtail unnecessary activities.

‘100% Recycled’Public bodies typically take a recoupment position when theyfund content, using resulting revenues to pay for overheadsor other activities that are often unrelated to production. Thismeans that the production sector is effectively underwritingpublic bodies. The UK Film Council recently took stepstowards addressing this by suggesting all its recouped fundsshould be recycled into production, except for a 30%corridor to the producer. Our proposals go further: to createthe optimum conditions for the growth of UK productionbusinesses, and break creators’ dependency on publicentities, 100% of recouped sums should be channelled to the production company. To ensure funds go to production,70% of all monies recouped should be placed in an escrowaccount for the production company to use only for fundingits future UK films.

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GROWTH IN THE DIGITAL AGE: FEATURE FILM

OUR PROPOSAL: � 100% of public recoupment should accrue to the UK

production company, with 70% ring-fenced in a ‘FilmDepository Receipts’ scheme for the producer to investin future productions.

Reprioritising the BBCThe BBC currently spends an estimated £100m per year onimported content, with Hollywood films making up asubstantial part of this.

OUR PROPOSAL: � The BBC should double the annual budget of BBC Films

– its UK film department – to around £25m by reducingspending on Hollywood films.

The film tax credit as producer equityThe current film tax credit is a crucial support for production,but its benefit could be increased at no further cost to theGovernment. The credit was originally to be treated asfunding brought in by the producer, thereby providing theproducer with a revenue stream alongside other investors. Inpractice, however, producers are forced to give away thisposition because they have no negotiating power.

OUR PROPOSAL: � Treating the tax credit as producer investment should be

a condition of accessing any public funding for film,including the tax credit itself, investment from nationaland regional agencies, BBC Films, Film4, and theNational Lottery.

UNLOCKING THE POWER OF IP

BBC Films and Film4 take exclusive UK broadcast rights formany years when they commission films from independentproducers. This restricts film companies’ ability to realise thevalue of IP.

OUR PROPOSALS:� BBC Films and Film4 should reduce their licence period

to five years.� BBC Films and Film4 should introduce a ‘use it or lose it’

provision under which unused rights would revert to theproducer.

As the driving force behind aproduction, it is the producer’s tenacityand commitment – particularly in thesetimes – that ensures a film makes it toour screens.” Dustin Hoffman, BAFTA awards 2010

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exports

UK PRODUCTION SECTOR MANIFESTO

USING PUBLIC FUNDING EFFECTIVELY

Coordinating public fundingUnder the current system, disparate national and regionaldevelopment agencies use different criteria for making grantsto support exports, and even compete against each other.Although a level of flexibility is important, the currentapproach wastes resources and creates a postcode lotteryfor funding that disadvantages certain companies purely onwhere they are based. For example, only two English regions currently provide funding for companies to attend the leading global trade fair for television content, MIP TV,disadvantaging producers in others regions in terms ofexporting their content.

OUR PROPOSAL: � A genuinely coordinated national strategy for assisting

the production sector in growing exports should beoverseen by UK Trade & Investment or another suitablebody.

The UK independent televisionproduction sector has helped driveexport growth. Since 2003, when theCommunications Act enabledproducers to license re-use rights totheir programmes around the world,overall exports of UK televisionprogrammes (including independentand in-house) have increased by39%.xxiv Many independent televisioncompanies now combine productionand exports divisions, both creatinghigh quality content and maximising itsvalue by licensing Intellectual Property(IP) rights to overseas markets. Wewant to continue this success intelevision, and help companies in filmand digital media also become world-class exporters.

The British are coming – andbringing Wife Swap.” The Times, 2009

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GROWTH IN THE DIGITAL AGE: EXPORTS

The solution… is to make theBBC’s process for programme salesmore transparent, and increasinglyopen up the market for the BBC’sprogrammes to competitive bidding.”House of Commons Culture, Media & Sport Committeexxvii

UNLOCKING THE POWER OF IP

BBC WorldwideExploiting the BBC’s IP in the commercial market generatesrevenues that the BBC can reinvest in making UK content.The BBC is, however, failing to maximise the value of itscreative properties as its commercial distribution arm, BBCWorldwide, has preferential access to its output. Thisprevents distribution companies in the commercial sectorfrom competing for the BBC’s IP rights, and so maximisingthe price the BBC achieves. In the limited number of caseswhere BBC programmes have been put out to tender on theopen market, rival bidders have increased the eventual saleprice. The BBC’s first-look arrangement with BBC Worldwidealso means it cannot demonstrate that it is achieving the bestprice, as its benchmarking system tests only a sample ofprogrammes on the open market.

OUR PROPOSAL: � The BBC Trust should end BBC Worldwide’s preferential

status and enable all distribution companies, includingWorldwide, to bid for BBC properties.

Stimulating the IP marketAs a result of being able to license the rights to theprogrammes they make, independent producers haveincreased the exploitation of UK content across the world. In some growth areas, independents account for as much as 81% of all UK sales by volume.xxv Leading independentsnow generate up to 30% of profits from making programmesdirectly for the US television networks – perhaps the mostcompetitive market in the world.

OUR PROPOSAL: � The re-use of UK external producers’ IP rights must not

be unduly restricted. Previous sections contain specificproposals for achieving this in television, digital mediaand film.

IP theftIn 2008, the audio and audiovisual creative industries in theUK lost an estimated £1.2 billion in revenues due to physicaland digital piracy.xxvi Pact is actively involved in the CreativeCoalition Campaign, a partnership of trade unions and rightsholder organisations in the creative industries that hasformed to call on policy makers to implement genuinelyeffective measures to address IP theft.

OUR PROPOSAL: � Policy makers must not back down from their pledge to

force ISPs to implement technical measures againstthose who repeatedly ignore notices.

i Andy Burnham, speech to the OxfordMedia Convention, 2009

ii Ofcom’s PSB Review Phase 1: The DigitalOpportunity, Ofcom, page 33

iii Ofcom Communications Market report2008, page 97

iv Ibid

v Review of the BBC Value for Money andEfficiency Programmes, PKF for DCMS,April 2006, page 20

vi Economic Impact of the BBC, Deloitte forBBC, 2009

vii Pact Census 2009

viii Employment Census 2006, Skillset, figurerefers to broadcasters’ television activitiesonly

ix Broadcast annual survey of topindependent production companies,adjusted data

x Annual television export survey, TRP forPact

xi Fremantle, external producers account formore than 80% of format sales by volume

xii Pact Census 2009

xiii Digital Britain, final report, BERR/DCMS,section 99, page 162

xiv Second Public Service BroadcastingReview, Phase 2: Preparing for the DigitalFuture, Ofcom, September 2008, page 5

xv Ofcom PSB report 2009

xvi Pact Census 2009

xvii Ibid

xviii Employment Census 2006, Skillset, figurerefers to broadcasters’ television activitiesonly

xix Review of the BBC Value for Money andEfficiency Programmes, PKF for DCMS,April 2006, page 20

xx Pact Census 2009

xxi Digital Britain, final report

xxii Report of the Independent Review of BBCOnline, DCMS, page 13

xxiii Pact estimate

xxiv Annual television export survey, TRP forPact

xxv Fremantle, external producers account formore than 80% of format sales by volume

xxvi Building a Digital Economy: TheImportance of Saving Jobs in the EU’screative industries, TERA Consultants forthe International Chamber of Commerce,March 2010, page 32

xxvii House of Commons Culture, Media & SportCommittee, Report on BBC CommercialOperations, March 2009, page 38

referencesrecent Pact submissions and reports

Submission to BBC Trust’s Review of Children’sServices and Content, August 2008

Submission to BBC Trust’s Review of theWOCC, April 2008

Submission to BBC Network Supply Review,February 2008

Submission to Ofcom Review of TelevisionProduction Sector, March 2006

film

Independent Report on Public Film Funding,Olsberg Associates for Pact, February 2010

Submission to BBC Trust’s review of BBC Films’Strategy, December 2009

digital media

Public Sector Procurement of digital mediacontent and services, May 2009, MTM Londonfor Pact

Submission to BBC Trust Consultation onProject Canvas, April 2009

Submission to BBC Trust on online quota,October 2009

Submission to Competition Commission Reviewof Project Kangaroo, July 2008

Submission to BBC Trust’s Review of bbc.co.uk,October 2007

exports

Analysis of BBC Worldwide Strategic Options,O&O Associates for Pact, January 2009

Submission to Culture, Media & SportCommittee Inquiry into the CommercialOperations of the BBC, 2008

general

Submission to Digital Britain Second Phase, March 2009

Submission to Digital Britain First Phase,December 2008

Submission to Ofcom PSB Review: Phase 2, December 2008

Submission to Ofcom PSB Review: Phase 1, June 2008

Pact Annual Census of Independent ProductionSector: 2007, 2008, 2009

Production Trend Report for Out of London, 2009, 2008

Annual Television Export Survey, TRP for Pact

Pact Diversity Toolkit 2009

Submission to House of Lords SelectCommittee on Communications Inquiry into UKFilm and TV Content, March 2009

Submission to BBC Trust Review of BBCEditorial Guidelines, December 2009

television

Submission to Ofcom’s Financial Review ofChannel 4, November 2006

Submission to Ofcom’s Review of Children’sTelevision Programming, December 2007

Response to DCMS consultation onreclassification of producers, February 2010

Submission to Northern Ireland AffairsCommittee Inquiry into Television Broadcastingin Northern Ireland, April 2009

Response to Perspective Report for DigitalBritain Review, May 2009

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