UK “high end” TV 2014-2019

UK “high end” TV 2014-2019 Trends in spending and third party funding for shows using high-end TV tax relief Ben Keen for COBA, based on BFI data (adjusted)

Summary • Production is booming: Investment in UK shows using the high-end TV tax credit has doubled since 2014, with the number of hours made each year up 59%. • Spend per hour is up: Average spend/hour has risen by 36% since 2014. Average budget/show has nearly doubled – partly due to average number of hours/show increasing substantially. • Co-commissions have nearly doubled: Number of shows with third party involvement has nearly doubled since 2014. PSBs amongst biggest beneficiaries; trend shows no sign of slowing.

Definitions • Data refers to television programmes using the tax relief for high end TV (HETV). In practice, the vast majority will be dramas. • ‘Domestic productions’ – lead commissioner is UK broadcaster (majority are PSBs). Does not preclude third party funding, such as an international pre-sale or co-funding with an international player. • ‘Inward investment’ – classified by the BFI as substantially financed and controlled from outside the UK, but lead commissioner may still be a UK broadcaster or SVoD. • ‘Co-production’ – made under a specific statutory co-production agreement (in practice this accounts for very few productions). • ‘Co-commission’ – production with early stage financing/editorial collaboration between UK broadcaster or SVOD and third party TV group (mostly not a statutory co-production).

Section 1: Overall production • Investment in shows using high end TV tax relief (HETV shows) • Number of shows • Number of hours

Investment has more than doubled since 2014 Source: Ben Keen analysis of BFI data

Number of shows per year up 25% since 2014 Source: Ben Keen analysis of BFI data

Hours made per year up 59% since 2014 Source: Ben Keen analysis of BFI data

Section 2: Spend per hour • Spend per hour • Production budgets • Hours per production

Average spend per hour up 36% since 2014 (£1.7m to £2.3m) 2019 = Q1 data only Source: Ben Keen analysis of BFI data

Average budget per show has nearly doubled since 2014 (£8.4m to £16m) 2019 = Q1 data only Source: Ben Keen analysis of BFI data

Number of hours per production up 24%

Section 3: Co-commissioning • Co-commissions per year since 2014 • Co-commissions for 2019 so far • PSBs and co-commissions • Netflix participation in PSB co-commissioning peaked in 2017, but active in 2019 with four in year-to-date • Other companies active as well: 32 different companies have partnered PSBs since 2014

Number of co-commissions per year nearly doubled between 2014 and 2018 (from 16 to 30) Source: Ben Keen analysis of BFI data

Co-commissions for 2019 already near total for 2018 Source: Ben Keen analysis of BFI data

BBC is most active co-commissioner 2019 = Q1 data + announced future productions Source: Ben Keen analysis of BFI data

PBS and Netflix most active partners for PSBs 2019 = Q1 data + announced future productions Source: Ben Keen analysis of BFI data

Netflix co-pros with PSBs peaked in 2017, but others have increased significantly

Methodology • Methodology • These charts are based on analysis of BFI data. The BFI collects data at the time of production on all high-end television(HETV) programmes that have accessed or intend to access the relevant UK creative industry tax relief. To access the relief, an HETV programme must qualify as British under the relevant cultural test or as an official co-production under the terms of a bilateral co-production agreement or the European Convention on Cinematographic Co-production. To qualify, an HETV show must be a drama (including comedy) or documentary production of at least 30 minutes per episode intended for broadcast on television and/or the internet and have an average core expenditure per hour of not less than £1m. The few qualified documentaries have been excluded from this analysis. • For the purpose of analysing budgets, the BFI combined co-productions (defined as above) and ‘inward investment’ productions into a single category. The BFI defines the latter as a programme substantially financed and controlled from outside the UK, where the production is attracted to the UK because of script requirements, the UK’s infrastructure or UK tax incentives. Many (but not all) inward productions are HETV programmes by virtue of their UK cultural content and the fact that they pass the cultural test administered by the BFI Certification Unit on behalf of the Secretary of State for Culture, Media and Sport. Programmes not classified as ‘co-production’ or ‘inward investment’ are classified by the BFI as ‘domestic’ productions. • The spend data used in this analysis is based on ‘total spend’, which is a higher sum than just the ‘UK spend’ that is regularly published by the BFI. • To analyse trends in co-financing of HETV productions, every title from 2014 to Q1 2019 has been reviewed to identify those where multiple parties were involved in commissioning and funding the programme ahead of production. Where multiple parties were involved, we have defined the programme as a co-production. But it should be noted that this is a different definition of co-production to the formal one used by the BFI. There are a number of other differences between the broad categories of ‘domestic’ and ‘co-production/inward’ used by the BFI and the categories used in this analysis. For example, not all programmes defined as ‘PSB’ are classified by the BFI as ‘domestic’ and not all those defined as ‘co-productions’ are classified as ‘inward investments’ by the BFI. • The underlying BFI data is complete up to the end of Q1 2019. To make this study more current, we have also analysed all future UK productions that have been announced to date. However, it is worth noting that it is not possible to know in advance whether all of these will qualify for HETV status.

Ben Keen and COBA Ben Keen • Ben is an independent analyst and board-level advisor to companies in the Technology, Media & Telecommunications (TMT) space. He has 30 years of experience helping companies and investors make better-informed decisions based on data-driven understanding of the future. • His current interests include serving as Strategic Advisor to immersive entertainment research firm Greenlight Insights, Non-Executive Chairman of TV drama consultancy MediaXchange, Senior Advisor to start-up accelerator Match-Maker Ventures, Senior Associate at digital sports consultancy Seven League, advisor to 3 media-tech start-ups, and expert advisor to the high-level government-industry liaison organisation British Screen Advisory Council. COBA • The Commercial Broadcasters Association (COBA) is the industry body for multichannel broadcasters. Its members include a wide range of UK and multinational channels, broadcasting on pay and free-to-air platforms.

UK “high end” TV 2014-2019