Alex Graham On Broadcasting
ITV's new smarter buying policy is not really so clever after all
Monday 03 July 2006
There's been much carping about ITV's new programme-buying strategy this week. Smarter Buying it's called. (Note the profligate capital letters designed to counter any suggestions that this is a cost-cutting exercise.) The idea is that producers will be given less money to make the programme in the first place but, should the programme be successful, they will get a bit more.
Actually, I was so captivated by the idea of Smarter Buying that I decided to implement it myself. Perusing the menu at Claridge's the other day, I called the proprietor over. "Gordon," I said, "this stuff all looks delicious but frankly the prices are a bit steep. Suppose I give you half the money up front and then, if I find I've enjoyed the meal and I haven't thrown up on a dodgy scallop, you can have the rest." Unfortunately, I'm not able to give you a detailed account of Mr Ramsay's response in a family newspaper but suffice to say that the doctor has told me not to worry and it's just that I bruise easily.
Undeterred, I took the same line with my local BMW dealer. He was more accommodating, merely suggesting that I **** off and buy a second-hand Skoda. And that's the point. We already have a system of smarter buying - it's called the market.
Smarter Buying threatens to have what economists like to call perverse consequences. It may drive down prices in the short term but will simply take money from the production process and deliver it as bonuses to the shareholders of independent production companies. What it won't do is put more money on the screen.
There's another problem. No one is saying that there are not cost savings to be made. Indeed, technology is driving the cost of production down. But it's also driving down the cost of entry. You can now buy a professional quality HD camera for around £4,000 and HD-enabled FinalCut Pro software for about £500; throw in a high-speed broadband link and you're a broadcaster and for less than the price of a bottom-of-the-range Skoda. Put it another way, it's much cheaper to set up as a broadcaster now that it is to become a London cab driver. Where are you now, Fred Housego?
Lower production costs can lead to lower prices. But competing on price alone won't work in the digital world because the low cost of entry means there will always be someone who will do it cheaper than you. Margins will be squeezed and production values eroded. The result will be a vicious spiral of decline in quality, revenue and profitability.
What ITV urgently needs are not just cheaper programmes but better programmes. The odd thing is that we all thought ITV's Smarter Buying strategy was already in place. The old vertically integrated culture has been swept away and ITV has indicated that it wants the best ideas from whatever source and the best producers to make them. Simon Shaps has assembled a commissioning team which is extravagant not just in numbers but in talent and, for the first time, there seems to be real competition in the supply of ideas and programmes to ITV. Given time, that competition will not only drive prices down but more importantly drive quality up. But the fear is that time, rather than money, might be the one thing ITV no longer has.
THOSE WHO know me may have remarked that my pale Glaswegian skin is even paler this summer. I'm emerging - blinking - from 100-plus hours of negotiations with the broadcasters over new media rights. One of the hardest things is getting my head around a whole new glossary of jargon and acronyms. Two weeks ago, in the middle of a presentation from Five about their on-demand strategy, there was a Powerpoint slide with several mentions of something called an STB. Ignorance in these negotiations is immediately and ruthlessly exploited as a sign of weakness so I racked my brains trying to think what an STB was. I knew about VOD, PPV, PVT, and DTO. But what the hell was an STB. Eventually I cracked and asked Charles Constable, Five's genial strategist, to explain. Without a hint of smugness he explained that an STB was ... a set top box. Just another example of a TLA. That's three letter acronym to you lot. But even TLAs are no longer enough. On top of VOD, we've now got SVOD, TVOD and even PVOD. Don't ask. The TLA is dead; long live the FLA. All I can say is let's forget talking like this PDQ.
Alex Graham is chief executive of the independent production company Wall to Wall and is chair of Pact, the trade association that represents the commercial interests of the independent film and television sector.
Why preach the size-matters credo in a broad church?
PACT has always been a broad church committed to representing all independent producers however big or small. But the recent waves of consolidation, led by All3Media and TWI, have made the church broader than ever. It was only a matter of time before the these newly emerged "super indies" were seen as threats to creativity. I have to say it sticks in the throat when broadcasters with turnovers running into hundreds and even thousands of millions of pounds suggest that a £50 million independent producer is somehow a threat to creativity.
There's a real danger that in our legitimate desire to protect the small indie from exploitation, we end up romanticising the idea of smallness for its own sake. Most small independents don't want to be small. They spend all day, every day, trying to get bigger; to gain critical mass, hold on to key talent and to invest in programme development.
The ground-breaking programmes of the past decade have - in most cases - come from larger companies, many of them much vilified "super indies". It's hardly surprising. Small independents have less resources to devote to development and are more likely to be dependent on a single customer. As such, they are more risk-averse. Could it be that the enthusiasm for small independents has less to do with finding them more creative and everything to do with finding them easier to push around?
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