Who Dares Wins? TV's indies did. But now they've met their Waterloo (Road)

As the big fish eat the small fry, the pool of independent production companies is shrinking. Simon Evans reports

The world of independent media production is shrinking. The sector has suffered or enjoyed depending on your perspective a wave of consolidation in the past few years. And ITV's 26m purchase last week of 12 Yard, the indie founded by David Young and Andy Culpin and "famed" for quiz shows such as Eggheads and Who Dares Wins, shrank the independent pool still further. Subject to certain performance targets being met, the price could swell to as much as 35m.

The deal marked the first salvo to be fired by TV's most powerful woman. Dawn Airey, the recently installed global content boss at ITV, has been charged with spending a 200m war-chest funded by Michael Grade's shake-up of the ailing commercial broadcaster, whose share price has continued to tumble in recent months.

"I have reservations that she is going to be able to spend that 200m any time soon," says Roddy Davidson, media analyst at Altium Securities. "Clearly there's a shopping list, but it's doubtful that a lot of creative talent out there will want to return to the monolith that is ITV.

"They aren't going to smother the life out of 12 Yard what would be the point? But when a company like ITV takes you over, you obviously surrender a large degree of autonomy."

Ms Airey's task would have been far easier had she been given such a war-chest two years ago. The forces of consolidation that have swept the 2bn independent sector have irrevocably changed the shape of the landscape.

"Certainly most of the juiciest companies have already been acquired or are very close to being acquired," says John McVay, chief executive of Pact, the industry body for independent producers. "But that may be no bad thing and it's clearly an indication that indies come up with the best ideas."

According to Pact's last census of the indie sector, a third of all companies in the 5 to 10m bracket said they planned to merge, while nearly half received a takeover offer last year. Just 10 companies accounted for 60 per cent of the independent production sector's revenue base in 2006, with a further tightening this year swelling that percentage further.

Shed Media, the Alternative Investment Market-listed group with a value of around 60m, produces BBC 1's Waterloo Road. Last month it finalised the 25m purchase of the much admired indie Wall to Wall, the production company behind Who Do You Think You Are? The deal is believed to have netted Wall to Wall's founder, Alex Graham, nearly 6m.

In September Shed, which has lost a quarter of its value in the past year on the back of the ending of flagship programmes Bad Girls and Footballers' Wives, also bought Twenty Twenty, responsible for Bad Lads' Army and Brat Camp, for 19m. Two years earlier it scooped Ricochet, the producer of Supernanny.

In July, the Midlands-based indie Maverick, which makes Channel 4 hit How to Look Good Naked, was bought for an undisclosed sum by All3Media, which has itself assembled an impressive portfolio in recent times, including the likes of Company Pictures and Cactus, the maker of Richard and Judy. Backed by Permira, the private equity group headed by Damon Buffini, it seems inconceivable that All3Media's acquisitions will end at Maverick.

IMG, the media and talent agency founded in the 1960s by Mark McCormack with golf legend Arnold Palmer, also got in on the act by acquiring Tiger Aspect, maker of The Catherine Tate Show, earlier this year and considerably widening its offering.

Super-indie Shine, the production group founded in 2004 "with no more than a piece of paper" by Elisabeth Murdoch, daughter of media mogul Rupert, went on a shopping spree worth around 65m in 2007 and snapped up Princess, Firefly and Kudos, maker of Life on Mars. And just weeks ago it was revealed that the group had fended off rival bids from heavyweights IMG and Endemol to win America's largest independent, Reveille, which produces the global hit Ugly Betty, in a deal worth 100m. Many predict the coup will propel Ms Murdoch's firm from super-indie to the major league.

Meanwhile, the AIM-listed RDF Media, whose share price has slumped by a fifth in the past year following the highly publicised "Queensgate" affair (in which it faked a tantrum by the Queen), looks likely to feel the force of Endemol, which already owns 30 per cent of the stock. A bid from the Dutch group seems probable despite its silence, while other indies are likely to be on Endemol's shopping list, which is focused on the UK's dynamic independent sector.

Opinions are divided, though, over whether the surge of activity will continue into 2008.

"I think there are three or four companies of interest left," says Nicholas Ward, media analyst at London-based broker Panmure Gordon. "Most of the better drama companies have already gone, so I think the big wave of consolidation is over."

But with the comparatively small sums of cash needed to buy indies shielding the sector from the credit crunch that has hit mergers and acquisition activity in the large-cap arena, others are predicting a second wave of consolidation next year.

"It's still to run its full course there's certainly a lot more to go," says Mr Davidson at Altium. "The larger players are still looking to achieve wider genre exposure to broaden their offerings. And to be honest, the valuations of many of these firms are pretty low, so deals are attractive."

It might be an attractive proposition for those super-indies looking to beef up, but according to Mr Davidson, things are likely to get much tougher for the micro producers, which will become marginalised.

"Take the BBC, for example," he says. "It's going to be much more difficult for the small firm to meet the terms and compliance requirements stipulated by Broadcasting House. There are always horses for courses and the small one- or two-man band sector will exist, but they will find life a lot more difficult, especially as the bigger firms pick off talent from them."

Comments from BBC independents executive Krishnan Arora that he'd "rather not deal with lots of micro-enterprises" a quote he has since claimed was taken out of context would suggest tougher times are indeed ahead for those minnows yet to be fished.

The pool of British independents is shrinking. A handful of owners will be the winners. Whether the viewer will once again end up on the losing side is less clear.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Media

Recruitment Genius: Trainee Social Media Account Writers

£12000 - £13000 per annum: Recruitment Genius: This social media management pr...

Ashdown Group: Deputy Editor (Magazine Publishing) - Wimbledon - £23-26K

£23000 - £26000 per annum + Benefits: Ashdown Group: Deputy Editor - Wimbledon...

Ashdown Group: Editor (Magazines/Publishing) - Wimbledon - £26-30K

£26000 - £30000 per annum + Benefits: Ashdown Group: Editor (Magazines/Publish...

Ashdown Group: Print Designer - High Wycombe - Permanent £28K

£25000 - £28000 per annum + 24 days holiday, bonus, etc.: Ashdown Group: Print...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent