Broadcast
Pact is warning of a crisis in kids’ TV due to a lack of broadcaster investment. Could live-action tax credits or quotas be the answer?
The children’s TV landscape is in a state of flux. Pact has called the chronic lack of UK broadcaster investment in the sector “a crisis” that the incoming tax relief for live-action is unlikely to ameliorate. On the other hand, the prospect of tax incentives has already improved the hand of indies in piecing together co-production finance, while the ambitions of Amazon and Netflix could deliver new commissioning lifelines. Billy Macqueen, cofounder of Darrall Macqueen, says: “No one knows which way the domestic market is going to go, but we are pretty excited by the changes happening.”
A report by Pact and The Ragdoll Foundation, submitted as part of Ofcom’s PSB Review, highlights dramatic declines in spend on kids’ content.
The volume of UK kids’ original content on the PSB channels has fallen by 68% since the 2003 Communications Act, while spend is down 95%. The BBC cut first-run hours by 59% between 2003 and 2013. Furthermore, hours on the commercial PSB channels, excluding digital spin-offs, fell by 87%. The result, the report argues, is a sector on the brink of collapse.
“There’s been a huge increase in the amount of deficit funding that indies are expected to find, which has grown from 20-30% four years ago to 60-80% now,” says Macqueen. “The bargaining chip is how much of your IP you give away.”
Lime Pictures joint managing director Kate Little adds: “The status quo is not far off market failure. If you don’t invest in children’s live-action content, and if kids are used to watching oversees imports or movies, where is your drama audience of tomorrow?”
Officially Amazing: CBBC
With CBeebies and CBBC the only significant domestic option open to indies, getting a live-action project over the tax credit funding threshold has meant complex co-pro deals, often taking filming into territories with financial inducements, such as Canada and Ireland. Kindle Entertainment’s magical drama Jamillah And Aladdin, for example, is a BBC Children’s commission majority-financed by Canadian production group Mediabiz and shot in South Africa.
The government’s latest announcement that the required threshold for spend in the UK will be reduced from 25% of the budget to 10% is set to make the territory more attractive to international co-producers.
“We will bring more finance to the table, which should mean we keep more equity rather than cede to Canada. And it should enable us to shoot more in the UK,” says Valerie Ames, director of Kindle Entertainment.
“After various costs are netted off, the tax break delivers around 15-20% of production budgets, which is fantastic,” says Little. “However, 80-85% of project costs will still need to be found. It will really help producers to build financing plans for programmes and may reduce the piece of the overall pie that UK broadcasters will have to fund.”
One problem that won’t go away is the cost of production, says Lion TV managing director Richard Bradley.
“The unforeseen consequence is that prices for studios, facilities and crew have gone up and it’s much harder to find availability,” he says.
“It’s a myth that it’s cheaper to make drama with kids than adults,” agrees Little. “Your ability to work a schedule with the same degree of freedom is inevitably hampered by restrictions on working hours for child performers.”
Business opportunities
The rebate is already credited with rubber- stamping series two of Topsy And Tim (Darrall Macqueen for CBeebies); a third run of Hank Zipzer (Kindle for CBBC); 20-part teen drama Evermoor Chronicles (Lime for Disney); Offi cially Amazing (Lion TV for CBBC) and interactive comedy drama The Secret Life Of Boys (The Foundation for CBBC).
The rebate is already credited with rubber- stamping series two of Topsy And Tim (Darrall Macqueen for CBeebies); a third run of Hank Zipzer (Kindle for CBBC); 20-part teen drama Evermoor Chronicles (Lime for Disney); Offi cially Amazing (Lion TV for CBBC) and interactive comedy drama The Secret Life Of Boys (The Foundation for CBBC).
“Since the autumn statement, we’ve received calls from co-producers expressing interest in shooting here as opposed to Canada, so there are signs it will bring in business,” says Michael Carrington, chief executive of Zodiak Kids’ The Foundation. “I can’t see it transforming the indie sector though. We’re not seeing the number of commissions increase overall, and nor are the number of slots from domestic broadcasters changing.”
Pact has called for regulatory changes to reverse the situation. “We need to move away from the BBC being the monopoly buyer of children’s content,” argues Pact senior policy consultant Rosina Robson. “We hope the credits will incentivise ITV and Channel 4 to do more, and for other broadcasters to invest more in the UK. But we think the end game could be quotas on children’s content for PSBs if current levels of investment don’t change.”
Topsy And Tim: CBeebies
Variously sceptical and reticent about publicly supporting Pact’s call for quotas, the indies Broadcast contacted are united in feeling that measures are needed to reset the balance.
“If we want to have a robust children’s industry, it needs something of a different order of magnitude,” says Bradley. “I am not sure if quotas are the answer, but we need a strong commitment from broadcasters to end the industry’s perpetual state of struggle to fund live-action programming.”
“We need an array of weaponry to make this work,” says Anna Home, chair of the Children’s Media Foundation, which wants the industry to look at contestable funding by lottery cash.
According to Greg Childs, editorial director of the Children’s Media Conference, the tax breaks are an acknowledgement by the government of the need for action. “The amount the Treasury gains from kids’ tax breaks will be nothing compared with the benefit from animation tax breaks.”
Pact estimates that the new rebate could generate up to £3m per year for the Exchequer (£52m is estimated to have been generated as a result of animation credits last year).
Pact’s report also highlighted that since 2004, spending across children’s channels owned by Disney, Turner and Viacom has fallen by around 40%. However, it did not register the activities of new market entrants seeking to bulk up their kids’ portfolios.
Attendees left Miami’s Kidscreen Summit in February optimistic that Netflix and Amazon are committed to an original children’s slate and that UK content could in time join its current US-centric slate.
After renewing 2014 seasons of Gortimer Gibbon’s Life On Normal Street and Annedroids from Sinking Ship Entertainment, Amazon Studios’ 2015 pilots include Sigmund And The Sea Monsters and Just Add Magic.
Netflix live-action orders include Some Assembly Required from Canada’s Thunderbird Films. Bottersnikes & Gumbles, a CG animation due in 2016, is a first co-pro between Netflix , CBBC and Seven Network Australia.
Life On Normal Street: Amazon
“Children’s producers have historically been very creative about where they look for money, and Amazon and Netflix could offer a paradigm shift beyond broadcasters,” says Bradley. “They want children’s content and are prepared to pay for it.”
With budgets reportedly more than £300,000 per half hour of pre-school material and £600,000-plus for under-15s programming (the UK norm is £160,000-200,000 per half hour), indies are excited but wary.
“The catch is that they want premiere or exclusive rights to the UK, which puts pressure on CBeebies and CITV,” notes Macqueen.
“Like any new platform, they have to invest up front to attract the right ideas and talent. But I don’t think that level of investment is sustainable,” says Carrington.
Indies are also benefiting by being released from contracts preventing sale of programming to VoD within five years. “Broadcasters have recognised VoD as a main revenue stream for producers, so we can release properties to the likes of Netflix, Hulu and Amazon in the second window after a year,” says founder of Serious Lunch Genevieve Dexter.
And then there’s YouTube, which already accounts for 20% of kids’ viewing, according to Ofcom. The platform is now ramping up its kids credentials with a dedicated app.
“It will take five years for the market to mature, so anybody who wants to start a specialist kids’ indie in the UK will have a tough time without decent financial backing or a track record in financing co-productions,” says Macqueen. “Even then, they may get overtaken by producers with a different business model talking directly to the child audience by developing for YouTube.”
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