Reporting on the annual ups and downs of the UK indie market is more complicated than trying to fill in your tax return.

The problem is that due to the ‘snapshot’ nature of any survey, there is always some information that does not make it in, thereby skewing the numbers and so the tallies.

Amid its management changes, Warner Brothers, for example, declined to give up any data this year.

Even the term ‘indie’ has several flavours: are you a truly ‘indie’, indie? Or are you an indie owned by a bigger entity, as an increasing number of companies (formally known as indies) are?

£624M

Combined turnover of true indies (27% of the market)

That said, despite the usual lumpy reporting of revenues by the companies surveyed, there is a unique story behind almost every set of figures in the Broadcast Indie Survey 2017. And overall, there are several trends to explore and some interesting case studies.

After all, this is a moment in UK television history where there is a lot of money sloshing around for the right programmes, including from the high-spending new platforms, led by Amazon and Netflix.

The total turnover reported by participating indies in 2016 was £2.3bn, compared with £2.25bn the previous year.

£2.3BN

Indie sector global turnover

However, not all the same companies appear in both years’ figures, so the like-for-like numbers for the two years show a slight drop in turnover, from £2.15bn in 2015 down to £2.13bn last year. But it is so small that it’s not really significant.

More important is the total turnover figure, which was up £43m (2%) year on year, giving an indication that the whole TV pie being shared by producers is getting bigger.

£876M

Combined turnover of the top 10 indies (38% of the market)

The indie with the largest turnover remains IMG, up 10% to £191.3m (with shows including live sport events such as Channel 4 Racing and BBC World Championship Snooker), while Thames has the biggest turnover (£93.2m).

The Crown producer Left Bank Pictures has booked a whopping 49% increase in turnover to £118.6m.

With the 20-part, two-series commission said to have been worth £100m, it is clear that US-headquartered Netflix’s deep pockets were a real help here: more than a quarter of Left Bank’s turn over came from outside the UK.

19

Secured commissions from international broadcasters or OTT services

Meanwhile, Avalon TV grew turnover by 11% to £100m and Fremantle Media’s UK arm Thames reported turnover up 7% to £93.2m.

NBC Universal-owned Carnival Film & Television’s £90m 2016 figure is 21% less than the £114m it reported the year before, almost entirely due to the end of its long-running ITV mega-hit Downton Abbey.

In such a long list, there are many and varied reasons why certain companies are reporting higher or lower turnover.

Raw TV’s turnover, for example, shot up by 102% in 2016, from £28m to £56.6m. But chief executive Joely Fether says this sharp rise will not be repeated in 2017.

“Inevitably, some programming won’t return. Our big scripted project, Harley And The Davidsons, for example, was never conceived as a returner, so we’re now working on our next scripted project, which will hopefully happen in 2018.”

Harley And The Davidsons was the “biggest single factor” in the increase in Raw’s 2016 turnover, with another £10m in turnover from non-scripted/factual entertainment series, including Homestead Rescue for Raw owner Discovery and No Man Left Behind for National Geographic.

Locked Up Abroad (National Geographic) was recommissioned after laying dormant for a couple of years.

Fether says that although there were some gains in the UK market, Raw’s domestic business did not grow much in 2016.

“I am delighted, and just a bit relieved, at the result for 2016,” she says. “It was so gratifying to see all the development work we did in 2015 deliver new US factual series in 2016.”

BIGGEST INDIE CONCERNS

Another indie booking a big jump in turnover in 2016 was Red Production Company, up 114% to £45m, from £21m the previous year.

“It was a busy year, but nothing out of the ordinary,” notes managing director Andrew Critchley. “It was a coincidence in timing in that we had several programmes reporting in 2016 with production costs spent in the prior year.”

The UK producer of Last Tango In Halifax and Happy Valley has been majority owned by StudioCanal in France since 2013 and benefits from StudioCanal acting as distribution agent for its more recent shows, including The Five for Sky and StudiCanal and Paranoid for ITV, with access to UK drama tax credits on top.

“We are tilting towards bigger-scale shows and international co-productions where the finance patchwork is a bit more complicated,” says Critchley.

Both The Five and Paranoid had big budgets, which also lifted the numbers: The Five cost £14m across 10 episodes and Paranoid was £13m across eight, with Netflix scooping the non-UK licence.

“We are hearing of co-production budgets of up to £3-4m per episode now because of the appetite for drama,” says Critchley. “That is the direction of the drama bubble.”

Certainly, the ‘Netflix factor’ is helping to feed the drama bubble of increasingly high budgets, and this is having an effect that many production companies are seeing in their turnover figures and bottom lines.

Big and bold

The Crown is Netflix’s highest-profile drama so far, but the US streaming company has an appetite for big, bold episodic dramas, and a willingness to pay as much as 35% on top of the production budget.

“Netflix is essentially buying your future profits as there are no back-end payments,” says Critchley.

Netflix has transformed Endemol Shine owned-House of Tomorrow after it switched broadcasters for the most recent series of Charlie Brooker’s former Channel 4 show Black Mirror and enjoyed a bumper 12-episdoe, two series order. House of Tomorrow was the fastest-growing company in 2016, with turnover up from £2.3m to £22.2m.

FASTEST GROWERS

Increasingly, Netflix and Amazon are looking for other genres beyond drama as well, though Netflix pays much less for non-drama productions, according to several indie executives.

“For non-drama programming, Netflix is paying maybe a 5% premium over production costs, or sometimes no premium at all, but it does pay up front,” says one executive familiar with Netflix’s interest in unscripted fare.

ITN Productions, which has been making big noises in recent years about expanding its portfolio of programmes beyond news and current affairs, reported a £34m turnover last year compared with £24m in 2015 – growth of 44%. In fact, the factual company says it has grown 40% year on year for the past three years.

ITN received its first-ever Oscar nomination this year for Watani: My Homeland in the Documentary Short category and is continuing to push into the US.

“We do a lot of specialist factual and crime programming [Killer Instinct, Encounters With Evil, Murder In The Sky] and we have been recommissioned to produce Triumph Games, which appears on CBS Sports network,” a spokeswoman said.

“By 2020, we want 10% of all revenue to come from the US.”

Meanwhile, Baby Cow, the producer of comedies Uncle and Alan Partridge’s Scissored Isle, suffered a 40% drop in its turnover between 2015 and 2016, from £9.8m to £5.9m.

“Turnover is often recognised before the spend,” points out Baby Cow finance director Jonathan Merrell. The indie also faced a change in ownership and management in 2016, with co-founder Henry Normal departing and BBC Worldwide increasing its ownership stake to 73%.

Baby Cow is “slightly reworking” its comedy slate and putting time, effort and funding into new slates for both drama and film. “It’s become increasingly difficult to sustain a mid-size indie on comedy alone,” says Merrell.

This mirrors similar moves in recent years from Big Talk and Hat Trick, dictated by the falling number of comedies on terrestrial channels.

The non-PSB channels and streaming services have helped cover some of the gap, with Baby Cow having made two new series of Red Dwarf for UKTV’s Dave and about to produce a second series of Zapped for the same channel.

“Prospects for recommissioning are strong for shows that really work for digital audiences and broadcasters,” says Merrell.

BIGGEST FALLERS

Of the top 30 ‘true’ indies – those that are not majority owned by a larger group – the 2016 turnover figure of £502m looks extremely healthy compared with the £327.4m in 2015.

However, the 2016 number has been boosted by the inclusion of the biggest player in this group of true indies – Catastrophe co-producer Avalon Group – reporting turnover of £112m. Broadcast did not categorise it as a ‘true’ indie last year.

There was also a boost from sports producer Whisper Films posting its first turn over figure (£15.7m).

If Avalon and Whisper’s combined 2016 turnover is subtracted, the overall revenue for the top 30 true indies last year was only £379m, putting the growth in true indies’ combined revenues from 2015 to 2016 at £52m, a 16% gain.

A decade ago, an indie had four or five primary customers to pitch its ideas to (BBC, ITV, Channel 4, Channel 5 and Sky), but that has now more than doubled. Amazon, Netflix, Hulu and other content platforms are creating a vibrant market for commissioning, or co-commissioning, all kinds of material, especially drama, episodic series for binge viewing and short-form video.

In all, 23 indies said they were in talks with these new players and another seven had already produced shows for them, or at least part-funded by them.

This month, Netflix announced it has partnered with the BBC to coproduce two of the corporation’s highest-profile forthcoming dramas: Troy: Fall Of A City, produced by Derek Wax’s new indie Wild Mercury in association with Kudos, and Drama Republic’s planned Black Earth Rising.

At number 10 on the indie league table with turnover of £52m, Endemol Shine-owned Tiger Aspect is one of the producers that has benefited most from the emergence of new platforms craving attractive content.

Tiger Aspect’s Ripper Street was recommissioned by Amazon in association with the BBC, and a six-part travelogue fronted by Jack Whitehall and coproduced by Cave Bear has just been commissioned by Netflix.

Travels With My Father is one of Netflix’s first non-scripted commissions from a UK production company.

To feed these new platforms and attract some of this money to genres that were previously ignored, there is much development going on, particularly at some of the larger indies.

Clearly there is growing competition for key talent, so Designated Survivor producer/distributor Entertainment One recently tied in some key talent, signing a first-look deal for ideas coming from American actors Stanley Tucci and Steve Buscemi.

Viacom’s ownership of Channel 5 has boosted the commissioning fortunes of some producers, including Knickerbockerglory, which reported a 78% increase in turnover from £5.9m in 2015 to £10.5m in 2016, largely from supersized commissions such as year-round doc series GPs Behind Closed Doors.

Manageable cashflow

As if the complexities of finding the right idea for the right broadcast platform were not taxing enough, the chief financial officer of every indie is also earning his or her corn these days trying to construct a manageable cashflow at a time when costs and payments show up at different times – hence the growing use of the term ‘lumpy’ to describe balance sheets.

While the development costs may appear in one year for a programme, the payment may appear in another.

At Fifty Fathoms, for example, which made big budget Sky Atlantic series Fortitude and BBC1’s remake of Israeli series The A Word, turnover was previously wrapped into the Tiger Aspect group that housed it, but here debuts in its own right.

Fifty Fathoms head of production Charlotte Bloxham explains that 2015 was a year when no series were delivered, but in 2016 it completed The A Word, Fortitude and another Sky Atlantic show that will air in 2017: Idris Elba-starring Guerrilla.

This year’s Indie Survey also has several new entrants – indeed total turnover of companies not in the previous year’s survey adds up to £64m, including a small number of new indies such as Gobstopper Television, which makes Show Us Your Phone and the forthcoming Just The Tattoo Of Us, both for MTV, and had a maiden turnover of £1.47m.

“We’re growing quickly,” says Gobstopper founder Ross McCarthy. “We’ve already secured more business for the next financial year [to April 2018] than we’ve posted here. So expect us to be further up the table next year.”

Any survey of independent producers in the UK is a moveable feast. Consolidation by studios like Warner Bros and ITV Studios means that the production companies they acquire are no longer allowed to report individual turnover.

New indies are also always being created – Expectation, for example, was launched in February by former Endemol Shine Group President Tim Hincks and ex-ITV director of television Peter Fincham with an ownership stake of just under 25% from BBC Worldwide.

As the name suggests, there is great expectation that it, and the other indies, will be included in next year’s survey.