British Parliament Eyes Changes To High-End Drama Funding Scheme & Terms Of Trade For Superindie Production Groups

"The Crown" Netflix

The way that high-end drama is produced in the UK, including on shows such as The Crown and Game of Thrones, is set to change after the British Parliament made a number of recommendations in a wide-ranging review of the television business.

The House of Lords, the upper chamber of the British Parliament, has recommended changes to high-end TV tax relief, which subsidises big-budget dramas filmed in the UK as part of a review on public service broadcasting from its Select Committee on Communications and Digital.

The committee has also made a number of recommendations about the terms of trade – the framework that allows British producers to keep hold of IP and rights – and listed sports rights but has avoided plans to introduce a levy on global SVOD services including Amazon, Apple and Netflix operating in the UK.

The committee’s report – Public Service Broadcasting: As Vital As Ever – comes after months of deliberation and the appearance of high-profile appearances from the likes of The Crown producer Andy Harries, All3Media boss Jane Turton, Netflix’s Anne Mensah, Apple’s Jay Hunt and Amazon’s Georgia Brown at the House of Lords.

The report was commissioned as public service broadcasters, including the BBC, ITV, Channel 4 and Viacom-owned Channel 5, have struggled to appeal to younger audiences. The BBC, for instance, found recently that viewing by 16-34 years olds halved since 2010.

One of its key recommendations was changes to the High-End TV Tax Relief, which was introduced in 2013 by the government to boost the production of big-budget scripted series. Producers are eligible for 25% tax relief on shows that cost over £1M per hour. However, the House of Lords’ committee noted that while this relief has benefited the UK production sector and encouraged high levels of inward investment with series including The Crown and Game of Thrones, it warned of a “serious” risk of the sector reaching full capacity and “overheating”. The relief also makes it less attractive to produce mid-budget drama, which is crucial to the development of skills in the production sector.

As such, it has recommended that the High-End TV Tax Relief “should be tapered in” from £800,000 to remove the incentive to spend more to reach a cost of £1M per hour.

One of the worries of the scripted boom was that British broadcasters were no longer able to afford to produce high-end drama without partnerships with U.S. and international broadcasters and streaming platforms.

Wolf Hall (left) creator Peter Kosminsky was among those that argued that a levy should be placed on these SVODs. However, the committee has decided against pursuing this as a strategy.

It noted in the report, “In a fast-changing market public service broadcasters’ access to third-party funding for programmes for UK audiences should be kept under review. We do not support proposals for a levy on SVOD subscriptions at this time, but we would expect Ofcom to assess the merits of a levy if the situation changes and to make recommendations accordingly.”

Terms of Trade

The committee also supported the continuation of the terms of trade for British producers, which means public service broadcasters cannot make acquiring the secondary and international rights a precondition of buying the primary rights to a programme, as per the 2003 Communications Act.

Dan Cheesbrough, Commercial Director of Sherlock producer Hartswood Films, said, “I will die in a ditch for the Terms of Trade. They need to be protected. Anything that is going to compromise or erode or challenge them needs to be resisted desperately. Ironically, there is a large voice within the BBC that would love to see the Terms of Trade overturned. I do not think it is in its own interests to see the Terms of Trade overturned, now more so than ever.”

However, as part of its review, the committee considered whether the terms of trade, which were originally introduced to protect independent production companies from the dominance of public service broadcasters, needed to change given the growth of superindie production groups.

“We support the continuation of the regulated Terms of Trade between PSBs and independent production companies but recommend that they should be reviewed to reflect better their original purpose of protecting small and medium sized production companies rather than large international companies,” it noted. “Given the degree of consolidation in the market, in order to uphold their original purpose of protecting small and medium sized independent production companies, Ofcom should review whether the Terms of Trade should still to apply to larger companies.”

In sports, the committee urged the Secretary of State for Digital, Culture, Media and Sport to “modestly” increase the number of listed events, which keeps the likes of the Olympic Games, World Cup Finals and Wimbledon Tennis finals on free-to-air television. It praised the government for its plans to add equivalent women’s events and the Paralympic Games to the list and recommended including The Ashes cricket tournament and The Open Golf Championship to the list.

Chairman of the Committee, Lord Gilbert of Panteg, said, “For many people, especially young people, watching TV in real-time is now the exception rather than the norm. While the arrival of SVODs has created exciting opportunities for the creative sector and for audiences, particularly in drama, we are concerned by the unpredictability of future developments. PSBs provide a stable investment platform for a diverse range of content, made for UK audiences, and freely available on a reliable over the air platform.”

“At a time of polarisation, public service broadcasters play a role in unifying the country through shared experiences. Our recommendations will ensure that public service broadcasters are able to continue to serve us and afford to make world-class programmes. If we fail to support our public service broadcasters, audiences would miss them when they’re gone,” he added.

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