The UK’s TV production sector has adopted the mantra “survive to 2025” as a perfect storm of market pressures has led to a £400m financial hole, leaving hundreds of small companies in a fight to stay afloat this year. This week the industry body Pact, which has 850 TV production companies as members, revealed that cash-strapped British broadcasters slashed spend on commissioning programmes last year to the lowest level since the height of the pandemic. The impact has left the hundreds of small independent TV producers, the “indies” that make up 85% of the UK’s production sector, scrabbling to make ends meet as they pin their hopes on a market recovery this year. Despite enjoying all-time record income of almost £4bn in 2022, thanks to a post-Covid spending by broadcasters and streamers seeking to replenish and spruce up their programming catalogues, the financial downturn has been abrupt and precipitous. More than 70% of indies that took part in a recent survey by the industry body Indielab said they faced the risk of closure by May next year if there is not an improvement in market conditions. Over the past two years many companies have either shut, merged with other labels or stopped employing staff to produce new content, turning instead to monetising their back catalogue. They include the names behind a swathe of hits. In the past few weeks drama indie Euston Films, the maker of The Sweeney and Van der Valk in the early 1970s and more recently Nightsleeper which starts on BBC One on Sunday, let all its staff go, while Label 1, which produced the long-running BBC Two documentary Hospital, shut its doors. In February, RDF closed after a 31-year run in which it produced high-rating favourites including Wife Swap, Faking It and The Crystal Maze. The slump has fuelled a wave of job losses, while others have had their hours reduced. Freelancers have been particularly badly hit, with a survey from the union Bectu finding in July that more than 50% are not working and 38% plan on leaving the sector in the next five years. “It is pretty bad out there,” says Victoria Powell, the chief executive of Indielab. “We have had a perfect storm of issues that have led to this contraction. If we don’t act and address the challenges it may be too late for many to continue in a sector that has thrived for the past 20 years.” The combined pressures on UK TV production include the worst downturn in TV advertising since 2008, soaring inflation affecting broadcasters’ costs and the end of a period of profligate spending in the race for eyeballs fuelled by the global streaming revolution. “The era of ‘peak TV’ produced budgets and quantities of commissions that hit unsustainable heights,” says Fred Black of the media analysts Ampere. “There was a content gold rush and production companies were taking the money on the table, but that was never going to last for ever. It was a shock to see that change so rapidly last year.” The market conditions have seen brutal retrenchment across UK broadcasting. Earlier this year, ITV cut 200 jobs as part of a £50m restructuring programme. Separately, Channel 4 announced it was to sell its £90m London headquarters and lose 240 staff in the biggest round of job cuts in more than 15 years. The BBC, which has been making waves of job and programming cuts amid a licence fee freeze, said in March that it needed to make annual savings of £700m a year after a decline in its income of about 30% between 2010 and 2020. International broadcasters have also cut back amid the decline in traditional TV viewing and a need to make heavily loss-making streaming services earn their keep, with Disney slashing content budgets by $3bn (£2.3bn) and Warner Bros Discovery in the midst of a $5bn cutting drive. The knock-on effect on programme commissioning in the UK, from domestic and international broadcasters, has hammered the production industry. About 1,400 new TV series were greenlit in the UK in the boom of 2022, according to Ampere. That dropped to a little more than 1,200 last year, exacerbated by the Hollywood writers’ and actors’ strikes that halted US-funded titles being made in the UK. “The question is was there a surge and are we now coming back to something more normal, or are we going backwards,” says David Abraham, the founder of Wonderhood Studios, which has made shows including Super Surgeons and Evacuation for Channel 4 and Dodi: Last Days of a Playboy for Paramount+. “Britain punches above its weight in terms of creativity and impact. It is an incredibly successful market. Shows like Baby Reindeer show that the replenishment of creativity in the UK system can find a global audience and have a global impact. I wouldn’t say the market is easy or straightforward, but it is readjusting.” However, that readjustment is not affecting UK producers equally, with smaller companies disproportionately hit. One production industry executive points out that daytime and lifestyle programming is facing significant pressure, despite being cheap to make, as broadcasters hope to minimise cuts to budgets for more premium shows that have more capacity to stand out and sell internationally. “That middle ground, the bread and butter sector, is being squeezed,” says the executive, speaking anonymously. “We are also seeing an increased focus on ‘affordable drama’ series as value for money becomes a priority.” Pact’s figures show that more than half of the revenue value of programme commissions in the two biggest genres, drama then entertainment, went to the largest producers. And 90% of spend on drama commissions last year went to indies with a turnover of more than £25m. “The impact has been asymmetrical, with the bigger production companies not showing a major impact, while the smaller producers have really felt it,” says John McVay, the chief executive of Pact. The drop in original commissions has hurt small to mid-size companies that rely more heavily on winning new work, while bigger players who tend to have returning series to lean on are proving more resilient, McVay says. “Even when times are hard Channel 4 is still going to keep commissioning a Gogglebox, isn’t it?” Indielab’s Powell would like to see regulation introduced by the government, which she suggests is more interested in the Hollywood production boom than the “serious contraction in the homegrown market”. Measures at the top of the list include the introduction of a quota system for big streamers such as Netflix, similar to France which has forced them to reinvest 20% to 25% of their domestic revenues back into French production. There are also calls to extend the tax credit system, which offers major breaks for film and high-end drama, to all genres and scrap the £1m-plus-an-hour eligibility criteria for dramas. Production companies have endeavoured to diversify their businesses to stem the impact of the downturn. Pact recorded 51% growth last year in non-TV revenue from activities such as management and event production. The question is how many will be able to make it to the other side, and whether the last two years mark the beginning of a trend of permanent decline, or just a post-Covid correction. “I don’t know whether 2023 is about going back to normal numbers seen pre-pandemic, or an indicator of further decline in investment [ahead] from what was a big spending 2022,” McVay says. However, some signs of a possible recovery are starting to show. There were more commissions for unscripted shows in July and August than the same months last year, the first months this year to show annual growth according to Ampere. Meanwhile, commissions of scripted programming in August were higher than the same month last year, and in 2022 and 2021. January to August has also been the most prolific period for UK commissions by Netflix, while Channel 4 has resumed commissioning after instituting a freeze due to cost-cutting. “There is a saying that has been going around the industry – ‘survive to 2025’ – when things will hopefully improve,” says Ampere’s Black. “We are starting to see glimmers of light that indicate that may well be true.”