Written evidence submitted by the Association for Commercial Broadcasters and On-Demand Services (COBA)
1. The UK creative sector, including Wales, benefits from a mixed ecology of different investors, as well as public support from the Welsh government and bodies such as Screen Alliance Wales. Different companies, using different funding models, provide a wide variety of services, including linear and VoD, as well mainstream and niche or specialist content.
2. This means investment in UK content, as well as skills and infrastructure, is in rude health. For example, the latest figures show high end production topped £4 billion last year, with both inward investment and domestic production levels the highest they have been – ‘by some margin’ – since 2013, when the tax reliefs were introduced. This has amply mitigated declines in PSB spending.
3. COBA members invest more than £1 billion per annum in first-run UK content, as well as making a significant investment in skills, facilities, infrastructure, and other areas. Ofcom’s recent PSB report found that non PSB sources account for nearly 50% of all investment in UK production. A substantial proportion of this goes on commissions from independent producers across the UK, as well as on inward investment productions that shoot outside London. A recent Enders report stated that non PSB sources accounted for 39% of investment outside London, including inward investment.
4. In Wales, drama is the key genre thanks to investment from PSBs such as the BBC’s Dr Who series and non PSBs, such as the HBO-BBC co-production His Dark Materials, now in season three, and Sky’s returning series, Britannia, season two of I Hate Suzie, starring Billy Piper, with HBO, and A Discovery of Witches, with another COBA member, AMC Networks. Disney+ filmed Willow, a Disney+ original series, at Dragon Studios in Llanilid, while Sony Pictures Television became one of the investors in epic Bernard Cornwall-adaptation The Winter King, a 10-part series shooting at Bad Wolf Studios in South Wales. Meanwhile, HBO has partnered with the BBC on Bad Wolf’s Industry, for a second season.
5. Crucially, such is investment is often sustained over multiple series, allowing a creative cluster to form in the area. This investment extends to other areas, including infrastructure. In 2021, Sony Pictures Television acquired a majority stake in Bad Wolf, the founder of Wolf Studios Wales in South Wales. This will help the company grow internationally. December 2021 Sony Pictures Television acquired a majority stake in Bad Wolf to become partners in the company’s next phase of international growth.
6. This sustained success is the result of non PSB investment, PSB commissions, and national Government support, all working together. Far from being a threat to PSBs, such investment from other sources enhances their output, as many of their own commissions are part funded by non PSB sources. While co-production has always taken place, third party funding is now “the new normal” for many areas of programming, providing an estimated £400m a year for PSB commissions on top of the contribution from PSBs themselves. This is nearly double 2012 levels and has enabled PSBs to successfully mitigate any increase in production costs, as Ofcom concluded last year:
“[T]he PSBs do not have to meet the entire cost of programme making, instead trading off part-ownership of the associated rights.”
7. To put this contribution from third parties into context, it is more than all PSBs invested in drama themselves (£307m in 2017). Some have suggested that this third-party funding is drying up. On the contrary, it is increasing, as the above figures for third-party funding for PSB content illustrate. Even if the number of co-productions with Netflix has slowed, others such as non PSB broadcasters or other SVoD services are queuing up.
8. Such investment should be encouraged. Policymakers should ensure that market conditions are such that new businesses can launch and existing businesses can grow and develop, with reasonable certainty. We are strongly opposed to levies on companies to create funds for investment, especially when such companies are already investing in UK content. This would at best be a zero-sum game, and would risk reducing diversity in commissioning.
9. Indeed, the barriers to growth are skills and space, not investment. There is much discussion in the industry about the shortage of both skills and space, as a result of significantly increased demand for production. COBA members have done much to address this, such as being amongst the lead signatories to voluntarily agree to a new levy on factual commissions that will fund skills under the auspices of Screen Skills. Warner Bros was one of the companies that supported the first pilot apprenticeship schemes managed by ScreenSkills, while Prime Video is the lead partner of ScreenSkills’ latest apprenticeship scheme.
10. There is in our view an opportunity for Out of London areas to grow now that London is at or nearing capacity. The UK has many strengths, including London’s studio space, the talent pool and reputation, on which to build, but the challenge is to ensure the UK has the capacity to meet new levels of demand. One estimate puts the immediate need of studio space at two million square feet.
11. Government and industry should work together to replicate London’s success across the UK, which would help develop and expand the growth of the sector and support the Government’s wider levelling up agenda. However, any growth needs to be sustainable and support the expansion of the sector over the long term, and so policy should be developed with industry, looking at skills, infrastructure, and further support. This work could also prove to be a central pillar of wider Government efforts to level up the UK.
12. Separately the Government should also consider how to make existing initiatives, particularly related to skills, work better for the screen sector and wider creative industries. COBA members have invested heavily in apprenticeships already, but, according to Screen Skills, currently only 25% of the funds the screen sector puts into the apprenticeship levy are used. We would urge this Committee to look at how to make the apprenticeship levy work for the creative industries as we believe developing a bigger apprenticeship pipeline could help create opportunities across the UK. This should include making the scheme more applicable to the short term contracts that are prevalent in the production sector. Doing so could unlock a range of new opportunities and help support the creation of a more diverse pipeline of talent.
15 August 2022
 Ofcom International Broadcasting Market Report 2013
 Skillset, Television Sector – Labour Market Intelligence Profile
 COBA 2019 Content Report, Oliver & Ohlbaum Associates for COBA
 COBA Content Report, O&O for COBA
 Small Screen: Big Debate, Consultation, Ofcom, Section 3.21, stated: ‘While PSBs now only commission slightly more than half of all programmes made in the UK in spending terms, this is largely due to a significant increase in international and UK multichannel spending.
 According to Ofcom’s 2018 Communications Market Report, the BBC, Channel 4 and Five reported that third party funding for first-run originations represented £338 million on top of their own production spend in 2017. ITV figures were not available but, as it is the biggest commercial PSB, COBA estimates that third party funding would amount to more than £400m if it were included.
 Ofcom Communications Market Report, 2018