UK TV production sector income falls by £400m as programming budgets cut

The TV production sector in the UK suffered a £400m fall in revenues last year as cash-strapped British broadcasters reduced spending to the lowest level since the height of the pandemic.

The latest annual industry survey found that total revenues made by UK production companies fell by £392m to £3.61bn in 2023. However, just as traditional broadcasters struggle, global streaming companies such as Netflix and Amazon continue to become an increasingly important income stream, the study showed.

The latest bellwether census from industry body Pact said UK broadcasters such as ITV, the BBC, Channel 4 and Sky cut programming commissioning budgets due to factors such as a falling advertising market, viewers moving away from traditional TV and rising inflation. The freeze on the BBC’s licence fee also led to severe spending cuts .

The total amount spent on commissioning programmes by all UK-based broadcasters fell by more than 10% last year, from £1.99bn to £1.78bn, to the lowest level since the industry shut down during the pandemic in 2020.

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While spending by public service broadcasters – the BBC, ITV, Channel 4 and Channel 5 – remained relatively resilient, budgets across multichannel broadcasters such as Sky plummeted by more than 35%.

The report blamed this on part of the UK market being “particularly exposed to a difficult advertising market placing downward pressures on broadcaster margins”.

“The 2023 census shows how many producers are really feeling the impact of the financial crisis and tough market condition,” said John McVay, the chief executive of Pact, which represents hundreds of UK independent production companies.

Earlier this year, ITV cut 200 jobs in response to the UK ad industry slump as part of a £50m restructuring programme.

Separately, Channel 4 announced it was to sell its £90m London headquarters and cut 240 jobs in the biggest round of layoffs in more than 15 years – all part of an accelerated shift to streaming during the worst downturn in TV advertising since 2008.

The BBC, which has been making waves of job and programming cuts , 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.

UK independent producers, known as indies, were hit by the same decline in revenue from commissions by primarily US-based international broadcasters.

The 14.7% decline last year, to £1.13bn, was also exacerbated by the lengthy strikes by actors and writers that brought the US industry to a halt.

The steep fall was driven by programme commissions from international traditional TV broadcasters, which fell by more than 29%, to £441m.

“Next year’s census will give us a clearer idea of the longer-term impact of the uncertainty of the past few years,” said McVay.

While traditional broadcasters felt the pain, the global streaming services showed little sign of an investment slowdown, becoming an increasingly important source of income for UK producers.

Spend by the global subscription video-on-demand services (SVOD) – such as Netflix, Disney+ and Amazon’s Prime Video – shrank by just £13m year on year despite the wider malaise in the broadcasting industry.

Subscription services have been rapidly increasing their financial importance in the UK marketplace in recent years.

UK indies benefited from £684m worth of programme commissions with the comparatively minimal dip in annual spend meaning that the SVODs accounted for 24% of total revenue derived from programming commissioning last year.