Vinculación con la colectividad

The TVWF Independent Production Quota

The other major area for debate in terms of the ‘independent production’ comes from the context of the European television industry, which represents about two thirds of the overall EU audiovisual market and employment (European Audiovisual Observatory 2004). As noted earlier, in an effort to enhance the competitiveness of the single market and to balance the increasing deficit within the US in audiovisual trade and to defend European cultural interests in the context of the WTO, the EU has eagerly liberalized the broadcasting sector, which has resulted in an explosion in the increase of commercial broadcasters, growing from four in 1982 to more than three thousand in 2004 (ibid). Correspondingly, in the light of such unprecedented growth in commercial channels, the TVWF Directive was designed and implemented in 1989, based on the general provisions of EU competition law. The aim of this was to stimulate new sources of cultural production of programs, especially from independent producers. According to the Directive:

Whereas a commitment, where practicable, to a certain proportion of broadcasts for independent productions, created by producers who are independent of broadcasters, will stimulate new sources of television production, especially the creation of small and medium-sized enterprises; whereas it will offer new opportunities and outlets to the marketing of creative talents of employment of cultural professions and employees in the cultural field.27

To fulfill this aim, the Directive stipulates in Articles 4 and 5 which have an effect as the independent production quotas on broadcasting in the EU, that member states are required to ensure that at least ten percent of their programme transmissions must consist of European works made by independent producers. Importantly, although the Directive does not provide an account of what constitutes ‘independent producer’, however, it does provide a general framework, by stating that the member States should consider criteria such as the ownership of the production company, the amount of programmes supplied to the same broadcaster, and the ownership of secondary rights.

Such criteria, focusing on issues of ‘ownership’, highlight the fact that the television industry in Europe is still dominated ‘by incumbents who are the inheritors of previous public monopolies’ (Buigues and Rabassa 2007:284). In addition, with regard to the development of independent production, the issues concerning media ownership are considered as a fairly extreme form of intervention to avoid market abuse and to shape the European media market (Sawyer 2005; Doyle 2003). However, while the EU Directive sets out common

27 Television Without Frontiers Directive 1989, European Council Directive 89/552/EEC of 3 Oct. 1989.

rules for its member states,28 Europe has yet to reach a Community-level intervention regarding media ownership at national level (Wheeler 2004), and controls on media ownership continue to be regulated primarily at the national level.

UK media policy has been seen as being inseparable from the commercial principles of the EU’s audiovisual policy (Collins 1994).Therefore, the following section will look further into the UK, which is the largest audiovisual market in the EU, to examine how the regulation policies influence industrial structures, and hence, the growth of independent productions.

The Development of ‘Independent Production’ in the UK Television Industry

The End of the ‘Cozy Duopoly’ and Emergence of Independent Production

Ever since the post-war period, the UK television industry was characterized as a vertically integrated monopoly, in which the BBC was predominantly the only public broadcasting service, operating with the revenue from a guaranteed license fee system and as the only producer-broadcaster of all programmes. In 1955, with the establishment of Independent Television (ITV), the BBC’s monopoly was succeeded by a duopoly competition for television audiences. However, both broadcasters operated in a highly vertical, integrated ‘studio’ manner in that they produced and broadcast programmes in their own studios by maintaining large permanent in-house workforces, covering all aspects of the production process

28 This is mainly due to the basic Treaty provisions that the stated ownership rules should fall within the regulatory supervision of the member states and the political sensitivity of ruling on media concentration in them. (Collin 1994)

(Saundry 1998). They thus enjoyed a long period of financial security and stable demand for their programming, which was later referred to as the ‘cozy duopoly’ (Peacock Committee 1986).

During the 1980s, guided by the Conservative government’s neo-liberal preference for encouraging competition and reducing state intervention, two major events signalled a significant shift toward a market-driven framework for the regulating of broadcasting services and as a consequence, contributed to the growth of independent production. Firstly, in 1982, as a major action taken by the Conservative government to end the ‘cozy duopoly’, Channel 4 was established under the 1981 Broadcasting Act. Importantly, it was set out to operate as a broadcaster-publisher rather than a producer; therefore it encouraged the growth of the independent production sector through its programming policy from a wide range of sources, including independent producers (Saundry 1998). Secondly, the Peacock Report came out in 1986,29 _{and this marked another turning point for the}

growth of independent production. It indicated that the vertically integrated structure of broadcasters was restraining the development of a strong independent production industry in the UK. Therefore, to increase market competition, the 1990 Broadcasting Act imposed a quota system, by which both the BBC and ITV were required to purchase twenty-five percent of their programming from independent producers. Significantly, in the Act (section 186), the UK government provided a strict definition of what constituted independent producers.

29 The Peacock Committee was initiated by the Conservative government of Margaret Thatcher on March 27, 1985 which was led by Professor Alan Peacock.. It was a review into the financing of the BBC. The report of the Committee with the recommendations for BBC and public broadcasting service came out on 29th.May.1986.

In brief, an independent producer is one: (a) who is not employed by a broadcaster;

(b) who does not own more than twenty-five percent of a broadcaster; and (c) in which no single broadcaster owns a stake of more than twenty-five

percent or no two broadcasters together own a stake of more than fifty percent.

Increased Market Demand for Independent Production

The twenty-five percent quota on broadcaster ownership and independent programming can be said to be the beginning of a series of regulatory moves to foster greater competition within the UK production sector. In fact since the 1980s, the UK government’s regulatory approach has increased market competition, intensifying pressures on the operation costs of terrestrial broadcasters, and as a result, increased their reliance on external content suppliers, thereby contributing to the development of independent producers (Starkey et al 2000).

During the 1990s, with the emergence of digital broadcasting, which put an end to spectrum limitation, another wave of expansion of ‘media conglomeration’, led to an increase in cross-sector production and distribution of content. This made the existing regulatory frameworks insufficient. As a result, the issues of media ownership and competition regulation came to play an increasingly crucial role in altering the regulations in the AVS across Europe (Buigues and Valérie 2007; Sawyer 2005; Doyle 2002). Under the Labour government’s ambition of boosting its international competitiveness, media ownership regulations were further eased by its opening of the UK media market to major integrated competitors from other EU and non-EU countries. As a result, by the beginning of 2001, there were over two hundred channels on the UK television landscape. With only a few of the

larger companies having an in-house production capacity, the demand for independent production further increased.

Better Terms of Trade for Independent Producers

Such a rationale for market economics continues to be favored by the Labor government in its rhetoric and pursuit of a creative economy since the late 90s. Within this context, the DCMS and DTI collaborated, to publish the Communication White Paper in 2000, so as to deliver a prospect of ongoing deregulation of media ownership which climaxed and encapsulated in the recent most important and comprehensive piece of legislation of the AVS - the 2003 Communication Act. While emphasizing a strong independent sector is crucial to the quality and range of British broadcasting and hence the growth of its creative economy,30 the 2003 Communications Act was also designed to further alter the bargaining position of independent producers, by stipulating improved terms of trade between broadcasters and independent producers. Overall, the retention of copyrights by independent producers brought by the Act could be seen as the UK government’s fulfillment of its own commitment under the TVWF Directive ‘to give the criteria of ‘’retention of secondary rights’’ a more prominent and

compelling position’ to the independent producers.31 According to the 2006

Independent Production Census published by UK trade association Producers’ Alliance for Cinema and Television (PACT), the new terms of trade implemented since early 2004 have been proved to attract increasing investment from the

30 The UK government-level commitment to foster the independent production sector can be found in numerous government reports and documentation. Visit website archive of DCMS for examples. <http://www.culture.gov.uk>

31 UK government response to the Commission Consultation on TVWF Directive 89/552/EEC as amended by 97/36/EC.

financial sector towards independent production.

The impact on the independent production sector brought by the Act will be further elaborated in Chapter 6 in the discussion of the empirical context in the UK. Nonetheless, the growth of the independent production sector in the UK demonstrates that it has been driven by a combination of macro-factors, including demand, technology, competition and globalization, triggered and enhanced by various forms of regulatory interventions. While technology triggered the proliferation of commercial channels and the relaxation of the regulations encouraged greater competition, such developments resulted in increasing market uncertainty to broadcasters. The result is that the UK broadcasters and the independent producers now rely on each other in a complex way for their production capacity (Office of Communication, 2006). In particular, with their aim of securing continuing control over production and distribution, a similar scenario to that undergone by the independent production sector in Hollywood has also emerged in the UK, as a series of mergers among the independent production companies taking place since the 1990s (Saundry 1998). The consolidation of the independent production sector has recently been accelerated, as they are now able to retain more rights of their productions and their bargaining strength against the broadcasters is expected to grow further. 32

The UK experience demonstrates the background of the emergence and growth of independent production in the European context. On the one hand, it has been

triggered by a series of sheltering regulatory measures to safeguard the output quotas by independent producers, in order to bolster production diversity and market competition; on the other, the recent attempts to strengthen the economic competitiveness of the broader European AVS by relaxing the regulatory control over media ownership play a further role in the growth of independent productions.

2.3.3 Research Implications

My attempt in this section has been to demonstrate that both the scenarios of the development of the independent production in the US film industry and the UK television industry can best be described as an ‘industrial activity’ which is illustrated in the following conclusions drawn from the above discussions.

Firstly, as Kleinhans (1998:308) indicates, ‘‘’independent’’ has to be understood as a relational term’. It means independent in relation to the dominant system, rather than a practice that is totally free-standing and autonomous. This leads to the second conclusion that the network characteristics of independent production are evident. Independent production has developed historically as a result of interdependence with the major studios/broadcasters; it has from the outset leant towards a ‘networked’ model, and increasingly across sectors, resulting in a production model of ‘cross-industry networking’.

Thirdly, it can be said that the expansion of independent production in the core of the AVS (the film and television industries) is largely an outcome triggered by regulatory and institutional changes, and subsequently, accelerated by the

operational decentralization of large corporations (studios/broadcasters). As a result, independent production emerged, evolved and became consolidated.

Additionally, the relationship characterized as competing and cooperating between majors and independents is found to be conducive to the growth of the independent production sector at the industry level, as it creates market competition. However, at the production level, the empirical data has demonstrated that the label ‘independent’ comes at a price, as these ‘independent’ producers, whether inside or outside of the orbits of the majors, still operate in a fragmented market, relying on a contractual and one-off project-based business

(Levison 2007; Tzioumakis 2006; Ofcom 2006; EC 200533; Wasco 2003; Blair

2000) .

Finally, while it is clear that externally, the technology, regulatory and market impacts have contributed to the emergence and growth of the independent production sector, at the same time, internally, the entrepreneurial and creative nature of pursuing the integrity of ‘independents’ has also been the central drive for the individual producers to retain creative and commercial control over their enterprises and hence for the development of the sector. Yet such tendency has not been empirically and qualitatively examined in the broader and commercial context of cross-sector collaborations.

Based on the above discussions, the term ‘independent production’, utilised in this

33 European Commission (24 May 2005) Final Report, Impact Study of Measures concerning the Promotion of Distribution and Production of TV Programmes Provided for Under Article 25(a) of the TVWF Directive.

study, refers to a TV/film production carried out independently by a producer or production company who are themselves responsible for the financing, production, distribution and the rights management over their productions. This rather general definition is also indicative of its value to the AVS because such producers are necessarily dynamic, entrepreneurial and network-dependent.