A price squeeze is limiting indies' post choices, says Patrick Holzen.

Are you finding it impossible to rent a cutting room in Soho? Rising rents and falling rates charged by post houses are making offline suites in the capital a thing of the past.

Sadly, post house Resolution became the latest company to close, with managing director Mike Saunders claiming that high overheads and falling rates meant the business model for editing facilities was no longer viable.

Production companies may feel that they hold all the cards when negotiating a price for offline. They come armed with the knowledge that they have the option of doing these cuts in-house, or going out of town.

The bigger indies may have a contract with some of the main facilities and can dictate the rates because no one wants to lose the business of a company prolific in all programme genres to a rival facility.

These factors have led to producers securing offline suites in central London for very low rates - between£700 and£900 per week on average. That's cheaper than staying in a Holiday Inn! Without any kit, you can rent a production room in a facility for£250 per week - you just need to look at how much more an apartment would cost to rent over the same period to see how far facilities' prices have been depressed.

But the downward spiral of rates comes at the production company's peril and this decline of offline services is the starting point for a whole industry shift.

Soho facilities bosses are winding down offline services in an attempt to maximise returns on their expensive space by offering more specialised services such as grading, VFX or online services. This means post supervisors will soon no longer have the option of being close to the rest of their post because they have to go out of town for their offline due to the cost of post going down so dramatically. And if they keep putting pressure on rates, they won't get other services either.

Next stop Mumbai, because really the sums won't work here much longer. Take audio services: Pepper has just invested in this area so that we can offer a one-stop solution to our customers. To my disappointment, at our time of entry, these rates have already been driven down to the point that in the same space that it takes to host a mix studio, we could put 50 visual effects seats.

The post supervisor's job will turn into the role of a post-production manager charged with managing assets that might be dispersed all over the country or the world. And they won't have the same choice, which is the essence of small industries.

You either like Pepper's way of doing things or you may prefer some other facility. You may like a certain colourist or the character of a certain place - but if you keep depressing the price, there will not be any room for preferences. We all have to make money, but production companies: don't keep cutting the rates just because you can. In the long term, you will restrict your own choice of post-houses because you will have driven half of them out of town or out of business.

Production companies have often justified their low budgets by pointing out how they, too, are suffering from having budgets squeezed. To which I say: if you must cut your rates, then share your rights. If you are lowering rates paid upfront to post houses, maybe it is time to look to the rights you own to compensate them.
Patrick Holzen is joint managing director of Pepper. Broadcast LIVE & VideoForum runs from 30 January to 1 February at Earls Court 2.
For tickets visit www.broadcastvideoforum.co.uk