The commercials and broadcast arm of Prime Focus could be placed in administration, with the company performing an “urgent assessment” to see if it can sell the division.

In a stock exchange update on Friday (1 February), Prime Focus London PLC, the parent company of Prime Focus Broadcast and Commercials Limited (PFBC), described the company’s commercials business as “a drag on performance”. 

Staff working on broadcast post-production projects and the kit they use sit under a different entity of Prime Focus PLC, but invoice through PFBC.

However, there are plans to completely separate the broadcast aspect of the business from PFBC.

In August, Prime Focus announced it would be making some of the staff in its commercials department redundant, with the company citing lower demand due to a slump in TV advertising, which it linked to the London 2012 Olympics.

But the cost-cutting measures have not been enough to combat continuously “low volumes and suppressed margins”.

Revenue and EBITDA growth from the broadcast department are both up on the previous year, and Rowan Bray, managing director of Prime Focus Broadcast UK and Independent Film, said the company’s contract to supply post services and its VFX work and post production services for films would continue.

“While ongoing trading, in the business sectors of broadcast, VFX, technologies and film is unaffected, the commercials division has encountered long-term difficulties, due to industry pressures, and we are hopeful that a restructure in this part of the business could produce a stronger operation for the future,” Bray told Broadcast.

“We have a ten-day window [from the date of the announcement to the stock exchange]. We will continue to trade normally and then when the administration process starts we will already have a plan for the business.

“The broadcast division has plenty of good quality work, with more coming up. We have just been hamstrung by the old structure.”

The notice to the stock exchange said that “PFBC has insufficient funding to meet its debts as they fall due”, and that it was financially dependent on Prime Focus Limited, its India-based majority shareholder.