The results of a City investigation into independent television production in the UK released this month will make bad reading for TV Corporation's 30-year-old post subsidiary, Molinare, and its sister company, Visions, writes Sam Espensen.
A sector report compiled by Bridgewell Securities recommends that if TV Corp is to justify its status as a super-indie, chief executive Jeff Foulser must "rid the group of Molinare and Visions in order to focus on programme production and rights creation".
Bridgewell analyst Carl Franklin said Molinare is "definitely in the last chance saloon. It has an air of doom hanging over it which is unfortunately driving clients away."
According to the findings, there are several factors contributing to the facility's bad fortunes. A 40% decline in overall revenue - from£10.7m in 1998 to£6.5m in 2002 - reflects an industry that is under severe pressure from over-supply and price competition.
Revenues are expected to fall further this year to about£5m despite a£1m investment, reorganisation and the hiring of a new managing director, Mark Foligno. In addition, TV Corp has issued two profit warnings in 2003.
The report also blames past events for the company's present misfortune. The loss of Vicki Dunn and Nicky Sargent, who left Molinare in 1998 to open The Farm, was cited as one problem, as was the loss of several channel transmission contracts and the ubiquitous desktop editing revolution.
The facility's lease on its premises in Soho will expire in 2006. The report states that even if "the facility survives its six-month probation, this may provide a natural opportunity to wind the company up".
TV Corp has reacted angrily to the findings, with Foulser commenting that "anybody who wants to write stuff like that should take a walk round the place now. Mark [Foligno] needs to be given a chance to succeed without reading every 10 minutes that we're going to close the place. He and Steve Milne have really revved the place up and they're doing terrifically. And Visions made a lot of money last year. Where are we going to find that£1.7m profit? It's silly to think we'd get rid of it."
Franklin also predicts that several post facilities will need to close in order for the rest of the sector to survive. "I think the industry would benefit from the closure of several post houses," he said. "Molinare alone would free up around£5m of work for others. Post-production needs a very severe shake-out and I would advise investors to steer clear of it at the moment."
A third TV Corp spokesperson said he felt the report was "the interpretation of a particular analyst that we do not necessarily agree with. We have no plans to get rid of Molinare or Visions." The sector report was based on information gathered earlier this year.
Bridgewell Securities is a research-based institutional stockbroking business focused on mid and small-cap companies.
Molinare is one of the UK's longest serving post companies. Established in 1973, initially as a sound recording studio over a photographer's shop in Bond Street, it is currently based in Foubert's Place.
Credits include Fighting the Warfor the BBC and work for TV Corp companies - including Robot Warsfor Mentorn - and other producers and broadcasters.