UK Screen Association plans to flag up the importance of the UK facilities market to the government after mapping out the value of the £2.2bn sector for the first time.
The trade body plans to hammer home the importance of the market to the creative industries and the wider UK economy at an unveiling the findings of its Facilities Sector Report in London today (4 March).
The research document shows that the sector includes more than 1,300 independent kit hire, post-production, transmission, studios, effects and OB companies, employing more than 25,000 people and turning over £2.2bn.
It also reveals that the sector contributes £818m a year directly to the UK economy, with £262m (excluding VAT) going to the Exchequer. Chief executive
Gaynor Davenport hopes politicians, broadcasters and indies will take note of the findings.
She told Broadcast: “It’s the first time the industry has been able to comprehensively map the UK facilities sector and quantify what it represents in economic terms.
“We want politicians to become familiar with the processes and infrastructure, and recognise that it is a cornerstone of the industry. By doing this, we will be in a stronger position to influence decision making when the government considers public policy provisions for the creative industries.”
The research - carried out by Olsberg SPI and Trends Business Research - takes into account the years 2006, 2007 and 2008, and does not include the impact of the recent economic downturn.
It suggests that UK Screen looks into business support programmes and at providing assistance with accessing R&D tax credits. But it does not recommend that the trade body uses the data to lobby parliament for industry-specific standalone tax cuts or financial incentives.
An independent facilities quota, similar to the one enjoyed by indie producers, is also discounted.
- The facilities sector has a combined turnover of £2.2bn.
- Hire grew by 17.2%, Visual Effects & Graphics by 16.8% in 2008.
- Only two of the ten segments experienced a decline in revenue, namely Physical Effects (-1.5%) and Studios (-0.8%).
- Operating profit has grown significantly between 2006 and 2008, from a profit margin of 7.6% in 2006 to 9.1% in 2008.
- The three most profitable segments, by total operating profit, are: Visual Effects & Graphics (£41m in 2008, up from £15m in 2006); Hire (£38m, up from £31m); Picture Post-Production (£35m, up from £29m)
- Whilst there is an overall very positive trend of improving profitability and margins, there are a small number of activities which display declining margins such as: Outside Broadcast (17.3% in 2008, down from 18.1% in 2006); Studios (9.5%, down from 9.9%); Hire (8.2%, down from 9%)
- When in-house facilities are included in the overall facilities figures, the sector employs about 30,000 and has a turnover of £2.7bn.
- Employment has grown by 3.9% since 2006 but the difference in performance between 2006-2007 and 2007-2008 is stark. In 07-08 just 80 (0.3%) new jobs were created.
- 99% of firms employing fewer than 250 people and 65% employ between 1 and 4 people. 33% of the workforce is freelance
- In 2008 television was the largest market accounting for £1.14bn of sector turnover (or 52%); with film and commercials contributing £403m and £401m respectively (or 18% each).
- Indies: 34% of revenue. (£385m); BBC 23% (£266m); ITV 16%. (£184m); Other UK broadcasters 12% (£139m)
- The BBC and ITV spent £1,509m and £867m respectively on producing programmes for their schedules (source: Screen Digest). This means that the facilities sector attracts 17% of BBC and 21% of ITV production budgets.
- Drama is the most important genre for the sector representing 28% of revenues, closely followed by Entertainment at 26%, with Factual coming third at 17.
- For picture post and audio post “the period 2006-2007 saw growth but the decline in the 2007-2008 was sufficient to wipe this out, hence an overall decline. It seems likely that this decline will continue.”
- It is estimated that in 2008 the sector contributed £262m (excluding VAT) to the Exchequer.
- In terms of overall economic impact (including indirect and induced impacts), it is estimated that the facilities sector is responsible for generating 50,850 jobs in turn generating £4.4bn in turnover and £1.6bn in GVA (Gross Value Added).
- Total capital expenditure in 2008 was £236m. OB facilities spent the highest percentage of their turnover on CAPEX (25%) followed by Hire companies (17%)