TV Industry Faces Production Squeeze as Budgets Soar While Volume Drops
At a packed MIP London session, leading television executives painted a stark picture of an industry grappling with fundamental shifts in production economics, mounting cost pressures, and the ongoing impact of streaming platforms on traditional business models.
The panel, featuring Roy Ashton (Partner, The Gersh Agency), Rob Howard (EVP, The Gersh Agency), and Samantha McMillan (CEO, Key Street Productions), highlighted how production volume has dropped by approximately 25% while costs continue to escalate.
The Budget Paradox
A key focus was the widening gap between production costs and available financing. As McMillan explained: “The deficit from distribution has grown considerably because our production budgets have gone up. So it’s finding the solutions to that gap which has been the most difficult.”
She noted that UK drama budgets that were once £1.6-1.8 million per episode have now jumped to over £2.2 million, while broadcaster license fees have remained largely static. This has created increased pressure on distribution partners to fill the funding gap.
The Streaming Effect
Roy Ashton highlighted the dramatic impact of streaming platforms on production economics: “Netflix can write a check for unlimited funds, so can Apple and Amazon.” He cited the example of a recent hit show that drew 61 million viewers to its pilot, yet the producers saw minimal financial benefit: “I think one of the producers got $50,000 for their company… You have a huge hit and we all know people rely on a financial windfall. That’s no longer there in the streaming business.”
Creative Solutions
The panel explored various approaches to addressing these challenges. Rob Howard described success with dual-commission strategies: “We’ve had a bit of success with the likes of Lockerbie and Day of the Jackal where we set it up at Sky in the UK and then Peacock in the US, and then we still got to keep the rest of the world rights and then go sell it.”
McMillan highlighted the growing importance of regional funding: “We’ve done two shows recently where we have relied on regional funding. We’ve worked with Northern Screen on Red King, which we did for UKTV, and The Guest which we were making for the BBC, we’ve worked with Creative Wales.”
Risk and Innovation
A concerning trend noted was the industry’s decreasing appetite for risk. Ashton referenced several classic shows that might not get made in today’s environment: “Cheers was the last rated show on American TV… No one wanted Lost, no one wanted Survivor, American Idol, Sex In The City… The US Office could have been canceled after one season… All those people took chances, and some executives lost their jobs because they took those chances, and now they’re not taking those same chances.”
Future Outlook
Looking ahead, the panelists emphasised the need for adaptability. McMillan advised: “I think it’s being as creative as you can be. I think it’s being nimble, it’s being open for anything and thinking outside the box. At a time when there isn’t a status quo, you have to rip it up and try again.”
Howard stressed the importance of maintaining creative quality while finding new economic models: “You have to be very creative with everything from the rollout domestically and internationally… How are you going to make a show travel? And I think that’s the challenge.”
The session concluded with Ashton calling for industry-wide action: “We have to fight back against the streamers. They’re big behemoths, and they’re taking over our business… Few times we may have the leverage, I think we need to do the best we can to create a new business model.”
This frank discussion at MIP London revealed an industry at a crossroads, seeking to balance creative ambition with economic reality while adapting to fundamental changes in how television is financed, produced, and monetised.
Editor in Chief of Ikon London Magazine, journalist, film producer and founder of The DAFTA Film Awards (The DAFTAs).
