Move C 4 – Be sure, be very sure

 

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It is a laudable ambition for government to seek to increase the employment and economic prosperity of the nation outside of London and the South East but is it a good idea to initiate policies that will not increase the overall GDP of the country to the detriment of London?

There is nothing which ties television broadcasting or television production to any geographic location but unless moving Channel 4 provides a boost to either industry as a whole then should the move be contemplated?

The current consultation regarding a relocation of Channel 4 would appear to be falling into the idea of relocating some staff and at the same time increasing the proportion of production spend away from London and towards the regions.

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There is no suggestion that new money will be used for these purposes but simply a reallocation in percentage terms of the existing Channel 4 resources. Both of the proposal to relocate staff and to reallocate funds to non London Indies will have a negative impact on those individuals having to relocate or having to change jobs because they are unable or unwilling to relocate and on those London based production companies who are currently in receipt of the Channel 4 commissioning spend which will be reallocated to the regions.

The suggestion by PACT, to the detriment of PACT’S London membership, that Channel 4 should spend 50% of its commissioning budget outside of London would mean a further £51 million being allocated to the regions based on current figures. Such a sum would have a significant impact on the London based producers this funding would be switched away from. Many of these producers are small and rely heavily on Channel 4 commissioning. Would there be safeguards to protect the funding of smaller London based independent producers? There are no guarantees. Is there any justification in seriously effecting producers, their employees and their freelance contractors simply on the basis of a political decision?

There is also a danger that this policy would produce false regionality. There are numerous instances currently of London based producers making “regional productions” and complying with two of the three current requirements to qualify for a regional production. Whilst satisfying the rules is this really within the spirit intended? Perhaps a better solution for Channel 4 would be to ensure that all its current regional funding was properly allocated to bona fide regional companies. If the same were also the case for other broadcasters then the total injection of funds into the regions would be substantial and make any other changes unnecessary.

I would question whether it is fair, within an industry that has thrived organically and grown in a strategic location naturally, that changes should be implemented in an arbitrary and politically motivated manner to the detriment of those individuals who are having their livelihoods effected. Politically it seems odd that a Conservative lead government should seek to interfere in the workings of the market for television when such moves would be anathema in any other market. Reallocating resources to the regions would not in itself provide a boost to the industry as a whole but simply a redistribution from one area to another. Neither is there any guarantee that Channel 4’s output would be more “regional” or representative of the diverse regions of Britain. Has anyone noticed any difference in regional culture relating to BBC output produced in Salford? I would say it is the same as it always was.

Viewers are largely ambivalent about the regionality of the programmes they watch preferring to base their choices on a quality threshold rather than where the show is produced or broadcast. Attempts at setting up regional city franchises following the lead of Jeremy Hunt have failed. ITV which was established as a grouping of regionally based franchises has consolidated into a London based company despite the initial push towards consolidation being undertaken by Granada a well established North West based broadcaster and producer.

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Neither television production nor broadcasting is akin to opening a shop in the high street where locals will go to buy their television needs. Neither is television like other entertainment forms in which nascent practitioners can practise their skills locally. Actors, musicians, visual artists and even chefs can all develop their skills in a local market place. This allows a local market to develop in theatre, music and gallery spaces. The same is not true for television. Having local workers does not produce a local industry.

Television has increasingly become global both in output and in who owns it. Viewers enjoy Scandinavian drama, US reality shows and global news networks as well as home grown fare. British originated television needs to compete in that global marketplace both at home and abroad. Large international broadcasting companies will pay big money to get hold of the best programming, featuring the most expensive talent both in front and behind the camera. Removing Channel 4 from London will not give it any competitive advantage over London based rivals and will in all probability mean that Channel 4 will need to invest heavily to create a regionally based broadcaster of similar size to its rivals, money it does not have and will not be given.

The other strand of the strategy is to force Channel 4 to spend more of its production budget outside of the M25 in order to boost regional production. Where should these funds be allocated? It could be made available to all regional producers but such a broad brush strategy will do little to boost any particular region and the thinness of the spread would benefit no one in the end. That leaves investing the funds in one or perhaps two areas in attempt to create a regional super producer. The investment would allow a single company to invest in training and development given that it could be given a more secure income. A longer term commitment would need to be given until such time as the company was a size that would allow it to compete with the largest of the UK’s current producers. Such a strategy could work but would no doubt incur the ire of those regional producers not favoured by an injection of funds. It would also require a long term commitment to a single company something which any future government could easily reverse.

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Moving Channel 4 will not significantly change the broadcasting or production landscape of the UK. Neither will it dramatically boost regional economies or employment. Uprooting 850 or in all probability fewer jobs from London to somewhere will have an effect on the chosen region but it will be only one region and may only be temporary. To make a political decision which adversely affects the lives of individuals it is important to be sure, absolutely sure that the decision will in the long run have beneficial effects for the totality of the industry. I don’t believe that surety is there. To move a broadcasting business away from its London hub needs proper consideration. Other broadcasters are not going to move. ITV, BBC, Sky, Discovery and Liberty Global will remain in their London bases leaving Channel 4 potentially isolated.

Is there a realistic case for moving Channel 4? I think not.

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The Three Accounting Essentials for the Profitable Financial Management of any Business

 

There are only three things any successful business needs to focus on from an accounting perspective everything else is hot air and window dressing.

Number 1 – CASH

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By far the most important element is cash. Every business owner and manager must pay attention to and acquire knowledge of the business cash position at any given time and make reasonable predictions of future positions. Cash is the blood of the business coursing around the body and keeping it alive and well. With a little thought and a spreadsheet it is possible to estimate cash income and outgoings on a weekly, monthly and annual basis. Continual monitoring of the cash position will allow any business to maintain a cash buffer against unknown shocks and allow investment and business planning decisions to be made. Long term positive cash accumulation on its own will ensure profitability and being aware of potential problems early means corrective decisions can be made in time. Every element of the business can be reduced down to cash including financing of investments and other capital items, dividend payments to shareholders and tax payments. Cash encompasses all aspects of the business so a sound understanding of where it comes from and what it is being used for is essential.

Number 2 – MARGIN

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The second thing to focus on is Gross Profit Margin. This is simply the difference between what it costs to produce the product or service and the price it is sold for net of Vat elements. The easiest way to track this is as a percentage. Take the total margin and divide by the total sales to give a Gross Profit Margin percentage. The higher this is the better. Monitoring the margin will show improvements or falls in the profitability of the products produced by the business, allow pricing decisions to be made and make decisions regarding the costs of production. If the margin is too low it will show that it is uneconomic to be in that market and the business can decide to cut costs, increase price or exit the market all together.

Number 3 – OVERHEADS

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The third and final essential element are overheads. These are all the other pre-tax costs deducted from the total margin to give a profit number. Every pound (or dollar, yen, euro etc) saved on overheads drops straight to the bottom line. That is why cutting these costs is so beloved by businesses acquiring other businesses. Reducing overheads is the quickest and in most respects the simplest way to increase profits. Overheads have a habit of creeping up over time slowly eroding the profitability of the business unless they are routinely monitored. Cutting out non essential costs is a sure route to profitability.

Of course there is more to running a business than finance and accounting so focus on these essentials and you will have more time to deal with manufacturing, sales, marketing and finding the right people to make your business fly instead of fretting over complex KPI’s.