Broadcasting Committee

Inquiry into Public Service Broadcasting

A submission by Calon to the Welsh Assembly Broadcasting Committee

Calon is a television production company based in Cardiff formed in 2005 by the directors of Siriol Productions following a management buyout from Entertainment Rights plc.

The Calon team have a 25 year track record of developing and producing high quality children’s programmes made in Wales and broadcast around the World - including Superted, Sam Tân / Fireman Sam, Sali Mali and Hilltop Hospital. A new series of Holi Hana / Hana’s Helpline is nearing completion having been recommissioned by S4C and for Five’s Milkshake block for preschool children. Live action drama credits include Help ! I’m a Teenage Outlaw for ITV and Nickelodeon.

Calon has one of the best export records of any independent production company of its size in the UK, and the best of any producer in Wales. Programmes made by the Calon team have been broadcast in over 100 countries around the World. The company has produced a varied slate of programmes to meet the requirements of different broadcasters. Uniquely amongst producers in Wales, our track record includes working with S4C, ITV, BBC 1 and 2, Channel 4, Five and Nickelodeon in the UK; co-production with major networks outside the UK such as France 3, Canal+, ZDF, WDR, NHK and YTV. The company has an unrivalled track record of ensuring that most of its work is made in Wales, when the general trend in animation has been towards subcontracting to facilities in the Far East and other parts of the World.

As a result of recent changes in the law, ownership of intellectual property rights (IPR) in television programmes rests with producers in most cases. This presents an opportunity to create genuine asset value for companies which have the creative expertise to develop marketable ideas and the commercial nous to secure and exploit the IPR alongside their partners. By owning and controlling IPR, producers in Wales can also reduce the risk of service providers in cheaper economies undercutting production costs. When the IPR leaves Wales, the production follows - as can be seen with the latest series of Fireman Sam which is being made in China.

The directors of Calon welcome the opportunity to contribute towards the Assembly’s inquiry into public service broadcasting. Public service broadcasters have been the cornerstone of a vibrant creative economy in Wales. In Calon’s particular area of expertise - animation - the sector can demonstrate a world class track record in one of the few genres of programming where Welsh independent producers regularly and consistently produce work for the international market.

Case study

Holi Hana / Hana’s Helpline is a 52 x 10m animation series produced by Calon from a state of the art high definition stop frame studio near Cardiff Bay. The studio was set up in 2002 to produce a new series of Sam Tân / Fireman Sam for S4C, the BBC and HIT Entertainment. It employs around 30 people in highly skilled, relatively well paid work where talent is at a premium. The production team reflect a mix of award winning experience some of whom have relocated to the area, (eg the Art Director worked on the Dreamworks feature film Chicken Run) alongside new - usually local - trainees who are given the opportunity to upskill over a typical 18 month production period (eg two of the animators on the series started as runners). Calon has established close links with colleges and universities in Wales in order to identify new talent.

The series cost £4.5 million almost all of which was spent in Wales. The series was funded from a variety of sources including S4C, Five and the Gaelic Media Service in the UK; German broadcaster ZDF; Sweden’s SVT; TV2 in Denmark; RTBF in Belgium and the EU’s Media Programme. The final tranche of funding was provided by an investment from the Wales Creative IP Fund - the first investment by the Fund in a television project. As well as levering £4.5 million of production spend in Wales, the Fund is now beginning to recoup its investment from sales of the series. Calon has also made a significant investment in the series as a means of retaining a large share of the IPR in Holi Hana / Hana’s Helpline. This is central to the business plan of Calon since future revenues from this and other IPR will enable the company to invest in new production alongside broadcast partners.

Public Service Broadcasting and the Production Sector in Wales

Wales is fortunate in having a relatively buoyant local market in which three broadcasters - BBC, ITV and S4C - all have a presence. Between them, they make a large investment in the independent production sector which has helped to develop and sustain a vibrant and world class talent base in Wales. The drawback is that the home market is big enough to provide a good number of companies - including some of the larger ones - with very profitable business without having to make the investment required to nurture relationships and credibility elsewhere. It’s not an issue which is unique to Wales. Plenty of London producers ignore the international market in favour of a lucrative home market for the same reasons.

The consolidation of production companies in Wales has mirrored consolidation in the media sector generally. We agree that scale is helpful in creating the critical mass necessary to develop, finance, produce and exploit content for a wider market. It is certainly Calon’s belief that we need to be grow substantially as a company if we are to continue to secure network commissions against the likes of Chorion, Hit Entertainment and Entertainment Rights who are our competitors outside Wales. However it appears that consolidation in itself has not been enough to increase the penetration of Welsh-made content in the rest of the UK and internationally. Indeed, there is a risk that the reverse may be true unless further measures are taken to incentivise producers to look beyond local boundaries.

This has never been an option for an animation producer. The nature of funding animation has always required a multi market approach. As part of UK trade association PACT’s research into the children’s production sector, it was estimated that producers use exports, merchandising and other secondary sales to generate turnover worth at least three times the initial investment from a broadcaster.

OFCOM has already suggested that S4C could maximise the value of its investment in Welsh-language children’s content by strengthening incentives for independent production companies to reversion content for UK and international audiences. There is nothing new in this. Ever since the days when Superted became the first UK animation to be bought by Disney Channel in the US, programmes made in Wales and partly-financed by S4C have sold consistently to overseas markets. Network children’s content such as Fireman Sam and Hana’s Helpline were first shown in Welsh on S4C as Sam Tân and Holi Hana. It seems obvious that we should all be pursuing ways of building on this success, such as developing opportunities for co-productions with other broadcasters.

S4C’s commitment to a new children’s service is a positive step which will help mark out its territory in the future world of public service content By encouraging producers to find outside investment for their programming, broadcasters in Wales could increase the number and quality of their programmes, boosting the economy at the same time. For this to happen however, producers need to be incentivised to add value in this way. At the same time, the traditional route of securing fully funded commissions should be made less attractive for producers.

S4C in particular has a long history of opening doors to the international market for production companies based in Wales. Its significant investment in programme spend has been crucial in enabling companies such as Calon to lever coproduction funding - particularly in animation. If producers in other genres could be incentivised to do the same, it could have a transforming effect in terms of the value added to programme budgets and to the creative economy in Wales.

The UK Networks

We have followed the submissions put forward by the London based networks with interest. We cannot comment on the validity of statements to the effect that few Welsh producers bother to submit programme ideas to ITV and Channel 4 in particular. It may well be true given the apparent priority given to the local market by most Welsh producers for reasons we have already referred to. From Calon’s perspective, we can state categorically that over the past two years the company has invested as much (probably more) in developing and presenting ideas to networks outside Wales as it has to targeting S4C, BBC Wales and ITV Wales. We have had network success with animation. The process has been slower with our efforts in drama and entertainment - despite having brought on board key individuals with network credentials to work with us. It is early days, and we have been around long enough to understand that it will take time to cultivate the relationships and credibility similar to the ones which Calon already has in animation. However, it is disingenuous for the London-based broadcasters to blame the pitifully low level of network commissions entirely on a lack of suitable ideas. If ITV’s view of a meritocracy is reflected in the decline in their programme ratings over the past few years, it surely calls into question some of the judgements made regarding those ideas and the companies chosen to produce the programmes.

There is a disconnect - possibly an inevitable disconnect given the metro-centric nature of the media business. It is interesting to speculate whether the situation would improve if commissioning editors or even channel controllers were physically located in the nations and regions. Channel 4 has a senior member of its team based in Glasgow, but even in that instance the Director of Nations & Regions can only act as a broker to his colleagues in the commissioning team who make the programming decisions.

Creative Industries Strategy

The establishment of the IP Fund has been helpful. There are tangible and measurable results to be seen on a series such as Holi Hana / Hana’s Helpline where a £4.5 million project may not have happened in Wales without the Fund’s investment and Calon’s ability to lever co-production funding as a result of this. S4C also deserves credit for its long standing support for animation made in Wales. The channel has earned a reputation as a pioneer in this area, and has also reaped the rewards by building a catalogue of long running brands such as Superted, Sam Tân, Sali Mali and Holi Hana which are enjoyed by successive generations of Welsh children. S4C’s new Children’s Service is a bold statement of intent for a public service broadcaster. However, there is a risk that stretching the resources of S4C’s current investment in children’s programmes could dilute the channel’s ability to invest in flagship programmes - even when these projects deliver added value in the form of co-production funding from other broadcasters. It would be counter productive to the principles behind the establishment of the IP Fund if it was merely filling a funding gap which ought to be filled by the broadcasters.

The commercial focus of the IP Fund - unpopular in some quarters of the production sector - is, we believe, one of the strengths of the Fund. The requirement to demonstrate co-production funding and commercial return gives the Fund a clear and objective focus as opposed to more subjective and vague criteria which might otherwise apply.

We acknowledge that the tools which the Assembly Government currently has to influence the commercial development of the production sector in Wales are limited. We understand the IP Fund has a budget of £7 million over three years and has doubtless leveraged considerably more than this in co-producton finance brought to the table from other partners. During the same period, broadcasters in Wales have spent over £300 million on programmes made in Wales. Imagine the transforming effect for the creative economy in Wales if a fraction of that was spent in a way which incentivises producers to bring coproduction and other added value to this large public investment in the production sector.

We are realistic about the limitations of Government support for commercial, creative businesses. Financial assistance to attend major television markets such as MIP, MIPCOM and others means that companies such as Calon get more value from their own investment in business development which is essential in raising the company’s profile and position with clients outside Wales. Ultimately however, it is producers - not civil servants - who develop and market the content, and we believe the role of selling Wales is best left to those whose job it is to run creative businesses. Public intervention has a role to play in providing incentives to ensure that those businesses are outward facing rather than focused on a limited local market, and in ensuring that the support given is measured in tangible and sustainable outcomes.

We would be happy to provide further information if requested to do so by the Committee.

Robin Lyons - Managing Director
Huw Walters - Commercial Director

May 2008