Companies involved in the TV production sector has seen a sharp rise. UK film and TV production company insolvencies have jumped 69% in the past year, from 67 to 113 according to new research from Mazars.
The research found that many of those insolvencies were of financially weaker production companies that missed out on last year’s UK film & TV industry boom as they couldn’t recruit staff.
Many of those financially weaker production companies have struggled as Covid lockdowns kept them from working. Many were then swept up in the wave of winding up petitions since the end of March this year, when the moratorium on winding up petitions was lifted. Creditors have since been able to apply to have companies wound up to recoup unpaid debt from the sale of these business’s assets.
Adam Harris, Partner at Mazars, says that despite the boom in production from online streaming companies such as Netflix, the industry is still struggling to service pandemic era debt, while recruitment issues have hampered many smaller businesses. During lockdown, many skilled TV and film production staff found alternative employment when production companies halted work. Many did not return to their original employers and have been hard to replace.
Harris says “Staff shortages meant that many film & TV production companies were unable to take advantage of upswing in orders following the pandemic, having already endured a very difficult lockdown. Once creditors were allowed to file winding up petitions, many in the sector simply ran out of road.”
The rise in insolvencies marks a sharp turnaround for the industry, as streaming services have begun to cut shows a year after a record £5.64bn spend on British film and TV in 2021, up from £4bn in 2020.
The situation likely to worsen as Netflix and Amazon Prime lose subscribers. Last year, streaming platforms fueled spending with a record £737m UK film and TV investment. However, as the major streaming services, including Netflix and Amazon Prime, cut content amid falling subscription levels, further insolvencies are expected. Adam Harris says this move has made traditional lenders reluctant to lend to film and TV producers, as the industry’s recent successes were tied to spending from streaming giants.
Harris added “Many production houses are reliant on work from streaming services. Losing a contract from a streaming service can be a major blow, especially as large production houses will also hire dozens of smaller firms for the project. Many of these will be let go as a knock-on effect of cost cutting.”