In a move that signals a subtle shift in the balance of power between terrestrial broadcasters and indie producers, two of Britain’s leading production companies have secured output deals with the BBC and ITV.

Alomo Prods., subsid of publicly quoted SelecTV, signed an exclusive three-year deal worth about £s;1.5 million ($3 million) with the BBC, first output agreement between an indie and the pubcaster.

In return for development funds (estimated at about $1 million over the three-year period) and a commitment to one six-part half-hour sitcom series a year, the BBC gets first look at all upcoming Alomo projects.

BBC also has exclusive call on Alomo writers Laurence Marks and Maurice Gran, creators of its current hit sitcom “Birds Of A Feather,” now into its third series. Witzend Corp., L.A.-based subsid of SelecTV, is prepping a pilot of the show for CBS.

At the same time. Zenith Group, subsid of giant facilities firm Carlton Communications, signed a three-year output deal to run from 1993 with Tyne Tees, regional ITV broadcaster for the northeast of England. Zenith is 49% owned by Paramount TV.

The deal, which covers 20 hours of local programming a year and a commitment to develop shows for the national ITV web, is dependent on Tyne Tees retaining its ITV franchise in the upcoming sealed-bid auction.

Applications due in spring

Applications for new 10-year licenses (to start from 1993) are to be submitted this spring, and a decision will be announced later this year.

All terrestrial broadcasters are committed to commissioning 25% of non-news output from independent producers by 1993 as part of the government’s plan to open up broadcasting to more players.

While a handful of elite indies are set to benefit from a new era of increased competition via lucrative output deals, bulk of the indie sector is undergoing its worst period since the advent of Channel 4 10 years ago.

Dual impact of the current economic recession and the upcoming ITV auction has stemmed the flow of new commissions to a trickle. Trade Body Independent Program Producers Assn. expects to lose 100 (out of 700) member companies over the next 12 months.

Impact of the ITV auction is particularly severe for indie producers. Incumbent ITV broadcasters will not know until October whether they have retained their commercial tv licenses and are loath to commission new series until they know their fate.

But for those indies that survive, the future seems rich with opportunities. According to a report published by media consultancy firm GAH, the U.K. indie tv production sector could grow into a £s;500 million ($1 billion) industry by 1993 as both ITV and BBC beef up their current indie commissions from 9% (3,500 hours) of airtime to 25% (9,500 hours).

Report notes that indie producers will face a slump until mid-1992 as ITV licensees await the auction results, losers wind down their production activities and Channel 4 budget cuts take effect.

But for some indie companies, the run-up to the ITV franchise shuffle has opened up golden opportunities for lucrative output deals aimed at securing development funds and guaranteed program output.

Michael Braham, head of Broadcast Communications, says he is being courted by nine different groups, either current broadcasters or franchise hopefuls.

Cash guarantee

“Output deals are a major step forward for indies. Locking up one large-scale contract for three or more years guarantees cash and the ability for longterm planning. Independents traditionally have been forced to live a hand-to-mouth existence.”

For Alomo, the logic of its BBC deal is self-evident. “We had what they wanted – the talent [in writers Marks and Gran] – and they had what we wanted, a longterm commitment to development funds and output,” was how Mick Pilsworth, managing director, described the landmark deal.

Exec notes the agreement will save Alomo both time and money. “This lets us concentrate on developing new series rather than wasting our time pitching ideas to program heads at six different ITV broadcasters and Channel 4,” he said.

ITV auction wrinkle

Alan McKeown, chairman of Alomo and m.d. of parent company SelecTV, said the BBC deal would not affect his plans to participate in the ITV auction, either as a program supplier or a shareholder in a consortium. SelecTV controls two other indie producers, Witzend (which specializes in drama/comedy) and Clement La Frenais (sitcoms).

Zenith likewise is looking to tie up more deals with potential ITV franchise holders. Zenith CEO Charles Denton said he was looking for a maximum of three output deals. Zenith also will play a major part in the application of parent company Carlton in a bid for a major ITV franchise.

Roger Laughton, head of the MAI group, which also is bidding for an ITV contract, supports output deals but pointed out the downside.

Will honeymoon last?

“On the face of it they sound very attractive, but it all depends how you feel about your partner two or three years down the line.” Ironically, Laughton, who was in charge of co-productions at BBC before leaving to head up MAI’s broadcast ambitions, played a key role in developing the Alomo deal.

The trend by broadcasters to lockup production talent via output deals could have an impact on Channel 4, which commissions half its output from indies. “One of these days, output deals could be the only way to deal with indies, but at the moment we intend to deal project by project, as we have done since day one,” said Liz Forgan, Channel 4’s director of programs.

“We have always had to compete with people who have more money than us and always had to seek out new talent,” exec noted. She said Channel 4 would continue to look for quality rather than quantity.

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