Smallscreen

Last year was, in some respects, a good year for Fulcrum, the independent television production company of which I am co-founder. Our feature film Surveillance premiered at the Berlin film festival, our documentary about Marks & Spencer won the Wincott award, and Black Gold (pictured, below right)—a documentary we co-produced about the global coffee industry—won a British Independent Film award. Nonetheless, just before Christmas, after 21 years in business, we were forced to put the company into liquidation. As the executioner says in the BBC's 1971 series Elizabeth R: "Death, when it comes, comes quickly, but the journey there is long and arduous." For those who have not had the experience of winding up a company which represents the best part of their life's work, I don't recommend it. But as I was nursing the feelings of regret, guilt and failure that accompany such an experience, I found it oddly gratifying to feel that I was part of a bigger economic phenomenon—the "creative destruction" of Britain's television industry.

This is not the place to go into the detail of why Fulcrum did not survive (I am saving that for my lecture tour). But the basic problem was that we did not have a business model appropriate for the rapidly changing world of British television. Despite our best efforts, during 2007 we found it difficult to secure the level of commissions needed to meet the fixed costs of the business (which were not lavish). Things were not helped by a mistaken decision to change our accounting system, the arrival of a completely unexpected tax demand, the failure of one customer to pay what they owed, the decision of another to pay six months late and a third to pull out of a major project halfway through. If these things hadn't happened, we might have kept going for a few more months, by which time we might have secured more work and it would have been a different story. But, as it turned out, we were on the wrong side of an industry dynamic that on balance does fantastic things for the British consumer and economy.

Television production is one of the few industries in which there are very few barriers to entry—anyone can start a production company. And many people do, as suggested by the fact that thousands of independent production companies in Britain have never made more than one film. And although there has been a great deal of consolidation in the independent sector recently, the largest companies (like Endemol, makers of Big Brother and Fame Academy) are still very small in comparison to customers such as the BBC, BSkyB and the American broadcasters. It is also still an open question whether companies that have consolidated are actually establishing any competitive advantage, as suggested by the recent profit warnings from one of them, RDF Media (responsible for, among others, Shipwrecked, Wife Swap and Faking It). So, with many small suppliers, a small number of large customers and the consequent downward pressure on price, leading to narrow margins and undercapitalised businesses, it is reasonable to ask: who would run a television company? Thousands, is the answer.

There are many things that attract people to the creative industries, but the most important is the chance to create something of your own—be it clothes, a film or a piece of music. That's why there is such an impressive range of new ideas in the media. Of course, like all producers in all industries, we hate the customers—they are so demanding, wanting new ideas that will appeal to viewers, wanting them to be excellent, not just good, wanting them at ever lower prices. But it is these pressures that force people to think more creatively about the ideas they suggest and how they might make and finance them. As a result, some companies can grow very fast. But ease of entry into an industry has a corollary—ease of exit. This creative destruction gives the industry the flexibility to adapt to changes in taste and technology and thus avoid getting stuck in the ruts that led to the demise of much of British manufacturing.

For those who want to survive, I recommend reading a very funny lecture by John Bates of the London Business School, entitled "How to Kill a Growing Creative Business," which he delivered at the Britdoc film festival in Oxford last year. Bates warns about all the errors producers are prone to make—loving your product too much, loving your customers, loving yourself, believing you're unique, concentrating on the urgent instead of the important, and so on. I will try to follow Bates's advice better next time round.

One of the features of the enterprise economy is that it is much more forgiving than the world which preceded it. So I am taking advantage of the lack of barriers to entering a creative industry and jumping back in. As (I hope) this will prove a demanding task, this will be my last television column for Prospect. When I started writing just over a year ago, I told the editor that I thought there were probably 12 things which I wanted to say about television, and one of my recurrent themes has been the role which the public sector can play in maintaining the range and quality of television. So, finally, I think I can accept being one of the casualties that the creative economy requires to keep it vigorous, so long as the government keeps its side of this bargain and prevents Rupert Murdoch and the multinational music, film and television industries constructing barriers to entry and creating the monopolies which are the enemy of cultural pluralism and real choice.