The recent Xconomy piece on Noubar Afeyan’s ideas for a biotech ”innovation supply chain” got me thinking about how other industries strike a reasonable balance between their big distributors and smaller creative types.
I don’t work in the biotech sector but, as a 37-year-old with cystic fibrosis, I am interested in the end-products. I live in the U.K. and used to work in investment banking and private equity but now I have had to step back from full-time work. I try to strike a balance between work and the increasing demands of my disease. I am a director of a couple of companies, do some consultancy and act as a patient advocate trying to improve rare disease drug development and patient access. One of the companies I am involved with is an independent production company making factual entertainment TV shows for viewers in China.
While the capital requirements are quite different, I think the biotech industry is similar to the TV production industry in the sense that both are highly creative and a small number of gorillas control access to the end-customer. Like independent TV producers, biotech companies need to invest a lot of time and money on developing a product before they can ever hope to be rewarded with product revenue.
The U.K. independent production sector was essentially created by the Broadcasting Act of 1990 which introduced independent production quotas forcing broadcasters to commission a certain percentage of their programming from independent production companies. The sector was then transformed by the Communications Act of 2003 which introduced new “Terms of Trade” in 2004 and fundamentally rebalanced the rights ownership position as between broadcaster and independent producer.
The Broadcasting Act of 1990 created a defined and regulated market for independent producers in the U.K., which required that operators of Public Service Broadcasting licences (the BBC, ITV, and Channel 4 at that time) devote not less than 25 percent of the total amount of time allocated to ‘qualifying programs’ to independent productions.
Because of these reforms, the U.K. independent production sector has grown to a position where U.K. companies can be considered as leaders in the global market for television programs and associated intellectual property (IP) with the UK program supply market ranked as the leading net exporter of television formats in the world.
Prior to 2004, the U.K. TV industry was driven by a basic ‘cost-plus’ business model. Typically, producers would agree on program production costs with the commissioning broadcaster and would receive a production fee in the range of 5-15 percent on top of costs. Independent producers were
