Jeremy Roberts, a partner and head of broadcasting & content distribution at UK legal firm Sheridans, explores the potential threats posed by further Covid-19 restrictions once lockdown is over and provides a five-point plan to keep shows on track.
From what we currently know of Covid-19, even after the pandemic ebbs and the current lockdown is lifted, there is a high chance of future flare-ups of the virus, leading to further restrictions.
As a result, each new production will face a new ‘known unknown’ risk – the chance of another lockdown, meaning potential absences of onscreen talent, cost overruns and delayed delivery.
Laying off production risk
To appreciate the potential scale of the problem, look at the production model for high-end drama.
Buyers – broadcasters, VOD platforms and distributors – commit to paying large fees in return for the future delivery of programmes. By and large, those fees are fixed. Buyers don’t pay more if the programme ends up costing more to make. The producer bears the risk of cost overruns.
However, the producer has various ways of laying off that risk: experienced production managers create the budgets, those budgets contain contingencies for unforeseen costs, many productions have completion bonds – a guarantee by a third party to step in to complete and deliver the programme – and, of course, all productions are covered by insurance.
These protections are so robust that banks compete amongst themselves to provide the low interest loans that most producers of high-budget scripted content need to finance their production costs.
The impact of Covid-19
Those banks will not lend unless producers can demonstrate that they can produce and deliver the show, come what may. In the face of future shutdowns, they can’t. Similarly, buyers will be loath to commit to paying large fees if there is a significant chance the production will be shut down, delayed and almost certainly go over-budget.
In normal times, we would look to insurers, but they are now excluding this and other pandemics. Some coverage will doubtless re-emerge – perhaps covering limited shooting blocks, or cast and crew carrying a form of ‘immunity certificate’ – but it will almost certainly not offer full protection.
The existing government measures will probably extend to any future shutdown too, but they fall some way short of underwriting all additional costs caused by any future restrictions.
Producers and buyers want to line up productions ready to go as soon as the current restrictions are lifted, but the route to greenlight looks harder than ever.
The way forward
We have reviewed the issue with various stakeholders, and here is what we will be advising our clients:
There are still a huge number of unknowns – such as whether or when people with immunity to Covid-19 will be able to return to work outside of their homes – but producers cannot wait for these questions to be answered.
The best case scenario for the industry as a whole is for producers to use the current shutdown to line themselves up to start production as soon as possible once the current restrictions are lifted. That means agreeing terms with buyers, cast, crew and banks now, leaving as few unknowns as possible to be filled in on full closing.
All the stakeholders need to take a sensible and flexible approach. If they don’t, the damage to the UK TV economy could last months or even years after the current restrictions are lifted. If they come together, they will give themselves and the industry as a whole the best chance to bounce back quickly.
Jeremy Roberts is a partner at UK legal firm Sheridans specialising in all aspects of the TV sector, and is head of the firm’s broadcasting and content distribution practice. His clients include award-winning high-end drama producers, US studios, major broadcast networks, sports media rights owners, and some of the UK’s best known on-camera talent.