Q & A - Charles Wace

by SWS on 14-Oct-09 16:32

We gave you the chance to put your questions to Charles Wace, Chief Executive of Twofour - his responses are below:

1. Twofour has actively diversified into digital comms, corporate comms, IPTV etc – how important has this been to the continuing growth of Twofour? Is diversification a strategic aim or business necessity?
 
I wish I could pretend that Twofour had always had a thought-out divergent policy, but the truth is that this is something that has emerged in recent years. In the beginning Twofour did anything it was asked wether it was a corporate programme or a broadcast project. If we had not had this approach we would have gone out of business many times in the early years.  That said, it has definitely been a policy over the last ten years to have a diversified commissioning base. I well remember losing two broadcast contracts that represented together about 70 percent of our turnover eight years ago and vowing that we would do all that we could to not to let that happen again. Now it seems to make perfect sense to run a 360 degree convergent business so I would say that it is now both a strategic aim and a business neccesity.
 
2. How do you ensure you have an adequate pool of talent in the business to match the growth of the business?
 
It helps having a diverse range of offices in London, Plymouth and India all for different reasons. India gvies us scale to grow our software development team alongside our hugely talented pool of systems architects and developers in Plymouth in a way that we would really struggle to do if we were just based in the South West. We currently have thirty people working on projects there and the team can expand and contract within days. Likewise, certain genres of programme would be really tough to run out of Plymouth  - that's why all our entertainment shows are run out of London albeit posted in Plymouth. Entertainment people seem to loathe to leave London for anything but the shortest of periods! Conversely all our factual and daytime shows are run out of Devon. It's easier to bring people into the companies on short term contracts in London in development and its easier to network with the commissioners from a London base. Our Plymouth location is invaluable at keeping the core team who love living in the South West so our varied geographic locations have been key to ensuring that we have an adequate pool of talent in the business matching its growth.
 
3. With narrowing margins just how profitable is TV production, does Twofour rely on its digital activities to generate profit?
 
In my opinion its never been tougher to make money in TV production. We have managed to remain profitable by keeping as much money "in house" as possible. I find that nowadays every broadcaster, big and small, expects you to routinely over-deliver  - especially in post production. Having cameras and post in-house has allowed us to take a view on this  - our margin would have been destroyed too often if we had been using  external facilities. The other source of remaining profitable has been overseas sales - they now represent fifteen percent of our broadcast revenues and tend to drop straight to our bottom line and that's vital in the current market. I think TV production can still remain incredibly profitable but that's only really possible if you have a returning break out hit of international scale and Twofour, like many companies, is still searching for this. In direct answer to the question, the Broadcast side of Twofour has always been profitable even in the current market but we see Digital as being a faster growing and potentially more profitable side of our business moving forward.
 
4.  As a tiny independent film maker, I would like some advice on how to go from making programmes to screen myself to getting programmes commissioned or considered for broadcast.
 
I would try and bring someone into your team who had a reputation for producing or directing broadcast projects. If you could not afford to bring them onto the staff I would try and  bring them in on a project-by-project basis. I would concentrate on a project that you had a passion for and a credibility for making - maybe it's on a subject or a talent that you know well. I would consider warehousing my idea with a larger company but that may be difficult in the current climate. I would also consider joining Pact and going to Pact open days etc with broadcasters.
 
5.  How important is international expansion? Twofour both distributes and generates content outside of the UK, does this give you a competitive advantage?
 
I think it's very important to have an international perspective. Virtually everything we produce has some element of overseas sales subsequently contributing money to our bottom line. We always think about the likely international proceeds of any production - often if the UK budget is not sufficient, we will look for distributors to  make up the shortfall through pre-sales. On occasion, we have funded a production in its entirety because we are confident that the overseas sales will justify its creation. This product is offered entirely to the international market and then often licensed to a UK broadcaster. That said, we think we have not  been as good as many others in developing an international strategy particularly in the US. We have taken the view that we need a stand-out returning international hit to justify opening a US broadcast office on either the East or West coast. Until then, we have agents who represent us on both sides of the US.
 
 6.  How difficult is it to run a major independent production company from the SW? In practice what is the balance between your London & Plymouth bases?
 
It is a challenge running offfices in London and Plymouth but we also now have equally significant offices in Pune and Philadelphia where we have a corporate office working on webcasting for a FTSE 100 client. It's important to make sure that each office feels empowered and informed by what the others are doing. As I am sure everyone reading this knows, especially if they are based in the far South West, it's a challenge running an office so far from London. I spend probably two days a week in London. I now have a flat in town, which is great, but it's undoubtedly been to the detriment of my family, of whom I have not seen so much. All of Twofour's directors would probably say the same - the only way we have been able to run a business like this is to make ourselves as visible as possible in all of our offices. I think our London and Plymouth offices are equally important - they are very different  but they are both vitally important to our success and growth.
 
7.  What are the key challenges for regional independent production companies in the coming years?
 
The key challenge for regional companies is to survive as part of a vibrant sector but think it's going to be tough. I think there will always be a market for small, talented companies that spring up around the talent of one individual - I think it's going to be much tougher for medium-sized independents. Politically, the power and the work is increasingly been driven by public sector broadcasters driven to the nations, and I personally think this is unlikely to change whilst they still have such considerable political power or whilst the regions have so little.  I think the South West is a particularly tough enviroment as it does not have a strong political lobby, especially when compared with the North of the country. I think the trick for regional companies would be to embrace a digital strategy where location is increasingly irrelevant.  The world of digital is increasingly less impressed by a central London location as universal broadband access becomes a reality. In regard to broadcast, regional companies obviously need to continue to control costs, keep as much of the budget in-house, and to concentrate on trying to produce returning commercial series of potential international rather than one-offs.
 
8.  When do you think that employment rates will pick up in the south west within the creative media industrys, 2010/2011? There doesn't seem to be much work around for new entrants at the moment!
 
I think the market for freelance labour is going to remain tough for the next two years for everything and that includes television. I thing digital production will continue to grow, especially if the use of technology is seen to save money. Regional production could also be attractive to broadcasters if they can see that lower overheards translate directly onto screen, as I think budgets will continue to fall. So my advice would be to keep going and maybe try and develop as many skills as possible alongside props in order to make yourself as flexible as possible.

Finally, from David Parker of Available Light Productions: Are you interested in growing by acquisition and how much would you pay for Available Light Productions?

 
We are always interested in growing by acquisition and we bought two companies last year - one in the webcasting space and the other in the South West in the space of experimental marketing - the hugely talented HMC. I think it's a tough market for production companies to sell in the current climate unless they are making lots of money - are you David!?

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