The media needs investors, but where are our tax breaks?
Thursday, December 17, 2009
| Posted by: Fiona Cullinan
Categories:
Business,
Finance
| Tags: business,
Alex Connock,
media,
investment,
Ten Alps,
government,
tax,
PBR,
AIM,
tax relief,
Pre-Budget Report,
EIS,
funding,
television,
advertising,
Peter Mandelson,
film,
X Factor,
policy,
subsidies
Alex Connock, CEO, Ten Alps reports on the media industry for the Grant Thornton blog. This month, he takes the pulse of the UK media sector and finds signs of life, but says the government is the key to unlocking more funds to help its development – through clever tax measures.
All praise to The X Factor this festive season for showing the investment world that, contrary perhaps to its received wisdom, the media business is actually not stone dead.
With 19.1m viewers and a reported £12m-worth of advertisers struggling to board its numerous commercial breaks, it tells a story of vibrant media business.
But the media as a whole is still not finding it as easy to get investment as Simon Cowell’s extraordinary lighting rig – and we all need to work at finding targeted ways of changing that, which means clever taxation.
It’s going to start with the acronyms EIS and AIM.
EIS not perfect
A recent Grant Thornton report highlighted the problems with the Enterprise Investment Scheme (EIS), and regretted the fact that the Pre-Budget Report did not extend the significantly beneficial Film tax relief to other media industries. Why that is, I don’t understand.
Is there a specific cultural or UK-strategic reason why film is more important to the nation than, say, computer game IP [intellectual property] creation or online publishing?
Is Britain improved as a country because yet more depressing UK gangster movies are produced using taxpayer subsidy rather than the same subsidy being available to (for example) the desperately underfunded makers of children’s TV? Obviously not – and the rules need changing.
This is one for people like Grant Thornton to keep lobbying on – and I think I will get involved, too. The frustration is that if someone could sit down in a room with Peter Mandelson [currently Secretary of State for Business, Innovation and Skills], and play him 10 minutes of clips from an animation company like my local Chapman Entertainment – which I don’t own any stake in – he would relax every tax restriction going.
AIM less
Next, have a look at the Alternative Investment Market (AIM). The potential flight of top TV drama production company Shed from AIM – to join RDF Media and Tinopolis in private equity-land, itself not necessarily that desirable a place – tells another story of disaffection among media firms with an often illiquid and unsupportive environment.
Aggregate investment in AIM as a whole in 2009 was a decent £5bn, and more cash was raised in October and November than in the whole second half of 2008 (£160m was raised by Borders & Southern, and Falklands Oil and Gas alone, for instance). So there is cash around, but the media is struggling to get much of it.
In fact, the interaction between media firms and often entirely disengaged investors on AIM in the dark days of 2009 was a little reminiscent of David Mitchell’s line in Peep Show: “Love life could be a rather grandiose term for staring at women on the bus.”
But why is that?
“It’s fashion,” said one leading investment banker, I know. “I remember trying to sell minerals and mining in 1999, and absolutely no-one was interested. You can’t fight fashion, but when it does come back to media, it will be rapid and it will be big.”
Putting the elements in place – the performance, the explanation, the products – is the first step. Consolidation among too many too small media companies is another.
But again, the real key is to help AIM get more funds in the first place – and the key to that is legislation, or rather un-legislation, because AIM needs its tax breaks back.
So it’s back to the government for that, too. We’d better book a double appointment.
Image: © mpclemens
Alex Connock blogs about the media sector for Grant Thornton. Read more posts by Alex Connock
Reader Comments (0)