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Matthew: Welcome to the Spotlight Podcast. In our interviews, we feature insightful people in the deep end of TV and film production and distribution. Today’s interview is with Jonathan Merrell, the Finance Director of Baby Cow Productions. Jonathan has 25 years experience in TV and film finance, initially as a Financial Controller at Hat Trick Productions, and then as a freelance Production Accountant for TV comedy.
Having joined Baby Cow and taking them through a sale to BBC studios, he has been on the board of Baby Cow since 2008 and is responsible for all areas of the finance function for the group. Baby Cow’s film credits in Jonathan’s time at the company include Mindhorn, Alpha Pap and Philomena, while TV shows range from Gavin and Stacey and the Mighty Boosh through to Alan Partridge, and most recently, Changing Ends for ITV.
Jonathan, thank you so much for joining us.
We’ll start with a couple of warm-up questions. So you work in a pretty exciting industry, but exciting can sometimes be turbulent. So what aspects of your role give you the most headaches?
Jonathan: Yes, turbulence is a good word. I think volatility is the biggest issue I face as the FD of a midsize scripted indie really, it’s not like we have a massive portfolio of projects, or we’re selling widgets where the variables are tiny. Well, what Baby Cow aims to do really, our plan at the start of the year is to make four individual sales during that financial year. So each of those four is a very bespoke piece, an authored piece that will have a different cast and crew and their own idiosyncrasies. And not making one of those four, or making one beyond those four, either way makes a mess of the forecasts, really. So looking at variables of 20-25% on budgets and cash requirements in an area so volatile that you can’t often predict beyond the end of your nose, certainly not beyond sort of six months to twelve months really.
Matthew: Actually, to win four, how many do you have to go for?
Jonathan: Well, we’ve probably got about 40 projects on the slate at any given time. And they will range from quite small projects that are aimed at digital broadcasters or sort of new talent, and they might go straight to YouTube or that type of projects, right the way through to scripted comedy that were known for, there are drama projects on the slate, there are feature film projects on the slate. So really, the key range of those four projects that we want to really make sure we get over the line during year, they’re all in the sort of 3 to 10 million pound budget bracket, and we’d need to make two or three of those to make sure that the company’s profitable and sustainable going into the following years.
Matthew: So that leads to the next question, really, and I always ask this one. But I do think it’s insightful. Doing your role can mean that you’re making loads of decisions every year. So what would you say is your approach to decision-making? And are you even good at it?
“I’m the accountant here, so it’s not for me to be taking the risks. It’s the creative team that takes the risks and it’s for me to facilitate those risks assuming that there’s some commercial viability to them.”
Jonathan: I think pragmatic is the word that comes up most often for my decision-making. And there are hundreds of micro-decisions that come up on a daily or weekly basis. I’m the accountant here, so it’s not for me to be taking the risks. It’s the creative team that takes the risks and it’s for me to facilitate those risks assuming that there’s some commercial viability to them, rather than taking any risks myself. So I think that the main objective for me in any decision is to protect the company, first and foremost. So it’s about protecting margins, and making the right decisions on behalf of the shareholders of the company, but very close behind that, it’s a consideration for the staff and the talent that we work with and the crews that we work with and the content that we put out. So we’ve got to give the creative process, and what we deliver has to have the very best chance of success and that involves giving you the financial support to do that.
And experience makes you better with all these things, doesn’t it? So I think most decisions I make, or anyone makes I suppose, they’re either things that you’ve explicitly seen before or they’re small variations from stuff that you’ve seen before.
Matthew: You’re looking at those cash flows and variances then, like a hawk, I would suspect?
“Even if you know what projects are coming up in the following financial year, you can’t necessarily schedule them into a timeframe that suits you precisely…So the turnarounds become an issue.”
Jonathan: Yeah, well, cash is king for a business of our scale, which is another reason why the volatility is a headache. Even if you know what projects are coming up in the following financial year, you can’t necessarily schedule them into a timeframe that suits you precisely because you’re reliant on writers, first and foremost, who if they are professional writers will have other projects on the go. A lot of people that Baby Cow deals with on the writing front are comedians, so stand-up comedians, or actors, or both at the same time, so they’ll just have other considerations, and they’re not going to be worried about where I’ve plotted this year. And then even if it gets commissioned the thing with broadcasters is they’ll leave you hanging on tenterhooks for quite a while, and then once they decide to push the green light, they want it delivered as soon as possible. So the turnarounds become an issue.
Matthew: Yes, and I guess at some point, it does depend on those writers, then having the creativity at that moment in time to deliver as well, right?
Jonathan: Yeah, and a lot of shows are quite bespoke, so you might find one needs daylight hours to shoot in, and then it can only be shot in the summer, or this key artist availability that you want to hang on for, and they’re not around for a few months. So there are all sorts of variables, the jigsaws of each project that either make something need to happen immediately or delay it indefinitely. And each one of these, they’re all like startup companies in their own right as well. So it’s like running three startup companies from set up to an intense period of activity and close down within a few months.
Matthew: That actually leads to a question that I hadn’t had down to ask you, but I am going to ask you because you’re talking about timing and availability. How affected has Baby Cow been this year with everything going on the other side of the pond?
Jonathan: Yeah, it’s had an effect for sure, because we would have got some good relationships with talent and agents in the US, and writers. Now, we did a drama for Channel Four that was shot in LA a couple of years ago called Chivalry that sort of enhanced those relationships as well, so we’ve now got quite a few projects where, well, it’s part of the slate development that we actively look for things that have an international feel or a transatlantic feel rather than specifically UK.
So the hiatus there has been quite damaging in the timeline, really. You’d hoped that these projects would have a life once things kick off again, but the strikes there have been quite problematic for everybody, I think.
Matthew: Yeah, I do speak to a number of people in the industry and I think literally everyone has been hit, right?
Jonathan: And the big issue, and I think there’s a filtering down to the UK deals, they seem much more unionised about these particular issues in the states. The AI stuff, that’s very problematic. I mean, it has had an impact here as well. I think there’s some resistance to the use of AI on all sides, really, it’s a major change and I’m not sure anyone quite understands the impact it might have, just yet.
Matthew: I think in five years, we’ll look back, and we’ll know what the impact was. But you’re right. Actually preempting what that looks like is spooky stuff, right?
“And on the producer side, we wouldn’t want the writers to use AI because then you can’t guarantee the provenance of the material that you’ve commissioned.“
Jonathan: Yeah. And I think in the meantime, there’s a natural scepticism of it. So I think certainly the deal in the states where the writers don’t want the producers and the commissioners to use AI, because they feel it will squeeze them out. And on the producer side, we wouldn’t want the writers to use AI because then you can’t guarantee the provenance of the material that you’ve commissioned.
Matthew: No, it’s a big thing for us, actually, as well, that we’ve had discussions about, because, you know, we’re a technology company, if we create a technology, the minute you start using AI to create part of that, you know, actually where does the IP lay? So it’s a difficult one and I think it all needs time to settle and for everyone to understand the challenge and everything that that’s going to bring.
Jonathan: Yeah. And it’s very difficult to set these things in stone when you need that time and space, maybe you need a few projects to evaluate it. So trying to put things in stone at a stage where no one quite knows what the landscape is is tricky.
Matthew: It’s almost a bit of an open book at the moment. So it’s very difficult to define things, but we’ll see. I think time will tell.
Obviously, being in the role that you are, it’s so fundamental now to understand technology as well as the finance aspects. So what big changes do you think are on the horizon in the industry? And how do you anticipate that you are going to address those changes?
Jonathan: One of the big issues for the industry is the fragmentation of the market really, and how you can address that with the data that’s available. And the methods of funding are really changing. I think in the UK market, they’re very challenged. The broadcasters have different challenges, individual ones, there’s the BBC with the frozen licence fee, ITV and Channel Four with the downturn in the advertising market, streamers seem to be cutting budgets. So is there another way to market? How do you do the research about what shows are going to work, particularly in the new, fragmented market? And how do you get those broadcasts and streamers to share that information, and how can we tailor what we pitch and what we make to suit those markets?
“One of the big issues for the industry is the fragmentation of the market really, and how you can address that with the data that’s available.“
I think on the administrative side, it’s ways of working that are the big, well maybe not a challenge, just the way that things have evolved over the last couple of years, really. At Baby Cow, we’ve always had, well, certainly for the last 10 years, had a system and accounts package that’s holistic, it caters for the company activity, but also has functionality for production to be in there as well. And so when we bring in freelancers, we train them up on our systems, they then work on our systems and go out to set. And that isn’t really the way the thing seems to be working more recently, it does seem that while accountants are more scarce, either gone in-house or left the industry, and we’re finding that we’re bringing in people that have their own systems and want to do it their own way, and we’re sort of back to manual consolidation in a lot of cases.
I think now Baby Cow is definitely a point where systems even upgrade, because we’re creaking a bit. We did a lot of bespoke work on the systems we have and the dumps served us very well, but it’s been a while. So it’s whether we go for it another system that’s fully rounded, and brings everything in, or whether we sort of accept that this is the way it’s going to be for at least the next few years and go for a more fragmented approach and have maybe a bespoke production accounts package alongside the corporate one.
Matthew: Yes, I think it depends where you’re going to put your production accounting going forward, isn’t it? Because one of the things that we found is that production accountants, standalone, do have their own preferred technology as such. But we’ve also seen that some accounting firms that do production accounting, are actually turning around and saying, “Right, well, we’re going to use a certain technology as a platform for anything that we do.” So yeah, I think it’s going to it can go either way, can’t it? It will be interesting to see what happens.
Jonathan: Yeah, it’s a functionality, I suppose if you have the ability to be holistic without necessarily utilising it, then it becomes a matter of cost, against the need and the resources you have available.
Matthew: Absolutely. I think you’re right, though, in terms of the fact that there is a lack of production accountants available for the production that is going on. And I guess where that resource comes from, will probably drive a lot of the discussion around technology going forward.
My next question really is what frustrates you about some of the technology in the industry at the moment? And how much of that is the fault of the tech suppliers, not delivering the tech or the users not embracing the tech?
Jonathan: I think there’s a frustration around feedback generally in the industry, about the amount of time and effort that goes into developing projects and the expense of that. And then not necessarily knowing why things don’t come back in a positive way or how the research goes at a broadcaster or wherever it may be. It’s things like viewing figures as well. You tend not to be able to find that stuff out very easily, and that should be something that’s really readily available in this day and age.
Matthew: Is that because there are so many platforms? Is that the trouble?
Jonathan: There does seem to be some protectiveness around it as well? Yeah, but possibly, I’m not actually all that close to that side of things, I guess. Again, on the admin side, I think it’s compatibility of products, I suppose, is the big issue. Constantly being pitched various, bespoke products that will do a bit of work for us, but they’re not compatible with all the other stuff we already have. So you end up with a position where you’re running so many different platforms and different things. We’re running Excel for cost reporting and external payroll, separate purchase order systems, that sort of thing. It’d be great if there was some sort of Movie Magic budgeting or Final Draft integration to an accounts package. I’m not sure if that’s anywhere along the horizon, but those are two really strong existing packages that non-accounts people use that it seems that there would be scope to bring those into finance.
“We’re constantly being pitched various, bespoke products that will do a bit of work for us, but they’re not compatible with all the other stuff we already have. So you end up with a position where you’re running so many different platforms and different things.”
Matthew: This is not a pitch, but we do have customers that bring Movie Magic budgets into our software, funnily enough, but for us, that’s one of the things that we’re trying to do, we’re trying to keep everything on one single platform. So we have production, accounting, royalty reporting, and tenant reporting, we are releasing another app next year for rights management as well. So we sort of recognise the need to bring a lot of these things to all on one platform. And these are all these will literally all be within the same environment, same Microsoft platform. So we’re trying to do that, Jonathan, but it’s interesting to hear your thoughts on that.
Jonathan: Those are good innovations, because what we want to avoid is a sticking plaster approach all the time, where you’re constantly just upgrading one little piece at a time and ending up with seven or eight different platforms in order to fill the gap.
Matthew: It’s always interesting to me, because I do hear that so often. That disparate approach is still so prevalent out there.
Your organisation, I guess, is embracing digital transformation, or intends to, but when introducing technology within your organisation, how much of the process up until now has involved genuine change management? Because we see that all the time. And that change management thing is becoming so much more important.
Jonathan: I think, for us, it’s been quite piecemeal. I mean, we’re always looking at the same end goal. I suppose before you and I were in this business, people shot films, people made programmes, and the idea was to keep them on budget, you’re trying to do the same thing. So it seems to be an evolution rather than a revolution thing. And it needs to be with the buy-in of everyone in the team really that that has got to provide information into the process. So whether that’s the Head of Production buying into the budgeting package that comes with the software or the Coordinator buying into the purchase ordering system, or whatever, you need the whole team to be on board with any significant changes to that. Although I’m always slightly wary of non-account staff being involved in inputting stuff into an accounts system.
So I suppose the bolt-on thing that I was railing against just now, it can work for small, independent producers, but it would be great if we could implement something that had an ability for other people to feed in their bits so that we weren’t just picking bits of information out of different sources.
Matthew: Yes. I think you’re right. I think in an organisation like yourself, if you are implementing a new solution or a new set of processes, it’s probably just ensuring that people know that something new is gonna happen, why it’s going to happen and what it’s going to deliver for the organisation. I guess that’s possibly as much change management, on most occasions as you need you.
As I said earlier, you’ve spent 25 years in TV and film finance, there are possibly people out there that might listen to this podcast at the start of that journey, so what’s the one best piece of advice that you would give to someone at the beginning of their journey in the industry?
Jonathan: I think I’d say to try to try everything rather than having any preconceived ideas. I think that would be the big thing. My daughter has recently finished a film degree and has done a bit of floor running since she came out, and has done that with the idea that it will give her a view of what literally everybody does on a film set or a TV set so that she gets that breadth of experience before she decides what it is that she wants to do. And I think that’s really healthy.
“When you have a small team where everyone has to muck in and help with everything you do, you just get so much experience of the whole business really I think that’s that’s invaluable.”
We do seem to get a number of people who join on work experience or whatever that come out of film school thinking I’m a director, and it’s like, okay, well, we need six cups of tea and this photocopying done. And I think having an approach that isn’t pre-determining what you want to be, I think that’s really, really helpful. And I think small indies are a great place to do that. I think even from my own experience, because I’m often quite reductive about my own time at Baby Cow, and say we make scripted comedy, but the reality is that Baby Cow make podcasts, we’ve made Radio Four comedy, we’ve made title sequences for other people shows, we’ve done international co-production, we’ve made small indie films and make big budget feature films and made dramas. It’s just the breadth, and when you have a small team where everyone has to muck in and help with everything you do, you just get so much experience of the whole business really I think that’s that’s invaluable.
Matthew: Be part of the team before you become whatever you want to be, right?
Jonathan: Yeah, you might change your mind as well. I said it just gives you a proper perspective.
Matthew: Brilliant. Thank you for joining me. It’s always a pleasure catching up with you.
Jonathan: Lovely. Thanks, Matthew.
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