That Sky Sports has overtaken the BBC as the nation’s favourite sports channel is less surprising than it might appear (MW May 29). Sky has outbid and, when it was not politically expedient to outbid, has done deals with terrestrial broadcasters so that it has taken “ownership” of sport in the UK – football, rugby league, boxing, cricket whatever you care to mention.
But behind the headline figure is a bigger issue for the terrestrial broadcasters, especially the ITV network. Cable and satellite growth means advertisers and media buyers are increasingly looking to cable and satellite for a return on marketing budgets, to the detriment of ITV.
As far as audience fragmentation is concerned Mark Wood, commercial director at Sky, puts the case well. “Every time someone puts up a satellite dish on the side of their house it enhances our audience. Every time someone puts a satellite dish on the side of their house it damages the prominence of ITV.”
There are now 2.7 million cabled homes and 6.2 million dishes on the sides of houses, growing annually at rates of 26 per cent and 16.1 per cent respectively.
Two pieces of research in the past two weeks confirm the growth of the cable and satellite industry. It was a CIA MediaLab survey last week that for the first time showed Sky is the most favoured channel for sports coverage.
It came days after a study by the Institute of Practitioners in Advertising (IPA) showed that daily viewing levels for all commercial television is in decline – six per cent lower than they were five years ago. In the first quarter of 1992 we watched 3.8 hours a day, this quarter we watched 3.3 hours a day. The corresponding figures for Sky are 4.1 hours in 1992 and 3.8 hours this year.
The IPA figures give the ITV share for the first quarter viewing figures at 34.3 per cent; BBC1 stands at 31.8 per cent and Channel 4 is 10.8 per cent, while BBC2 stands at 11.7 per cent. In contrast, a combined satellite and cable stand at 11.4 per cent.
But the IPA report underlines its members concerns. “ITV’s share of viewing is still giving cause for concern, while the share of non-terrestrial channels continues to grow and is expected to overtake BBC2 in the future to become the third largest ‘channel’ after ITV and BBC1.”
Head of CIA MediaLab Anthony Jones says: “The growth of cable is strong and sustained. Looking at quarter-on-quarter growth for the past five years there has only been one quarter with no increase.
“What has driven this growth is Sky’s sports coverage. When Sky began it followed a two-pronged policy of buying up sports events and big budget movie rights. But what has happened is that increasingly its sports coverage is driving subscriptions. Sky has been able to make people believe it has the best coverage in that area,” says Jones.
Rhona Tridgell, media communications director at ad agency FCB, supports this argument. She says: “Sports coverage is always going to be more successful for Sky because these properties are unique to the station. With movies you know if you wait long enough you will be able to see them on a terrestrial channel. But if you want to see a sports event live, or in many cases see it at all, you have to watch it on Sky.
“When I was at Ogilvy & Mather we started off sponsoring Sky’s coverage of football (with its client Ford). But when we saw the awareness and audience figures it received we decided to roll out the sponsorship to cover rugby, cricket and other events. But Sky’s sports strategy has worked and I would consider using Sky over other kinds of broadcast media.”
Other media buyers recognise the growing power of cable and satellite, led by Sky. As one analyst points out: “The product cable sells on its channels is Sky.” Bill Kinlay, media director at the O&M-owned media agency The Network, points out that in some regions the Sky proposition is particularly strong.
Kinlay says: “There are certain regions like Granada and Tyne Tees where the coverage of satellite is only about two per cent less than that of ITV. This is driven by sport – particularly football. There are big teams in these areas like Newcastle, Manchester United, and Liverpool. They are often on Sky and so these areas get a lot of people buying dishes or watching the channel. But the important thing is that this year is the first one where there is now a serious alternative to ITV.”
It is interesting to note the challenge does not come from Channel 5, which was conceived as a way to break the ITV monopoly, but from cable and satellite. Sky’s Wood is happy enough to take the plaudits but is keen to stress there has been no change in its dual strategy of movies and sport.
“Our highest-rated channel is the general interest Sky One. There is no doubt sport is important for us but movies are still part of our plans,” says Wood. He adds that the station attracts big advertisers like Unilever and Ford. “ITV is the brand leader and it will always be so. But there is little doubt that its share of audience will continue to decline. Our role is obviously to get as big a share of this changing market as possible.”
Media directors have long argued that ITV has abused its brand leading role. They complain the price of spot ads is too high and have not fallen in the face of declining audience figures. They also complain the network is an inflexible negotiator, that its advertiser-supplied shows and sponsorship opportunities are small and not innovative enough.
Head of business affairs at the ITV Network Simon Johnson says the network is more than capable of delivering mass audiences. He says that quality home produced drama, soaps and sport are three areas that regularly deliver huge audiences.
He adds: “Sky can only dream of the audiences we deliver. A big Sky match will deliver at most about 2.5 million viewers. If we got figures of about 6 million for a live football match we would consider that a bad day.”
In the past 18 months, the network has acquired the rights to show Formula One, highlights of England football internationals, live coverage of the European Champions League, and the FA Cup, highlights of the Coca-Cola Cup and the Nationwide League – significantly Sky has live rights to the last two.
Martin Lowde, commercial director at Laser Sales, which sells space for Granada, Yorkshire Tyne-Tees, LWT, and Border, and which media directors label as one of the innovative sales houses, denies ITV is not alive to the changing situation.
“We are aware of the way audiences are fragmenting and the way magazine channels are growing. But there will always be viewers for mass audience events. What needs to change is the relationship with advertisers. It needs to be a more long-term strategy,” he adds.
He argues that an example of this would be a client like Ford sponsoring a sport across a range of networks. “I can see this happening. We would have to sit down with a client to make it work,” says Lowde.
In the meantime, those satellite dishes Wood is happy to talk about keep going up.