Murdoch warns of tough time for second tier channels

Second-tier television channels such as Sky 3 and ITV2 will have to adapt or die, according to BSkyB chief executive James Murdoch.

“A soggy no-man’s land occupied by those media products will be very unpleasant and dangerous,” he says.

He made the comments as part of a speech at the Internet Advertising Bureau’s Engage conference, where he also warned the media industry that it is failing to adapt fast enough to the internet.

Murdoch predicts that in the future, brand owners will only want to advertise to genuine mass audiences or very targeted audiences. He points the finger at spin-off channels aimed at mainstream audiences as being neither popular nor niche enough.

He adds: “It’s those occupying the middle ground, offering a product which neither provides massive reach nor the ability to target particular consumers particularly effectively, that will find themselves increasingly uncomfortable.

“Bravo, UKTV Gold, ITV 2, frankly Sky 3 and many others will need to adapt in the near-term to keep up and maintain their relevance.”

Murdoch says advertising online or on a specifically designed TV channel allows advertisers to target the right demographic with “a great deal of efficiency”, but that mass audiences start to matter a lot more in the “age of multiplying niches”.

He also warns that advertisers are failing to keep pace with some of the changes brought on by digital media:

“Are advertisers really grasping the opportunity? I think it can be argued that they’re not. The internet is treated as different, separate and distinct. This view ignores the real revolution that is approaching, which is about the connectedness of all media.”

But Murdoch says media owners, as well as advertisers, must change their thinking: “TV networks, publishers, movie studios, music companies and even internet companies are all trying to figure out how they fit into a media marketplace that is a lot more sophisticated than it used to be and is willfully disobedient.

“The selling and buying of media seems to be lagging behind that pace. Our approach to advertising collectively needs to accelerate to keep up. It’s about having an effective integrated multimedia approach. Tweaking the mix, shifting spending, will not nearly be enough.”

Sky finds itself on both sides of the argument as media owner and a large advertiser in its own right with a major consumer brand to promote.

Murdoch adds: “There’s a danger that media sellers – and I include Sky – will just bolt on an internet offering and hope for the best. The industry has been guilty of that in the past.”

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