Broadcasters’ stability is platform for growth

Despite the dark economic clouds overhead, the major TV broadcasters, with the possible exception of Five, have reasons to be cheerful

We’re in the deepest recession in living memory. Unemployment is rising inexorably towards 4 million. And the media has been hit disproportionately hard, particularly ad-supported media where the declines have been between 30% and 50%.

Terrible times obviously. Armageddon just around the corner. Well, up to a point.

Jobs may continue to go as costs are trimmed but what we are now seeing, given the times, is a remarkable degree of stability in UK television.

In fact, stability is a completely inadequate concept to describe the remarkable performance at BSkyB. An apparently mature business has just managed to post its fastest annual rate of subscription growth in five years to more than 9.4 million subscribers.

Naturally the analysts, who have been consistently caught out by BSkyB over the years, have been surprised again. The business was always going to run out of steam or the regulators would cut them off at the knees went the well-worn arguments.

Now there is a new bogeyman to frighten the nervous analysts – that Disney-backed ESPN will outbid Sky for the footy rights in three years. Which probably means the analysts will continue to get it wrong well into the future.

ESPN is actually a rather cautious outfit more likely to be interested in co-existence with Sky than outright warfare.

The rise to 1.3 million High Definition customers is significant, when other broadcasters have consistently underestimated the importance of HD given that there are already 9 million HD sets out there, and rising.

Even more important, the number of Sky+ boxes has risen to 5.5 million – a phenomenon that concentrates attention on the main set and increases overall viewing.

The pay-TV model obviously works, as long as too much of the sports rights money is not used to fund the immense salaries of professional footballers.

But who would have thought that you would have to turn to Sky, rather than the BBC or Channel 4, to see Glyndebourne on TV?

Opera is one thing, but Sky could exploit its new financial stability by making more general original programmes beyond the bare bollocks in Ibiza genre of glorious memory.

By any standards the BBC with its remarkable guaranteed revenues of around £3.5bn a year is stable. There will always be rows over what the Corporation does and says and compliance issues over what emanates out of Jeremy Clarkson’s mouth.

But as director of news Helen Boaden put it memorably at a “summit” on local news held in the House of Commons earlier this year: “I feel almost embarrassed at the Beeb’s state of privilege.”

There are overblown skirmishes at the extremities of the BBC empire over whether 3.5% of licence fee should be top-sliced or not. Given that the money is not included in current programme budgets the arguments proceed on an almost theological plane about the integrity – as in completeness – of the licence fee.

The next Government isn’t interested in top-slicing so the BBC could come up smelling of roses again while newspapers are handed the poisoned chalice of trying to make money out of local television news. They would be wise to pass on the opportunity.

In a slightly different way, Channel 4 is now also stable. It’s got stability of opportunity. The years of putting all its efforts into trying to “go on the social” are now over. It knows exactly where it stands and the challenge for its overpaid top executives is to come up with new programme ideas and find a better way of selling to a younger and better-heeled audience than average.

And the advertising community might also wake up to the fact that C4 is about more than selling anti-spot gel to the Big Brother audience. For a start, how about recognising the quality audiences for some of the best programmes on British television – Channel 4 News, Unreported World and Dispatches. Just think of the average disposable income.

Now the burden of being a charity case has been lifted, a deal with BBC Worldwide could be the start of thinking their way out of trouble.
In a curious way ITV is now stable too – as in bumping along the bottom. Despite all the courageous adventures, such as buying Friends Reunited for £170m, ITV still assembles the largest commercial television audiences in the UK by far and the business could start moving forward in the autumn with the momentum of a newly appointed chief executive.

The only flaw in the stability argument is Five. In difficult times Five advertising could get squeezed ever harder. The task for owners RLT is to decide what the channel is for and put the necessary investment behind it.

But as the television world decamps to their villas in Tuscany, it’s time to think stability and of the prospect of a gradual improvement in the autumn.

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