FORUM: Is the IPA’s gloomy outlook a vision of the future? - The IPA’s response to the Communications green paper was based on some pretty pessimistic assumptions, such as the notion that free-to-air television might be allowed to wither o

By ALASDAIR REID, campaignlive.co.uk, Friday, 11 December 1998 12:00AM

There’s a BT ad around just now featuring a man who’s apparently blase about the rollercoaster ride he’s about to endure - until the car slows down to a virtual halt at the top of the first sickening descent and begins to plummet like a stone. There are quite a few people in the media industry - especially on the advertiser and media specialist side of the fence - who are starting to appreciate what that white-knuckle feeling is like.

There’s a BT ad around just now featuring a man who’s apparently

blase about the rollercoaster ride he’s about to endure - until the car

slows down to a virtual halt at the top of the first sickening descent

and begins to plummet like a stone. There are quite a few people in the

media industry - especially on the advertiser and media specialist side

of the fence - who are starting to appreciate what that white-knuckle

feeling is like.



We’ve seen an accelerating pace of change in media over the past five

years or so and that change has been, on the whole, rather agreeable for

all concerned. But we’re only really starting to wake up now to the fact

that all of this is extremely small potatoes compared with the extent of

change to come.



As digital starts to become a reality, it will stand the media world on

its head. The wholescale migration to digital could eventually create a

television underclass of people unable to afford the paid-for TV and new

technology. They will be left with a few free-to-air channels that will

become increasingly third-rate, stripped of all the best programming.

Even worse, choice for advertisers will be badly affected - subscription

TV will not just have all the best audience, it will also increasingly

exclude advertising.



What more proof do we need for this assumption than the fact that only

20 per cent of Sky Television’s revenues come from advertising? Or the

fact that right-on Channel 4 has just launched a subscription film

channel?



That is certainly the view underlying last week’s response from the

Institute of Practitioners in Advertising to the Government’s green

paper on Regulating Communications. The IPA doesn’t exactly want to

preserve the current situation in aspic - but it certainly wants to

preserve the health of free-to-air television for as long as

possible.



It wants to see a single regulator for television and its role would be

to prevent terrestrial broadcasters from asset-stripping its current

free-to-air services to fund their digital pay-TV empires.



Is the IPA right? Or is it over-reacting and overly pessimistic? Jim

Marshall, the chief executive of MediaVest and a member of the IPA’s

Media Policy Group, clearly doesn’t think so. But shouldn’t the industry

have more confidence in the workings of the marketplace? Marshall

counters: ’Television viewing is the single most important leisure

activity in the country and that makes it unique.



No-one is arguing that the BBC and the free-to-air commercial sector is

protected at all cost, but what we are saying is that there should be a

single television regulator able to look at the whole picture. The BBC,

for instance, is able to do things that will impact hugely on ITV

without any broad form of review or accountability coming into

play.’



Marshall clearly believes that the emergence of a two-tier system is a

very real danger. He argues that it will be in no-one’s interest if it

happens. ’We don’t want to see a subscription sector that takes no

advertising and a poorly funded free-to-air system that does. It is in

the interests of advertisers to reach the broadest possible

audience.



Advertisers still fund over half of the broadcasting in this country and

it is a growing concern that the Government is failing to take their

views into proper consideration - and, in fact, may well treat them with

deep suspicion.’



But would ITV, for instance, ever let a gap develop between its

traditional free-to-air business and its new ONdigital initiative?



Martin Bowley, the chief executive of Carlton UK sales, can’t see

it.



He adds: ’The key driver for the ITV business is advertising. That’s not

going to change overnight and you must remember that ITV is a

business.



We’re not going to damage that. Of course, ONdigital will be a fantastic

business too - it will deliver profits of pounds 150 million in three

years.



And it will also offer interactive advertising which will be exciting

for everyone. So that is great news for ITV and fantastic news for

advertisers. My job is to sell advertising and I’ve had no instructions

from upstairs to stop doing that.’



Other senior media people appear to be similarly sceptical. David Cuff,

the broadcast director of Initiative Media, points out that the needs

and demands of programme makers will be hugely influential here. ’You’ve

got to look at the way Hollywood derives its revenues from television -

it’s not in their interest to cut off any one sector of the television

market. Yes, the top television programming may go to the pay-per-view

audience before it goes to everyone else but that will never happen on

an exclusive basis unless it’s a special one-off event. And the thing is

that even those sorts of pay-per-view events don’t have to exclude

advertising.’



Cuff actually puts a counter argument. Currently 40 per cent of the

total UK television audience is BBC audience and is denied to

advertisers. Commercial television will actually increase its share over

the next ten years with the arrival of additional channels. ’I can’t see

the delivery of commercial audience being undermined by subscription or

pay-per-view. Of course, the regulatory authorities have to be aware of

potential abuses but the sorts of abuses that some people are worried

about just don’t make economic sense. They’re just not likely to

happen.’



Graham Appleby, the head of client sales at Sky Television, tends to

agree with that. Sky certainly has no plans to chase advertisers

away.



’There is no way that we will turn away a resource that generates so

much profit. Advertising generates 70 per cent of our profit. It makes

sense to take as much advertising as possible.



’I don’t think any aspect of this debate has been founded in fact and it

would be unfortunate if advertisers and agencies were running scared for

no real reason. I don’t see the emergence of two-tier television or

television without advertising. Show me the evidence. Put it this way: I

am not aware of any evidence that people are prepared to pay more to

have subscription television totally free of advertising.’



This article was first published on campaignlive.co.uk

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