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.’
