The Bill

The Bill

Colin Mills - Carat managing director

The Communications Bill recognizes the reality of the current market, anticipates its development and deals with it.
I think it deals with the issues head on and the proposals are workable.

The fear of potential exploitation of cross-media ownership is in danger of being blown out of proportion. I'd argue that if, for example, News Corporation does buy Channel 5, why is that such bad thing? It is generally accepted that News Corp makes a fair job of running its other TV interests and nobody's complained that C5 has been run by a German business for the last couple of years, so there's no cause for xenophobia. There is a theoretical chance that this could mean Channel 4 being privatized and sold off, but in truth, that is no more or less likely as a result of this Bill than it was before.

I am intrigued to see the details of Ofcom's powers over the BBC because I do believe that the BBC is getting in the way of developing a real marketplace. The BBC is building a massive presence in digital television and on the internet using licence payers' money rather than earned revenue.

 

Andy Roberts - Starcom Motive executive buying director

For advertisers, this will be both an opportunity and a threat. An opportunity for global clients to drive economies of scale and strategic business advantage via cross-border deals with media owners.
A threat for UK advertisers, since a global owner of ITV will look more favourably on its global advertising partners. For local advertisers, therefore, global media agency consolidation has never been more relevant. If they can't bring significant influence to bear in their own right, at least they will be able to do so by proxy.

For media owners, the prospect of global players
moving in means the local players will need to get bigger - unless they want to get swallowed. Mergers and
acquisitions will follow.

The result will be the growth of UK media powerhouses. They'll mirror the global players in offering cross-media opportunities that enable clients to hit large groups of consumers, via a single deal - staving off the effects of fragmentation.

The key challenge for clients and agencies is to ensure we are organized to take advantage of the opportunities the new ownership structures will bring.

 

Roy Jeans - Initiative Media managing director

The abolition of restrictions on a single ITV allows a regrouping in the face of the recent problems, but also opens up the possibility of foreign media companies snapping it up.

Although losing £1bn on ITV Digital in three years takes some doing, it has actually served to
disguise the wider issues concerning ad revenue.
A ruthless shareholder would conclude that the ad
revenue problems, allied to the ITV Digital news, necessitate dramatic surgery. In this context, a single ITV,
with an RAB-style sales and marketing programme, needs to happen quickly - a Murdoch-owned C5, with its access to vast global product, would eat into ITV's
ratings. If it grows overall commercial impacts, then so be it - but it may also eat into the ability to build high cover quickly or easily.

 

Phil Riley - Chrysalis Radio chief executive

Given there are something like 30
separate meaningful owners of broadcast and printed media in this country,
scrapping the rules that prevent them coming together has to be good news, particularly as we live in a broadcast landscape dominated by the BBC.

My feeling is that we will see up to half a dozen big groupings emerge, each with a mix of TV, radio and press interests. If each of these groups then has the freedom to compete on a level playing field with the BBC, media in this country will become more competitive than ever, which will be good news for consumers, along with those who work in the industry - it might even force the BBC to re-examine its quest for world dominance.

I don't believe the Bill paves the way for two "super groups" in radio, mainly because moves to begin
cross-media partnerships can begin immediately, while intra-radio moves are still hampered by the existing points system.

 

Nick Theakstone - Mindshare head of investment

This Bill has lengthened the outcomes for the future of the media industry.
I believe that the Competition Commission will have more influence than has been suggested.

My largest concern is the concentration of power and I think many of the large mergers will, in fact, be questioned.

A new ownership of C5 would be good news, as it will mean improved programme investment which, in turn, will be good news for advertisers.

If there is more investment coming into the market place, it is good news for the programming product.

 

Paul Corley - GMTV managing director

Big is beautiful in the Communications Bill. Granada and Carlton were FTSE 100 companies before the ITV Digital
debacle. Granada still is. Not big enough, according to the Government.

C5, apparently, has to be thrown to the markets to succeed.

Super regulator Ofcom will subsume five separate bodies. Ownership "liberalization" has been welcomed by companies hit by dotcom boom/bust and digital
disasters. More buyers, higher share price.

GMTV, in this climate, may appear an anachronism - the last remaining fully-integrated Channel 3 licensee, producing and commissioning its own programmes, scheduling its own airtime and selling its own
advertising. Yet it is the only part of ITV to increase its viewing share this year.

Economy of scale in broadcasting will deliver economies and scale.

Will it also maintain the creative drive that made our commercial television so distinctive?

 

Doug Flynn - Aegis chief executive

The changes could be summarized as very good for media owners, not much good for consumers and offers nothing for advertisers. Having said that, the overall direction of freeing up ownership is to be welcomed.

Allowing the ITV groups to merge is sensible.
The previous geographic separation and reach restriction was artificial and achieved nothing in terms of
competition.

The removal of foreign ownership restriction is also welcome. However, with the consumption of analogue bandwidth by the BBC inherently limiting the opportunity for competition, it is a mistake to allow C5 to be owned by the same group as ITV. If the Government was serious about providing both the public and advertisers with some commercial options, then C4 should be privatized or sold to the highest bidder without any delay.

The changes made in relation to cross-ownership of media are to be welcomed, though some restrictions remain. All the changes seem to have the immediate effect of driving up the price of media properties and improving the prospects of bankers and lawyers.

 

Morag Blazey - PHD managing director

It is interesting that the draft Communications Bill is published at a time when most media owners are somewhere between strapped for cash and restructuring their debt.

As the Bill opens the market to mergers and takeovers, one has to assume business will be slower than it might once have been.

New investment and new partnerships may well breathe a new lease of life into the UK's commercial TV and radio industries, but I'm not convinced this will give the viewer/listener greater choice.

Dominant players are exactly that - owning four national newspapers and a successful digital TV service, coupled with interests in a national radio station and now, potentially, a terrestrial TV network may give
consumers one particular diet of opinion.

Choice will also be restricted for advertisers in terms of establishing partners and deals. While we need strong commercial players to deliver audiences, we also need access to that audience to be unrestricted across all media. Regulation will be required to protect the
interests of advertisers as well as viewers and listeners.

 

Paul Brown - CRCA chairman

Post-2003, UK media has the opportunity to divest itself of the worst of the past's excessive regulation and grasp a host of fresh opportunities. In radio, licence terms will be extended, national station ownership will be subject only to competition law and we will be subject to a regulator required to deregulate in the light of circumstances as time goes by.

It was satisfying to hear Tessa Jowell describe how
the proposed changes had been designed to remove
barriers to investment, encourage innovation and allow companies to consolidate and expand.

On the face of it, this is a liberating piece of proposed legislation and will allow us to pursue our cross-media strategy effectively. Although more detail is required on the definition of some of the new rules, the Government appears to have listened to the media industry.

 

Greg Turzynski - Optimedia managing director

It is tempting to try to predict the future of the broadcast industry in light of the amendments in the Communications  White Paper. Firstly, you need to identify who will own whom and, secondly, whether any consolidation will be permitted by the various regulatory bodies and Acts. Much of the previous Broadcast Act has been revoked, with
the outcome of events in the hands of competition authorities. If you get this far, you could then attempt to predict the outcome on our industry.

The Bill has far from clarified the situation and it could be argued that it has passed on the responsibility for the future shape of broadcast to competition authorities.
In effect, the new players will have to test the water before progressing with confidence.

However, as the future unfolds, it needs to be resolved quickly before the industry and consumers lose confidence.

The potentially exciting and critical developments due in the near future could get lost in the confusion of
ownership and regulation.

 

Dominic Stead -  MPG deputy managing director

The Communications Bill didn't contain too many surprises, but it does contain some unanswered questions.

For instance, the sales house implications arising out of the likely further
consolidation of ITV will need looking at. Maybe one of the two operations can be MBO'd to
preserve competition.

I don't think the US market is likely to deregulate itself in the same way that we are doing, so we can expect to see the US media giants increasing their presence in the UK when they can afford it.

I don't particularly want UK television to resemble the US model any more than it does already, but sadly, I think it probably will. Quite where this leaves public service broadcasting I'm not too sure.

The clause allowing newspaper groups to buy into
C5 does look suspiciously like the Government trying to keep Rupert Murdoch onside.

 

John Perriss - Zenith Optimedia group chief executive

The Bill is beneficial to both viewers and advertisers in terrestrial broadcasting. There is a need for an injection of new management and new ideas, especially given the woeful performance of ITV in recent times. Bringing in new companies from the US is a good thing - they are more responsive to viewers and advertisers' needs.

Normal Competition Commission rules will have to be applied to avoid dominance of one group and I welcome the relaxation of ownership and cross-media regulation.

I hope the legislation will be introduced in the autumn of next year. In the interim, there may be a period where people start stake-building.

There are two scenarios which may occur with ITV. Firstly, Carlton and Granada may attempt to merge only for a new company to acquire them or they may find each other less attractive now.

 

Chris Boothby - BBJ negotiations director

Perhaps the only surprise was the
proposed relaxation to allow for foreign ownership. However, given the financial position of many of the "named" media giants, there is unlikely to be much of an immediate queue at the door.

The Government seems to be clearing away most primary legislation restrictions, leaving the competition authorities as the arbiters of ownership and competition.

If media owner consolidation is the route to ensure a media landscape that can deliver effective communication for clients in the future, so be it. However, it is
fundamental that there remains a competitive market in which media space is fairly priced - the competition authorities will need to look at this very carefully.

 

David Newell - Newspaper Society director

The proposals will create some new opportunities for newspaper companies to expand as newspaper publishers and broadcasting companies.

The Newspaper Society will press for further changes to the proposals so that regional and local newspaper companies can compete on the same terms as other media companies.

The NS remains concerned by Ofcom's wide-ranging powers and its potential impact on editorial freedoms and regional and local newspapers' development.

These issues will be raised by the NS in forthcoming meetings with the Department of Trade &Industry and with the Department of Culture, Media & Sport following further industry discussions.

 

Neil Johnston - OMD UK television buying director

So the Communications Bill told us what we all already knew - Carlton and Granada will be allowed to merge
subject to "usual competition rules". With the ITV Digital debacle and the Government's analogue switch-off date looking increasingly dim and distant, I wonder what these "usual competition rules" will be - on a bended knee and more leaked letters to
The Sunday Times,
anyone?

And the Yanks are coming. Are they? How much cost can be cut out of ITV to make it a viable, valuable and
justifiable expense, especially with Ofcom in the wings.  The prospect of ITV being part of Disney or AOL,
however, is exciting - the cash they have access to - is in a different league and these companies are future facing.

But two "independent" ITV sales houses, owned by one company, I wonder if Tessa Jowell can explain that one?

 

Nick Lawson - MediaCom joint managing director

It seems that whenever the Government looks at the communications industry,
it ends up making things easier for media owners and much harder for the advertisers who actually fund the industry.

With even more restrictions on media ownership being removed, the likely outcome has been well rehearsed - a merged ITV and Rupert Murdoch
grabbing C5. Both of these consolidations of media-owner power have potentially negative effects on
 advertisers unless some clearer restrictions on media sales' limits are put in place.

Perhaps the only silver lining for advertisers is the thought that, just as ITV can make itself stronger in
airtime negotiations, along comes Murdoch to weaken them again by offering more substantial terrestrial
competition.

As for Ofcom, with its " light-touch " approach to regulation, we'll have to wait and see how that is interpreted, but given the nature of the legislation, we can't be
confident that it will protect advertisers' interests,
let alone those of the viewers and readers.

 

Andy Tilley - Unity managing partner

In our view, the Communications Bill will act as an impetus for greater integration across media platforms and provide
the opportunity for media owners to
create more powerful, useable media portfolios for clients whose consequent value to stakeholders can only grow.

Now the shackles are off, media owners will be able to create larger more potent offerings, which could fundamentally change the way in which clients connect with particular groups of consumers. The integration of
message and multimedia on a mass scale - both locally and internationally - could become a reality.

 

Alison Wright - Manning Gottlieb OMD deputy managing director

The Bill barely mentions advertisers, which is an oversight, given they fund a large chunk of the UK media industry.

Removing many of the restrictions on cross-media ownership and satellite/
terrestrial TV ownership should lead to new investment and economies of scale. However,
it ignores the possible extent of consolidation. Surely regulation should be setting the rules, not waiting to see how the market decides.

Better content, leading to better quality and more engaged audiences is good news for advertisers, but there are no guarantees that the Bill will deliver that.

Also, the Bill does not deal overtly with the sales
implications of a single ITV and, despite its declining share in recent years, it is still a massively powerful force.

The Bill favours media owners at the expense of an important stakeholder group - the advertisers.                 n

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