Snow’s Facebook broadside points to growing fears over digital tide
The broadcaster’s Edinburgh speech hides deeper concerns about the changing media landscape, writes Christopher Williams
We got him,” proclaims a well-refreshed senior television executive in the early hours in an Edinburgh nightclub. “We got Mark Zuckerberg to take notice.” It is a few hours and a few drinks since Jon Snow, the veteran Channel 4 newsreader, fired a broadside at Facebook on behalf of the British television industry. The social network, along with Google, was blamed for the destruction of local journalism and a disconnect in society that meant long-standing concerns over safety at Grenfell Tower were unheard by the “elite”. Giving the main lecture at the Edinburgh International Television Festival, Snow attacked Facebook as the uncaring attention seeker playing “fast and loose” with the work of others. Government should force the Silicon Valley giant to pay for the material it distributes and more taxes, he said.
Snow was not first choice to deliver the keynote speech, but his choice of attack target may have been. Organisers originally sought a female speaker to address concerns about a lack of diversity at senior levels. They then held talks with the actor Stephen Fry, who despite his technophilia has also called for Facebook and other technology companies that are “evading responsibility” for material they distribute to face regulation as publishers.
Facebook’s response, a blog post from Zuckerberg highlighting various
to support attempts to make money from journalism online, came within hours of Snow’s performance.
The substance of the social network’s proposals was of limited intergathered in Edinburgh, however. Snow himself offered no answers. British television was just pleased to know it was still capable of stirring a beast of Facebook’s vast scale. “They’re our enemy now,” said the partying executive.
Such attitudes have become increasingly common in television, as the digital giants make incursions on to territory that was formerly the preserve of broadcasters. Facebook itself has begun building a home for professionally produced television on its social network, and is offering programme makers a cut of the advertising spoils.
These are not new trends, however. Television has known for years that it was on the technology industry’s list of sectors to colonise.
Players such as Youtube, Netflix and Amazon have been gaining ground for years. The arrival of Facebook, and soon Apple, which has begun hiring Hollypush into programme making, merely stakes.
Snapchat, now struggling on the public markets following its splashy debut in March, is the latest to make its pitch to British producers, asking them to make programmes designed for smartphones.
“It is inevitable that the way people consume content will continue to change, people use Snapchat on average 15 times a day, it is becoming a significant part of their lives, it lets them really easily access content,” says content chief Nick Bell. “That really becomes very powerful.” Yet nervousness and hostility towards Silicon Valley is mounting in the traditional television industry, and Snow caught the mood to win a standing ovation.
“Never, since the rise of the printing press, have two companies held such a monopoly over the world’s information,” said Snow in his attack on Facebook and Google. “And never have such organisations taken so little responsibility for it.” The heads prognosis – but they have still advanced by 50pc since crisis time. It is not always this easy. London congestion charger Capita will soon celebrate the anniversary of its big profits warning and the shares are little changed. The announcement of chief executive Andy Parker’s successor – which can’t be far away – should help them along. And Carillion, a more recent casualty? Only for the brave.
And so to Interserve, another company guilty of trying to do anything for anyone with insufficient focus on what they might charge. It builds prisons and hospitals, cleans railway stations and even assembles the grandstand for the Edinburgh Military Tattoo. If only it had never got into constructing energy-from-waste plants. After cost overruns and delays, Interserve said it was getting out of the activity a year ago, but the cost of exit ballooned to £160m in February and there has been talk of legal action in connection with a Glasgow plant.
The company expects to “complete substantially” the construction of these projects in the first half of next year. Howard Seymour at Numis believes the Derby incinerator is the contract with the greatest risk profile, so the fact it has reached the testing phase is significant. Interserve ran into gender pay gap this summer, the appetite for controversy is much diminished.
Yet the glee with which executives greeted Snow’s attack points to a growing nervousness. Since the collapse of the advertising market in the wake of the financial crisis, television has been on the front foot financially. Advertising sales rose strongly, driving the recoveries at ITV and Channel 4 under chief executives Adam Crozier and David Abraham, and stoking confidence across the industry. Now though, Cro- trouble just as trading dipped elsewhere. Profits are down in support services, which have been hindered by the hiatus in procurement following the Brexit vote. The UK construction arm is making a loss but it has begun to narrow its strategic focus. One bright spot is equipment hire business RMD Kwikform which could be sold if the going gets tougher at group level.
Testing Interserve’s financial headroom, Joe Brent at Liberum assumes a base of £500m of debt, the management’s guidance for peak borrowings this year, and adds £50m for restricted cash and £50m for volatility. That still leaves £40m of headroom within Interserve’s £640m facility. He also floats the idea of a £100m rights issue that would dilute investors not taking up their rights.
White’s arrival from Sodexo is not the only executive change. Interserve’s finance director is not far behind long-serving boss Adrian Ringrose in heading for the exit. It means that there is nothing to stop a thorough kitchen-sinking that would give the new team air cover for their turnaround. The threat of this bleaker outlook plus underwhelming interim figures this month has sent the stock trickling further south.
Questor has been highly bearish on Interserve, urging investors to “avoid” as recently as Aug 15, and rightly so. In cutting through the unnecessary complexity of this business, there is no telling what nasties might emerge. But a further 11.6pc fall in the shares since then, making them trade at barely three times next year’s earnings, could be just enough to encourage the most risk-tolerant investors to try some bottom fishing. zier has stepped down and Abraham will be gone from Channel 4 within months. The advertising market peaked before the Brexit referendum and now shows signs of a serious decline. WPP’S poor first-half results, published on Wednesday, caused a ripple of fear in Edinburgh, not least because Facebook and Google were identified as the cause.
Sir Martin Sorrell’s advertising agency empire suffered an 11pc drop in its shares, its biggest since 1998, as it failed to meet sales targets. He warned that shifts towards digital consumerism were fundamental, triggering changes by big brand owners, but blamed most of the disappointment on cost cutting by clients.
For the likes of ITV, which trades heavily on its ability to deliver big television audiences for consumer goods giants, Sorrell’s comments are worrisome.
Yet Sorrell dismissed claims of a structural threat to advertising agencies. “As usual, there were questions whether the current slowdown is due to the structural pressures coming from digital players, consultants, or bringing services in-house,” said Barclays analyst Julien Roch.
“Management dismissed the structural thesis saying that spend with Google and Facebook continues to increase and Google is now their ninth
‘Money can’t buy you success in this business – but there needs to be a more level playing field’
largest client.” WPP’S weak performance globally also masked a strong result in the UK.
The company has continued to grow since the Brexit referendum, regardless of declining sales elsewhere in advertising.
“It may be something at the micro level that is to do with our business,” says Sorrell. “We have a strong business in the UK, very strong market share, very good people, very talented, and that may be one of the reasons.”
Regardless of the waxing and waning of advertising sales, senior television executives know that the economics of the industry will not be the same next year, let alone further down the road.
“There was a question on one of the panels about what things will look like in 10 years,” says an executive in charge of one of the industry’s biggest programming budgets.
“Christ, I don’t know what things are going to look like in six months. The whole point is that nobody knows.
“That includes the digital guys. Money can’t buy you success in this business. It’s more complicated than that.
“But we all know there needs to be a more level playing field.”
Uncertainty reigns but there are signs that television executives are more alive to the threat of digital giants than publishers or the music industry were.
Jay Hunt, the departing chief creative officer of Channel 4, suggests the industry must walk a line, collaborating with Facebook, Netflix and the rest, without letting them take credit for creativity.
“In the end there are big players coming in saying we like what you do, we want some of that in our service,” she says. “That’s fantastic. But over time you have to think about where the brand attribution sits on all of this and then it’s a more complicated conversation.”
Jon Snow, left, has urged Facebook to pay more towards the news it carries, while also criticising the spread of false stories about the Pope, above