Stay tuned for a TV drama that could run and run
These are uncertain times for British broadcasting. Tony Hall, the director-general of the BBC, last week gave the latest in a string of warnings about the impact of Netflix and Amazon on financing for homegrown programming. Within a decade the rise of streaming services from US tech giants will mean £500m a year less is spent on British programmes. That is more than a fifth of the total.
Channel 4 has expressed its angst over shifting viewing habits in a different way. Its board has become concerned that it has lost its edge as the most experimental of the public service channels. Young viewers in search of more challenging entertainment than the Great British
Bake Off are turning away.
Part of Channel 4’s answer is to appoint former
Guardian journalist Ian Katz, editor of Newsnight and a complete novice in programme commissioning, to run its £470m budget. Eyebrows have been raised inside and outside the broadcaster but hey, it is at least a radical move.
In some ways ITV’S manoeuvring against Virgin Media may be more surprising still. As we report this week, the FTSE 100 broadcaster is willing to cut off millions of homes from its main channel unless the cable operator pays at least £45m a year in fees. We are all facing higher inflation but from a base of nil, it represents a pretty steep increase in the cost of living for Virgin Media. Both sides of the row claim the legal and political high ground and they cannot both win. Virgin Media says it won’t pay anything for ITV’S main channel.
The legal and regulatory situation is complicated and untested. That, combined with the fact that Virgin Media is owned by its own biggest shareholder, Liberty Global, signals that ITV is not just ready to rock the boat in television, but detonate the cargo of gunpowder.
ITV has been dangling the prospect of retransmission fees in front of its shareholders for years. The cash would be almost entirely profit and there are good reasons to doubt whether any of it would end up on screen. Since 2010 ITV’S spending on UK programming has been held flat at around £750m. Meanwhile, its revenues and dividend payouts have risen sharply.
PAY-TV operators do make money from free access to public service channels, however. It seems a little unfair that the Government’s legislative tinkering has left only Virgin Media exposed, although Sky is a concerned observer, but ITV has a legitimate grumble about set-top box recorders. PAY-TV operators have benefited by selling services that undermine its advertising business.
Whatever the rights and wrongs, many in the City doubted the seriousness of ITV’S retransmission fees campaign and its chances of success. A change of chief executive offers the perfect opportunity to abandon questionable initiatives, and yet ITV persists. Chairman and caretaker manager Sir Peter Bazalgette would surely not be going to war with Virgin Media without Dame Carolyn Mccall’s approval.
A lot of credibility is on the line. ITV must believe that the rewards of a victory would outweigh the humiliation of a defeat. The risks of angry viewers and bad blood with its pay-tv distributors must also have been part of the calculation.
On one level, this is a highly entertaining commercial dispute with a highly uncertain outcome. At a greater distance and in the context of technology-driven changes in television, ITV’S gambit makes more sense. Until this summer’s Digital Economy Act, public service broadcasters have had to give their channels away for free. It’s the deal. Viewers get regional news.
Broadcasters get cheaper terrestrial transmission and a guaranteed slot on the first page of channel menus. As more viewing moves to streaming those sweeteners will decline in value and public service obligations will become more onerous. Traditional channel menus are already being relegated by pay-tv operators behind more on-demand options. Discount transmission isn’t much help if everyone is watching via the internet.
For ITV there is a real question over whether its public service licence, up for renewal in 2022, will be worth the hassle by then. Retransmission fees could by then be a significant source of income that guards against declining advertising and young people who aren’t interested in
Emmerdale. The future is at stake.
Stay tuned for an almighty row.
‘Both sides of the row claim the legal high ground but they cannot both win’