A Look Back At 1998…
In the year that the much-heralded digital revolution started to come to life, media companies decided to try and get their paws on football clubs and ITV kissed goodbye to the News At Ten, these other things happened…
January
Very early in 1998 one of the largest management buyouts in UK was completed. IPC’s management, with the backing of venture capitalists Cinven, snapped up the publishing giant from owners Reed Elsevier for £860 million cash. This meant that IPC was able to continue running as one operation, under the hand of chief executive, Mike Matthew rather than being split up into separate publishing divisions. Following the takeover Matthew outlined his vision for the company, which would see it publishing 100 titles by 2000.
Capital Radio’s plans for expansion, however, were scuppered when Margaret Beckett, president of the Board of Trade, said that the group’s failed bid to takeover Virgin Radio (which fell to Chris Evans) would not have been allowed to go ahead anyway due to Monopolies and Mergers rules. The only way for Capital to expand to any substantial degree, it seemed, was to relinquish one of its existing licences before acquiring a new one. However, later in the year the company successful acquired Red Dragon in Cardiff and Xfm in London without invoking any involvement from the MMC.
Live TV supremo, Kelvin MacKenzie, was promoted to chief executive and group managing director of the cable station’s parent company, Mirror Group. He was not to hang around newspapers for too long, though, as radio and Rupert Murdoch were soon to beckon…
Towards the end of January ad agency GGT was bought by US-based group, Omnicom, for £143 million. The takeover was described as a bargain deal for Omnicom as GGT’s shareprices had just plummeted following the loss of the massive Proctor & Gamble advertising account. Later in the year Omnicom merged GGT Group’s BDDP Worldwide and TBWA International to create a new entity called TBWA Worldwide.
February
The all-new Sunday Business was launched in February and came out looking and reading very much like the Financial Times. The paper presented itself as a serious business read with bigger, bolder headlines and more charts and graphs than in its first incarnation. The Sunday Business recently received its first official circulation figure from the Audit Bureau of Circulations, which came in at around 50,000 copies per week. This is down on the target of 80,000 set at the paper’s launch.
Capital Radio announced plans for further expansion, this time with a bid for a North East licence to broadcast the children’s radio format, Fun Radio. However, the application failed in October when the Radio Authority awarded the licence to Chrysalis Radio to run the group’s Galaxy format. Undeterred, Capital submitted another Fun Radio application, this time for the Central Scotland region; the RA will announce the successful applicant of this early in 1999.
The mighty symbol of a thousand years of achievement, the Millennium Dome, unveiled its £58.8 million sponsorship deal. The major ‘founding partners’ are British Telecom, BSkyB, Manpower and Tesco which have committed a minimum of £12 million each. British Airways and BAA are also official Dome sponsors, but have pledged smaller sums.
The desire for more detailed and qualitative magazine and newspaper readership data was realised in February when the PPA, IPA and ISBA launched the Quality of Reading Survey (QRS). QRS aims to show how people read newspapers, and in particular their different sections, to provide information above and beyond crude total readership figures.
March
Outdoor advertiser, More Group, received and agreed a £446 million takeover offer from US media conglomerate, Clear Channel Communications. However, the process of finalising the deal was severely protracted after More’s French rival, JC Decaux, launched a counterbid of £475 million. Relations between More and Decaux subsequently became acrimonious with Decaux accusing its rival of circulating a document which reflected badly on the French outdoor company.
Eventually, after More’s chief Roger Parry denounced Decaux as indulging in a series of publicity stunts, the deal collapsed. This opened the way once again for Clear Channel which eventually acquired More for £475 million in June.
The Independent also received a new owner, in the form of Tony O’Reilly’s Irish Independent Newspapers (IN). The Mirror Group sold its 46% stake in the struggling broadsheet to IN for around £29 million. The industry reaction to this change for the Independent was one of cautious optimism, although O’Reilly was described by one media director as something of an unknown quantity. The stability of having one owner, rather than being stuck between two groups which did not always see eye to eye, was seen as attractive to advertisers.
The UK’s first sports-only newspaper, Sport First, launched into the Sunday market. Initially a broadsheet, the paper was redesigned and repackaged as a tabloid. An ill-fated Monday edition followed but did not last long. However the paper is still planning to expand across the week.
The DTI rejected a request from Liberal Democrat leader, Paddy Ashdown, that The Times be investigated by the Monopolies and Mergers Commission for not maintaining editorial independence from News International and its parent company, News Corporation, owned by Rupert Murdoch. Ashdown claimed that the Times‘ coverage of events in China had been written so as not to harm Murdoch’s business interests there. Margaret Beckett decreed that it was a matter for the editors and not for the Government.
April
MindShare, the media company created by JWT and Ogilvy & Mather in September 1997, announced that Simon Rees was to be its new managing director. Rees was previously deputy managing director at TMD Carat.
Cable consolidation continued with the £649 million takeover of General Cable by Telewest. The deal meant that Telewest overtook Cable & Wireless Communications as the UK’s largest cable operator.
The ITC, after much lobbying from the Periodical Publishers Association (PPA), finally decided to allow masthead programming on terrestrial TV. The first reaction to this news was that there would be a flood of magazine-based programmes as publishers clamoured to get the titles on TV and milk more money from old editorial. As it happened, once all the brouhaha had died down, very little actually appeared in the way of masthead programming.
Rosie Boycott, co-editor of the Independent titles along with Andrew Marr, announced her resignation. Boycott joined the Express to replace Richard Addis as editor, who also resigned. It is thought that the dual-editorship situation created tension at the Independent newspapers.
May
ITV dealt blow to BSkyB’s digital TV plans when it announced that it would not allow ITV channels to be broadcast on the Sky Digital platform. Despite pressure from Sky to renege this decision, ITV has stuck to its guns and refused to enter a deal, claiming that it is entirely a terrestrial broadcaster. The BBC, on the other hand, which describes itself as platform neutral, paid up to Sky for the privilege of broadcasting its service on digital satellite.
In an unexpected move, Andrew Marr resigned as editor-in-chief of the Independent newspapers. He was replaced by the Daily Mail‘s Night & Day editor, Simon Kelner. Marr’s departure followed hot on the heels of Rosie Boycott who left a few weeks earlier to become editor of the Express.
The Mirror Group became involved in takeover talks with German newspaper group Axel Springer. Springer announced that it was considering a number of moves, one of which was believed to be a takeover of a UK media group. After a long silence on Springer’s part, the company announced in June that it was not to make a final bid after all. In the meantime Mirror’s shareprice had fallen awaiting a decision.
Magazine publisher, Future, got together a management buyout team and acquired the group from owners, Pearson New Entertainment, for £142 million. The sale included FutureNet, the companies internet publishing arm.
June
Stuart Higgins, editor of the Sun, suddenly resigned after five years as editor of the tabloid newspaper. According to The Sun, commenting on his departure, Higgins said: “It has been incredibly hard work and I have had a wonderful time, but I am certain this is the right time in my life to make a change.” Higgins was succeeded by David Yelland who, at the time, was deputy editor of the New York Post. Higgins retained a senior position in the Sun‘s parent company, News International.
Over at the Mirror Group, Kelvin MacKenzie, group managing director, left the company to move into radio. He pulled together a consortium called TalkCo in order to bid for Talk Radio which was currently up for sale by owners CLT-UFA. Rupert Murdoch subsequently announced that his company, News International, would be financially backing the TalkCo bid.
More cable consolidation in June, with NTL snapping up two rivals, ComTel and Diamond Cable, for £550 million and £630 million respectively. This acquisition placed NTL as the UK’s third largest operator with franchises containing around 5 million homes. Telewest is the largest followed by Cable & Wireless.
Global advertising and marketing group, WPP, officially launched its UK MindShare division. The company opened its Strand office doors with £450 million of UK business already in the bag. However, the launch did not go without glitch, as Mike Wood, MindShare’s deputy managing director, left the company before it had even opened.
More things digital began to happen, this time on the radio front. The Radio Authority received a sole application for the country’s only national digital multiplex licence. The applicant, Digital One, is a consortium comprising GWR Group, NTL and Talk Radio. Talk has subsequently dropped out of the group, preferring to concentrate on content provision. Digital One was awarded the licence later in the year.
July
Change was on the cards in various shapes and forms this month. Two take-overs received the go-ahead from the Radio Authority; Capital’s take-over of Xfm, and the buyout of Talk Radio by Kelvin McKenzie’s consortium,TalkCo. The Xfm acquisition by Capital went through at the end of the month.
Sky’s movie channels also underwent another re-branding – the second in nine months – in an attempt to improve audience satisfaction.
Sally O’Sullivan, ex IPC editor-in-chief of Ideal Home, poached a number of IPC staff to man her new publishing company Cabal Communications, of which she is chief executive. The company was to launch a couple of titles throughout the year, including the new lads’ mag, Front.
August
Manchester United Football Club launched its dedicated digital television channel, a joint venture between the club, BSkyB, and Granada. Chris Evans’ Virgin Radio Breakfast Show also hit the television airwaves, and began being broadcast on Sky 1 between 7:30 and 8:30 on weekday mornings.
That Levi’s ad featuring the now legendary Kevin The Hamster, prompted more than 200 complaints to the ITC. Also unpopular was Capital’s move to put Xfm on hold whilst moving the station to its new base at the Capital Radio building in London’s Leicester Square. The station was later fined by the Radio Authority for breaking its promise of performance, and the radio watchdog received 280 complaints concerning the station’s programming and related matters during that period.
Publisher Emap gave away limited details about its top secret Project J, calling it a high frequency entertainment magazine.” Its rival, IPC, launched a fashion version of arguably its top brand, Loaded.
BSkyB rolled out its digital television offerings, involving 80 channels spread across 6 subscription packages.
September
The big event of September was ITV’s announcement that it planned to axe its News At Ten bulletin, and replace it with early and late evening news programmes. The broadcaster applied to the Independent Television Commission for approval, and revealed that the shift of the news was imperative for the Network to reach its 40% target share set earlier in the year.
This was also a big month in the build up to digital, with terrestrial digital television provider Ondigital announcing its launch date, 15 November, with packages starting at £7.99 a month.
ITV announced a new branding strategy based around the slogan: TV From The Heart. The broadcaster also continued to refuse to allow its service to be carried by the digital BSkyB service, which was preparing for launch in September for the beginning of October, despite the fact that Sky alleged the broadcaster stood to save £500 million if it signed up promptly to by carried by digital satellite.
Dixons launched the UK’s first free internet service, Freeserve, which would prove very popular later in the year, and the European announced that it was to close if it failed to find a buyer within 90 days. It subsequently closed at the end of the year after being unsuccessful in the search for a buyer.
Lastly, the ITC announced that it was too early to set a date for the switch off of the analogue television signal, despite digital TV operators’ suggestions that it be set for two years after the launch of digital services. The ITC ruled that the take-up of digital was such an unknown quantity that there was no point in setting a date for the switch-off yet.
October
Of course, one of the main events in October was the launch of BSkyB’s digital satellite service, which kicked off on 1 October. Sky received 20,000 confirmed orders for the service after its first day of sales.
BSkyB was also in the spotlight after bidding to buy Manchester United Football Club for £625 million. This appears to have precipitated a trend, with Carlton and leisure group Enic both submitting bids for football clubs. Carlton, who bid for Arsenal football club, later withdrew from the talks.
We here at MediaTel celebrated the company’s 17th birthday on 7 October, and the Radio Authority awarded Digital One the national commercial digital radio multiplex.
The BBC suffered a blow to its sports broadcasting rights, losing its coverage of English Test Cricket matches to Channel 4, and the Scottish Media Group (SMG) announced that it was to be launching a new Sunday newspaper.
November
Film Four, Channel 4’s new subscription-based film channel, went on air in November on satellite, cable and digital TV platforms, with a mixture of US and UK independent movies. The inaugural broadcast proved popular with terrestrial audiences who received the first night’s viewing for free. The Usual Suspects peaked at 2.08 million viewers between 8.30pm and 8.45pm. The response to the channel was said, by Channel 4, to have been ‘overwhelming’ with an initial 50,000 enquiries from potential subscribers.
Major restructuring of senior management took place at Talk Radio in the wake of the takeover by TalkCo – a consortium, headed by Kelvin Mackenzie and backed by News International and MVI . Despite healthy RAJAR ratings (11.2% increase in the station’s weekly reach) Mackenzie claimed his “…immediate priority is to motivate the staff and sort out the programming. We have set out a programming group which will completely review scheduling and content in the coming weeks.”
December
Contrary to most current economic forecasts, Zenith Media predicted that worldwide advertising expenditure growth is to accelerate over the next three years. The global adspend growth of 3.8% for 1998 is the market floor, according to Zenith. Growth is predicted to increase to 4.2% next year, 5.3% in 2000 and 5.8% in 2001, with the international outlook, generally positive.
John Perriss, chairman of Zenith Media Worldwide, was particularly upbeat, suggesting “These new forecasts make fears of recession look well overdone. We predict global advertising spend to grow in real terms every year and, moreover, that this rate of growth will accelerate.”
The UK advertising industry, in particular, is expected to avoid a recession with adspend forecast to grow by 2.2% to £12.7 billion in 1999. This was one of the key findings in Zenith Media’s UK Media Yearbook.
The Monopolies and Mergers Commission (MMC) published a letter, earlier this month, outlining the issues which it is to consider in the light of the BSkyB takeover bid for Manchester United FC. In a rare move, the MMC highlighted around 30 issues which it will be considering involving the bid. Amongst them was whether the merger would limit access to Manchester United matches, staff and players by media not owned by or allied to BSkyB, and whether the merger going ahead would encourage other media owners to acquire football clubs, and what effect this would have on competition. Interest in the BSkyB/Man Utd situation remained high, in the run-up to, and in light of the news that communications group NTL is considering a similar takeover of Newcastle FC.
Datamonitor ended the year by boldly predicting that the future (as we know it) will most definitely be ‘digital’. By 2003 there will be 7.2 million cable, 17.4 million satellite and 5.1 million terrestrial digital set-top boxes in Europe. This compares to 1997 , when there were only 1.1 million installed set-top boxes across all platforms in Europe. Datamonitor believes that, compared to multichannel analogue services (cable and satellite), digital TV has little incremental to offer and that growth relies on the marketing drives and set-top box subsidies of the broadcasters like BSkyB and Canal Plus in France.