TV Round-Up 1991
The 1991 television market was characterised by the continuing slide in revenues, the confusion and dissatisfaction with the new BARB contract and the furore surrounding the TV franchise awards. The result of these factors was a period of instability and turmoil which looks set to send shockwaves throughout 1992.
The 9% real decline in the advertising market in 1990 was not much improved in 1991, and broadcasters faced a second year of declining revenues. The advertising year started badly, with the Gulf War deterring advertisers andarresting spending. However, the growth in TV advertising expenditure in the fourth quarter of 1991 is reason for a degree of optimism and the advertising market as a whole is expected to see modest but steady growth throughout 1992 and 1993. Carat Research is predicting a 6.7% increase in TV advertising expenditure in 1992, against 1991, rising to 8% growth in 1993, whilst the AA expects TV to leap in the second half of this year to finish 13% up.
The year ended with TV revenue falling for the first time in 12 years, down 1.26% year on year. With no published revenue figures in 1992, station average price looks to be on its way out as a currency. Revenue through 1992 is likely to be buoyed by the Olympic Games and early signs that a number of dormant advertisers are returning to TV.
The big story of 1991 was undoubtedly the TV franchise awards, with rumour, speculation and ‘exclusives’ dominating the press at every turn. When the ITC finally announced the winners there was outcry (from losers TV-am, TVS, TSW and Thames, as well as ‘greenfield’ bidders such as Northwest TV and TVNI) and jubilation (from STV and Central, who both got away with 2,000 bids).
Of the winning companies, many of the main players have cross-holdings in each other: Central has a 20% stake in Meridian, whilst Carlton has a 20% stake in Central; STV, LWT and Carlton all have 20% holdings in Sunrise. Co-operation between these groups heralds a new era for the structure of ITV, but the list of share holders in the ITV system has barely changed.
For the individual ITV contractors, 1991 was a period of belt-tightening and cost-cutting. A leaner, fitter ITV was required in order to ride the crest of upheaval ahead.
One area for cost savings proved to be sales operations, with fewer points of sale allowing obvious economics of scale. The year began with the ITC addressing itself to the issues raised by the growing trend towards joint sales operations. The resulting code set a ceiling of 25% of ITV revenue for any one sales house.
In February, Tyne Tees wound-down its Vision Marketing arm and moved its airtime sales into Yorkshire TV’s MAS. The TV franchise awards in October sparked a further flurry of activity on the sales front. Defeated incumbent TV-am threw in its lot with BSkyB to form a new sales operation, whilst Border announced that it will move its sales out of TSMS and link with Granada at the end of the current franchise period. (The two had previously united in a franchise application for the Tyne Tees licence).
TSW’s sales force was recruited by Carlton Television and the year closed with STV announcing its intention to join TVMM from Spring 1992. The pressure to drive down costs and maximise efficiency still sits heavily on the ITV companies and 1992 is likely to see further rationalisation on the sales house front. New franchise holder Meridian has announced that it will work with Laser Sales, and Westcountry is to join TVMM; Sunrise has yet to finalise its in-house sales arrangements. Industry pundits have suggested that there will be five dedicated specialist shops handling advertising sales for the entire ITV network by 1993.
1992 will be a tough year generally for many of the franchise winners,although the recent decision by the Exchequer to cut the levy imposed on the ITV companies from 10% to 2.5% will provide a welcome reprieve. Those franchise winners who bid high are notably vulnerable. If advertising revenue does not recover fast enough, Yorkshire, Tyne Tees and HTV could find their plans for the new franchise period in jeopardy.
With only the prospect of sluggish growth on the immediate horizon, expenditure on programming and planning across all companies will have to be carefully monitored. Whilst ITV looks set to retain the lion’s share of audi- ences (attaining a high of 44.8% of theterrestrial TV audience in April 1991 compared to BBC1’s high of 38.5%, recorded in February), the disruption behind the scenes and the growing strength of satellite are further catalysts for instability.
1991 also saw Channel 4 gearing up to sell its own airtime. The channel’s intended sales structure was announced in September – with deals operating across six macro regions and 80% of airtime being sold on a national basis; former TVS Head of Sales Andrew Barnes was appointed to head up Channel 4’s sales operations. Channel 4 now has to build and maintainadvertiser confidence in its programming and needs to concentrate on viewing levels across all regions.
Problems with the new BARB contract, which came into effect in August 1991, reverberated throughout the rest of the year, with the industry still awaiting the currency convertor to compare results across the old and new panels. The loss of confidence in the currency is likely to cause difficulties well into 1992.
The new contract is split between AGB and RSMB and incorporates a larger, disproportionate sample of 4435 homes,live, timeshift and consolidated ratings, and the daily delivery of data. First results from the new panel were patchy and controversial, with data for the satellite channels being withheld until November. Even when Astra data was eventually released, BARB warned that it must be handled with caution.
Users are still waiting for the improvements encompassed by the new contract to outweigh the disruption and confusion its introduction has caused. The currency convertor is now expected in February, and may tie-up some of the many loose ends. Satellite continued to grow throughout 1991, with BSkyB consolidating its post-merger position. The year began with 1.3m homes receiving satellite via dish (according to Continental Research) and over 400,000 receiving via cable. Dish installations had reached 2.1m by the end of the year, with cable penetration nearing 450,000. Zenith predicts that satellite will be in 2.5m homes (12%) by the end of 1992, whilst Continental more optimistically forecasts 3m (one in seven households).
BSkyB launched its new five channel package – Sky News (combining the bestof BSB’s Now Channel), Sky One, (incorporating BSB’s Galaxy Channel), Sky Movies Plus, the Movie Channel and Sky Sports – in April 1991, complementing the list with the Comedy Channel in October. The end result has been a virtual monopoly of satellite TV in the UK. Recent links with TV-am and the opportunity to take established terrestrial programming from franchise losers like Thames puts satellite on a definite upward path, placing it firmly in the mainstream of UK broadcasting.
Television sponsorship also began to play a bigger role in 1991. The ITC’snew sponsorship code came into effect at the beginning of the year, tightening up the rules applicable to the terrestrial channels. Almost any programme outside news and current affairs may now be sponsored, but sponsors can have no influence on programme content or scheduling.
The new regulations allow for the usage of company logos and trade marks but prevent reference to the creative execution of spot advertising. Channel 4 issued its own sponsorship code in April, affirming the need for standards and editorial integrity to be maintained. ITV network sponsorship opportunities begin to appear, with Croft Port taking Rumpole Of The Bailey, Beamish Stout taking Inspector Morse, Barclaycard taking Wish You Were Here and Pepe sponsoring The Chart Show. Sony’s sponsorship of the Rugby World Cup was hailed as a success and a list of almost 40 programmes has been issued for ITV network sponsorship in 1992.
1992 is likely to prove a no-man’s land of instability between the frenzy of 1991 and the economic upturn and the cleaner slate of the new franchise period that will come in 1993.