UK Television Market To Become More Competitive
Channel 4 chairman Luke Johnson has predicted a significant increase in competition for UK television broadcasters during a meeting with equity research company Lehman Brothers.
Johnson said that he expects Freeview to become more attractive as more people find out about it. He also gave a pat on the back to the BBC, the brains behind Freeview, stating: “This is a massive success and a major achievement on the part of the BBC.”
However, he was more sceptical about the success of BSkyB over the coming years. He said that it could struggle to reach its self-set target of 8 million direct to home subscribers by 2005, but this could be remedied by Sky buying more attractive TV content.
According to Johnson, the UK television advertising market is performing well for 2004, with a growth rate over GDP expected. However, he feels that it could perform materially better and that the current advertising environment is masking some structural problems for TV companies that rely on its revenue.
Commenting on ad-funded television companies, Johnson said: “Major FMCG advertisers are continuing to question the value for money they get from TV and continue to shift to radio, outdoor, direct marketing and increasingly online.”
Johnson believes that forming a TV Advertising Bureau will allow the industry to focus the on qualitative benefits as well as quantitative in the same way that radio does via the Radio Advertising Bureau.
According to the broadcasting chief, Channel 4’s largest hurdle during the coming months will be the effect of personal video recorders. Audiences will become fragmented with the introduction of PVRs and time-shifted viewing will become common.
A recent report from Mindshare claims that PVRs are unlikely to destroy television advertising, instead upsetting the status quo and forcing advertisers to look at more innovative ways of reaching consumers. Johnson’s concern is that no major game plan has yet been developed for handling the knock on effect of PVR penetration, even though it is expected that 27.6 million units will have been shipped worldwide by 2008.
Another obstacle faced by Channel 4 is to find replacements for hit shows Friends and Frasier, which have both finished production and will air their last episodes on the channel later this year.
Looking ahead, Johnson said there are a number of options open to Channel 4, such as buying up parts of the BBC, should they be put up for tender, as well as bidding for some of the licence fee if it becomes available under the Public Service Broadcasting review. A tie up with Five has also been mooted which could bolster the revenues and audience viewing figures of both channels.
Channel Four: 020 7396 4444 www.channel4.com
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