A Look Back At 1999…
The eve of the turn of the millennium was characterised, in the media industry, by a flurry of mergers, takeovers and consolidations; by internet start-ups and new media millionaires; by a scrabble to grab the new Premier League football broadcasting rights contract and, tragically, the demise of Live TV and the News Bunny…
January
As 1998 began with IPC Magazines unveiling a £860 million management buyout, so 1999 began with a restructure at the company resulting in the loss of around 200 jobs. The restructure was designed to make the magazine publisher more cost effective. As part of the restructure, IPC’s different divisions – Country & Leisure, Music & Sport, Women’s Weeklies, TV Weeklies and the SouthBank titles – were devolved from the main group to a certain extent. Each publishing department was given its own board of directors to operate as a subsidiary of IPC.
Mike Matthew, IPC’s chief executive, who instigated the shake-up and largely orchestrated the management buy-out twelve months earlier, would announce in October that he is to resign from the company ahead of its planned floatation. Sly Bailey, managing director of IPC tx, took over from Matthew in December 1999.
A number of reports during January anticipated the surge in internet ventures which marked the year. Home use of the internet was shown to have doubled over the last twelve months and a quarter of these users had used the Net to buy a product or service online. During 1998 the size of the UK’s market in home internet use had grown to 11%, or 5 million people, and a further 5% claimed that they expected to get access to the Net within the next six months. Whilst companies at this stage were still reluctant to dip their toes in the world of e-commerce, this trepidation had all but disappeared by the end of the year.
February
February saw BSkyB celebrate its tenth birthday. Rupert Murdoch’s satellite broadcaster had grown from a start-up, four-network service in 1989 to one of the world’s top 250 companies. The company had also begun, a few months earlier, the much-heralded transition from analogue to digital broadcasting.
The Radio Advertising Bureau (RAB) confirmed that in 1998 radio was the fastest-growing medium in terms of advertising revenue. Figures showed that commercial radio’s total revenue reached £420 million during the previous year. This is a growth rate of 18.6% and is set against a background of a 7.4% growth for all display advertising for the January to September 1998 period.
Another report from the RAB found that the majority of advertisers felt that television is becoming prohibitively expensive. The survey found that 45% of advertisers agreed with this, whilst only 18% disagreed. “It must be of concern to TV that almost half its customers believe this to be the case,” said Justin Sampson, then operations director at the RAB. At the end of the year Sampson would be promoted to managing director of the Bureau.
March
March saw the launch of ITV’s new evening schedule, introduced after controversial plans to axe News at Ten were agreed by the Independent Television Commission (ITC) in November 1998. The Network introduced two new news programmes, the ITV Evening News at 6:30pm and the ITV Nightly News, which airs around 11pm.
The ITC is to perform a full review of the performance of the new schedule in March 2000. The Commission has been urged by culture secretary Chris Smith to ensure the review is rigorously conducted. Smith has already voiced concerns over the viewing levels for ITV’s regional programmes, an integral part of the Network’s licence requirements.
One of the ‘big three’ ITV groups, Granada Media, began to make moves towards strengthening its position in the Network with the acquisition of a 18.6% stake in Scottish Media Group. The move was essentially preemptive, offering Granada the opportunity to launch a full takeover of SMG at a later date. However, a much larger merger in the world of ITV loomed…
As the significance of the internet began to seep into media companies’ consciousness, a number of ISPs and portal sites started to emerge from traditional media strongholds. News International span-off currantbun.com from its Sun newspaper after backing out of the LineOne venture with BT. At the same time the Mirror Group announced plans for its own ISP and portal site, ic24.co.uk.
Later in the year News International decided to broaden currantbun’s appeal by including material from the Times and Sunday Times. The service was rebranded and marketed as simply bun.com.
April
After a backlash from politicians, club supporters and the public, BSkyB’s proposed takeover of Manchester United Football Club was finally blocked. The trade and industry secretary, Stephen Byers, decided, following recommendations from the Monopolies and Mergers Commission (now Competition Commission), that the takeover would prove anti-competition in the negotiation of television broadcasting rights. The blocking of the deal effectively scuppered plans by other media groups to buy majority stakes in football clubs.
Following Sky’s failure to secure a deal with Man Utd., the broadcaster’s chief executive, Mark Booth, announced that he was to leave the company to join a News Corporation-funded new media company called e-partners. Booth was replaced in May by Tony Ball, who joined the company from his position of CEO at Fox/Liberty Networks.
Also in April the largest ever poll of UK internet users was launched by Fletcher Research. Fletcher placed pop-up questionnaires on over 100 of the country’s most popular websites. The information gathered from the survey has been used by the Internet Advertising Bureau (IAB) and National Audience Survey (NAS).
French outdoor advertising group, JC Decaux, became the world’s largest outdoor group this month when it won the bidding to acquire a raft of outdoor companies from communications conglomerate Vivendi. Decaux bought the HMC Outdoor Advertising group, which incorporates Avenir, Mills & Allen, Sky Sites, AP Systemes, RCI and Pearl & Dean, for £650 million. Cinema sales house Pearl & Dean was subsequently bought by Scottish Media Group for £22 million in June.
May
Sky and ONdigital’s drive to attract digital television customers stepped up a gear this month as Sky announced plans to give away free set-top box equipment. ONdigital, which had initially offered customers a free box only if they bought a £200 television set, soon followed Sky’s lead and began subsidising the whole cost of the equipment.
May saw the launch of the inaugural Media Question Time event at the BBC Radio Theatre. The event was created and hosted by MediaTel and featured a panel of key media figures including Times media editor Ray Snoddy, then chief executive of ONdigital, Stephen Grabiner, and chief executive of Talk Radio, Kelvin MacKenzie.
The panel to questions from the floor covering a number of topics including the future funding of the BBC, the effect of the launch of digital television and the prospects for ITV’s new evening schedule. The Media Question Time event returns this year on Monday 28 February 2000, once again at the Radio Theatre. Chairing the event again will be the BBC media correspondent Torin Douglas. Already confirmed on the panel are Times media editor Ray Snoddy and Richard Eyre (currently chief executive of the ITV Network).
June
A flurry of internet activity began around this point in 1999 as Dixons announced plans to float its enormously successful free ISP, Freeserve, on the Stock Exchange. A series of Net floatations both here and in the US has seen shareholders make fortunes out of relatively young companies. The ‘dot-com’ phenomenon also paid off for Freeserve which eventually floated in July with a market value of £1.5 billion. By 22 December the value of the company, according to the 20% of stock which was made public, reached £5.8 billion.
Associated Newspapers, publisher of the Evening Standard and Mail newspapers, also began to develop its Net interests by announcing the launch of a major new site targeting women. Named charlottestreet.com, the site, which launched in October, latched on to the growing trend of web designed specifically for women. Associated New Media ploughed £5 million into the project.
The Government confirmed in June a date on which all tobacco advertising in the UK should cease. The new law stated that all forms of direct and indirect advertising on billboards, in newspapers and magazines must be removed by 10 December 1999. However, an appeal to the European courts by the tobacco manufacturing industry would the introduction of this ban delayed…
Greg Dyke was confirmed as the BBC’s new director general in June. Dyke succeeds Sir John Birt, who will leave the Corporation in March next year. His appointed was controversial as Dyke has had a number of links with the Labour Party in the past, leading Tory leader William Hague to demand assurances from Dyke that he will be politically impartial in the role.
July
A surprise blow hit digital terrestrial broadcaster ONdigital in July when chief executive Stephen Grabiner announced that he was leaving the company after only 15 months in the job. It was reported that Grabiner had had a series of disagreements with Carlton Communications chairman Michael Green. ONdigital is 50:50 owned by Carlton and Granada.
There was confusion surrounding Grabiner’s departure, as he first said he was planning to join Rupert Murdoch’s e-ventures group, which Mark Booth, Grabiner’s opposite at BSkyB, had left to start in April. However, Grabiner then changed his mind and ended take a position at venture capital group, Apax Partners.
Grabiner was replaced at ONdigital by Stuart Prebble who moved to the company from his position of managing director of channels and interactive media at Carlton.
Media companies’ interest in football clubs, ahead of the new Premiership TV rights contract, was further evidenced by Granada’s acquisition of a 9.9% stake in Liverpool for £22 million. The new contract for Premier League TV rights begins in 2001 and is expected to be awarded in the near future.
The slow but sure consolidation in the cable industry to a decisive step forwards this month as France Telecom took a 10% stake in UK cable company NTL for £640 million. The deal provided NTL will the backing it required to launch its own takeover/merger bid for rival group, Cable & Wireless Communications (CWC).
NTL soon entered exclusive negotiations with CWC and the two eventually agreed the terms of a £8.2 billion deal. The combined group would become by far the UK’s largest cable operator with a potential reach of over 12 million homes. Telewest was somewhat muscled out of discussions with CWC by NTL and was left out in the cold as the only remaining major cable company. However, the NTL/CWC deal would later be unexpectedly referred by trade and industry secretary, Stephen Byers, to the Competition Commission…
The potential for further consolidation in the ITV Network was also on the cards this month, as the Office of Fair Trading (OFT) announced that it was to review airtime sales restrictions which a number of ITV companies agreed to in 1994. Carlton, Granada and MAI, which bought Anglia Television, all agreed in 1994 to keep their control of TV advertising revenue and sales below 25% of the market.
If the OFT’s review results in a relaxation of this restriction, the floodgates may be opened for a series of buyouts and mergers in the Network. This review would turn out to be very significant for ITV companies later in the year…
The Restrictive Practices Court ruled at the end of June that the Premier League football had not been acting as a cartel in the sale of television broadcasting rights to BSkyB and the BBC. The Court’s decision contradicted that of the OFT, which argued that the sale of TV rights to all League matches ‘collectively’ was effectively the operation of a cartel. The OFT claimed that because only around 60 of the 380 matches played each year are shown live on British television, the fans and public are losing out. However, the Court decided that the current system was in the best interests of football in general. The decision was welcomed by BSkyB and ITV.
Record breaking cinema admissions figures were recorded in July as films including Star Wars: The Phantom Menace and Notting Hill contributed to a massive 14.6 million ticket sales. This is the highest number of monthly admissions since July 1971.
Right at the end of the a newspaper mega-merger was agreed when regional publisher Trinity agreed the terms of a £2 billion deal with Mirror Group. The combined group became the largest newspaper group in the country with a total weekly circulation of over 12 million newspapers.
August
The BBC suffered yet another blow to its sporting out when presenter Desmond Lynam, a fixture at the Corporation for the previous 30 years, announced his defection to ITV. Lynam moved to the commercial network to become its main football presenter covering the UEFA Champions League and FA Cup matches.
The much-debated subject of the future funding of the BBC was laid down in an independent report chaired by economist Gavyn Davies this month. One of the main recommendations in the Davies Report was that the government introduced an additional charge on the licence fee, payable by viewers who have digital television. The extra charge, suggested to be £24, would then be used by the BBC to fund its own development of digital services.
The recommendations received a very negative response from a whole host of commercial broadcasters who claimed that the Corporation is already very well funded and is often wasteful of its income. ITV chief executive, Richard Eyre, has claimed that the BBC should be able to manage its financial resources much more effectively than it currently does, and therefore there are no grounds for an increase to the licence fee, dubbed a ‘digital tax’.
A coalition of commercial broadcasters sought to clarify with the European Commission whether such an increase in the licence fee would be legally permissable. In October, a spokesperson for the EC said that the plans would not breach EU state aid regulations, adding that similar systems had been approved in Germany and Portugal.
IPC this month confirmed its commitment to new media development, with a £55 million investment in IPC Electric, a new company set up specifically to look into and create internet ventures. IPC’s first project, would be an extensive TV listing site, unmissabletv.com. In December the group also unveiled its offering to women online at beme.com.
The looming Premier League TV rights contract continued to get broadcasters twitching as each tried to secure a strong position from which to bid. BSkyB made further moves in this direction in August by buying a 9.1% stake in Leeds United for £13.8 million.
September
ONdigital entered another rocky patch in September when a number of the company’s directors resigned. The digital terrestrial broadcaster’s programming head, commercial director and operations director all left this month, just weeks after the departure of chief executive Stephen Grabiner.
ONdigital and BSkyB continued to bicker with one another over the provision of sporting rights and channels to each other’s service. Sky had been refusing to allow ONdigital to carry the Sky Sports 2 channel, claiming that it would breach the ITC’s digital points systems. Meanwhile ONdigital was keeping the UEFA Champion’s League games for itself, much to the umbrage of BSkyB, who, in retaliation, threatened to withhold covering of the Ryder Cup golf tournament from ONdigital.
After a series of threats and squabbles the ITC told Sky that it had to provide Sky Sports 2 to ONdigital and, after the Ryder Cup organisers threatened to sue Sky over rescheduling, the tournament was shown on both Sky Box Office and Sky Sports 2. This gave ONdigital viewers limited access to the competition.
Overwhelming demand for digital radio licences covering London led the Radio Authority the second of three such licences in September. The first licence for the Capital was awarded to CE Digital, an alliance between Capital Radio and EMAP Radio.
Another women’s website launch in September as the Telegraph Group teamed up with High Street chain Boots to produce the unfortunately-named handbag.com. The service now rivals UNM’s charlottestreet.com and IPC’s beme.com.
Culture secretary Chris Smith this month set out the terms under which the analogue television signal will be turned off. He placed the switch-off at between 2006 and 2010 and set broadcasters the target of providing full and affordable services. The analogue signal will not be turned off until 95% of the population has digital television and its broadcast coverage is 99.4%.
Record breaking cinema admissions figures were recorded in July as films including Star Wars: The Phantom Menace and Notting Hill contributed to a massive 14.6 million ticket sales. This is the highest number of monthly admissions since July 1971.
October
Analysis by the Radio Advertising Bureau (RAB) found that internet advertisers are increasingly turning to radio to promote their online services. The Bureau said that Net advertising on radio had risen by over 300% in the twelve months to the end of August. This compares to an increase in all above-the-line spend by internet advertisers of 102% over the same period.
The RAB claimed that the passive nature of radio makes it more attractive to companies advertising internet services as people often surf the internet and listen to the radio simultaneously.
A report by the Independent Television Commission showed that in the second quarter of the year, take-up of cable television services had hit an all time low. The rate of growth had dropped to just 1.9% between April and July year on year; this represents just 55,000 new cable TV homes. Increasing competition in the multi-channel TV market and the cable companies’ relatively slow development of digital services have both contributed to the slowing rate of take-up…
…At the same time ONdigital announced that between June and October it had seen subscriptions rise by 66% to 411,000 customers. Whilst still trailing behind Sky, which at this point had just fewer than two million customers to its Sky Digital service, ONdigital figures were still better than many expectations.
November
The television world was shaken at the start of this month by the departure of ITV’s chief executive, Richard Eyre, who left to head Pearson’s TV division. His departure came at a time when the commercial station was enjoying a new lease of life, with an improvement in its peak-time audiences, a rescheduling drive and the luring of key personalities like Des Lynam and Kirsty Young to the station pushing its stature. Later in the month, however, Chris Smith wrote to the ITC with concerns about new ITV schedule since the removal of the News at Ten. Of particular worry to the culture secretary was the decline in viewing figures for regional news bulletins as a result of the changes. Debate around a possible replacement for the chief lasted all month and is yet to be resolved.
A scandal rocked the regional newspaper world as the Audit Bureau of Circulations (ABC) began an investigation into “apparent irregularities” in the circulation claims of three Trinity Mirror titles. The Birmingham Evening Mail, the Birmingham Post and the Sunday Mercury have been suspended from the audit reports until the inquiry is complete. Later on in the month a virtual regional press war broke out as a surge of free local papers all with the same name descended on the streets of our major cities. The Metro war is still raging as the major regional publisher’s fight to corner the new market.
Live TV closed its doors as its carriage space and licence was sold off of to the Cable Programme Partners 1 consortium. The axe fell on the channel, famous for the News Bunny and Topless Darts, after its owner Mirror group merged with Trinity earlier in the year.
Digital radio launched in the UK when the Digital One consortium, which won the award for Britain’s first national commercial digital multiplex licence began broadcasting. A survey just a few months earlier however had found that few people in the country knew what digital radio was, and the sales of digital sets has been minimal.
Chris Smith urged broadcasters to join together to promote digital television after concern was raised about customer confusion.
Ginger Media Group neared a buy-out as bidders lined up for the sale of the company. Scottish Media Group was the favourite, with a decision still pending.
Consolidation fever grew as the month drew to a close with the Daily Mail & General Trust agreeing to buy Bristol United Press in an £122 million deal, and Carlton Communications announcing its proposal to merge with United News & Media. This 7.8 billion merger deal is still awaiting acceptance by the Competition Commission but is set to upset the television world if it is given the go-ahead, creating as it will the UK’s largest commercial broadcaster and a huge force in new media developments. The plans are subject to scrutiny, breaching as they do the total amount of ad revenue one ITV company is allowed to control, according to current legislation. The merged group would control a total of 36.8% of all UK ad revenue for television; the current limit stands at 25%.
December
Consolidation continued in the final month of the year as cable group Telewest and pay-TV group Flextech announced plans to merge. “Vertical integration” were the key words as content and carriage proposed to combine to form a pay-TV force to rival BSkyB.
US publishing giant, Gannett, which owns Newsquest, announced its interest in regional publisher Newscom. As the group informed the Competition Commission of its plans, Johnson Press and Trinity Mirror also came forward with proposals for a takeover bid.
The ITC stepped in against the merger between BSkyB and French pay-TV group Vivendi but approved the collaboration between cable groups NTL and Cable & Wireless. It reasoned that public interest was the highest priority and increased competition the best result of any merger plans. With these factors in mind it aims to stop a merger between the two huge pay-TV groups, resulting as it would in a tie-up of programming rights, but allowed the two cable groups to pool their resources, thus permitting a stronger force in the market.
As the year drew to a close Channel 4 celebrated winning a three-year exclusive rights deal to broadcast Friends and ER from Sky, but hung its head a few days later when the departure of two cast members of Friends was predicted.