Black Tidings For Advanced Television Sector
The UK telecoms, media and technology (TMT) sector is being held back by a lack of funding, restrictive legislation and over-caution on the part of content owners. That is the verdict of city media analyst, Neil Blackley, who had some harsh words for industry executives at the Royal Television Society Dinner in London.
In his speech, aptly titled “Parting Shots”, Blackley, the outgoing head of the UK and European Media Research Team at Merrill Lynch, said that there was no sign of a slowdown in the advance of communications technology. In particular, he noted that internet penetration is still on the increase, digital TV is winning favour and interactivity is in vogue.
However, UK television groups are not in the best position to take advantage of the public’s enthusiasm for emerging platforms. Cash is at the heart of the issue. Carlton and Granada are still smarting from the ITV Digital disaster which cost more than £1 billion. As a result, there is a natural reluctance to invest heavily in unproven technology and the two companies are now focusing their attention on mainstream programming.
Blackley thinks that the proposed merger of Carlton and Granada should be allowed to go through but is unwilling to speculate on what will happen either way.
“If it doesn’t happen, Carlton in particular has no plan B and would have to substantially reduce its dividend again. Carlton and Granada’s management are putting up a united front, but it will be interesting to see what happens after a merger,” he said. “ITV chairmen are like a rear view mirror – relationships between them can appear to be closer than they actually are.”
BSkyB would appear to be in a healthier position after posting pre-tax profits of £16.6 million in the first half of its financial year but Blackley rightly points out that the network amassed £1.6 billion of debt and had to cut its dividend after supplying free decoders and paying for the transition to digital.
However, the problems faced by satellite broadcasters pale into insignificance when compared to the tribulations of the cable industry. Both NTL and Telewest were forced to the brink of bankruptcy after a huge outlay on infrastructure and development stalled while the two companies underwent financial restructuring.
“Post high-yield bond refinancings, cable is being run on a care and maintenance basis, falling behind BSkyB on innovation – such as personal TV recorder boxes – let alone trying to leapfrog with video on demand,” insisted Blackley.
Assuming that they return to a solid financial footing, he supports the long-mooted merger of NTL and Telewest believing that it will pave the way for a national triple way local loop service.
With the launch of the DTT service Freeview, the BBC has put itself in the digital hot seat. New set-top boxes are available for under £100 in high street stores and there is considerable backing from the government which is looking to turn off the analogue signal later this decade. However, Blackley clearly believes that the Corporation should be doing more and cites the example of the Norwegian public service broadcaster, NRK, which is proposing to give away free boxes to every home on the basis that cutting off analogue earlier will pay for it.
In his speech, Blackley also railed against BT which has only just reduced its ADSL prices, for broadband internet and video on demand, at a time when other parties are unable to raise sufficient funds to enter the market. He suggests that legislation needs to be relaxed to encourage further competition and boost the high-speed internet access market. Content owners also need to be reassured that their output will not fall prey to interactive broadband providers.
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