Broadcasters have reasons to be cheerful among the gloom

Opinion

TV viewing and reach have declined as UK broadcasters slashed spend on home-grown premium content. But could a new production powerhouse come to the rescue?

You don’t have to be a management consultant to know when a business or a sector is showing signs of stress. Declining market share, falling investment in new products and moves towards consolidation are the key markers.

Unfortunately, ITV and British broadcasting as a whole are flashing all of those warning signals, although with mergers and takeovers there can also be an element of opportunism.

At least the broadcasting industry is not having to face the same degree of structural change as the newspaper sector. You could even argue that traditional broadcasters are holding up rather well, given the depth of technological change and the unprecedented level of competition for the eyes of viewers.

Yet viewing figures for last year, highlighted by Enders Analysis, showed that broadcasters’ reach and viewing fell, with average weekly reach on the TV set falling to 77% compared with 90% in 2019. By any standards, this is an alarming rate of decline over such a short period.

At the same time, average daily viewing fell to just under two and a half hours, from over three hours pre-pandemic.

Subscription VOD (SVOD) returned to growth in 2024, but its demographic profile is showing surprising characteristics. It is surging among the over-55s, who you would have thought would be a bastion for traditional broadcasting.

Meanwhile, the under-35s watched less than the previous year, while reach declined among children.

Worryingly, according to Enders, because of YouTube’s growth on the TV set and offering genres that viewers enjoy, it could pose a greater threat to broadcasting than SVOD in future.

Cutting investment

Alas, the record of decline in reach and viewing figures is, according to the annual survey by the British Film Institute, more than matched by a sharp fall in the level of investment in high-end shows costing more than £1m an hour to make.

Money spent on such programmes by UK broadcasters BBC, ITV, Channel 4, Channel 5 and Sky dropped by a quarter last year to £598m. After stripping out the Covid year of 2020, it was the lowest level of investment since 2019.

Everyone will understand why the financial pressure is on to cut budgets, but unfortunately the strategy takes place as international rivals such as Netflix, Disney and Amazon spent hundreds of millions on British-made premium content.

In fact, the scariest figure of all is that the international players actually increased the amount they spent on British-made content year on year by the total committed by the five British broadcasters.

The £600m increase took their spending to a remarkable £2.8bn. Such a commitment may be good for the UK production industry overall and levels of employment within it, but it hardly bodes well for the UK principal broadcasters.

There is more than a danger, given that audiences increasingly seek out glossy, expensive programming, that broadcasters could enter a cycle where decline leads to cuts in investments in programmes that in turn could accelerate the decline. Such a tailspin would be hard to pull out of.

All3Media dalliance

Consolidation in any industry can be a sign of growing tensions and pressure, and there have been reports by Reuters of early talks from ITV about a merger between ITV Studios and All3Media, now owned by the Abu Dhabi-backed investment group RedBird IMI. Last year, Redbird was blocked by the last government from taking over The Daily Telegraph.

All3Media, which brings together no less than 50 production companies making everything from Call the Midwife and Midsomer Murders to Gogglebox and The Traitors, is a remarkable creation.

It was set up almost from scratch 20 years ago by three former ITV executives: Steve Morrison and Jules Burns from Granada and former head of ITV David Liddiment.

Over the years, some have argued that ITV should be split into separate companies — broadcast and production, the latter of which should be sold off. It was a mistake avoided by ITV chief executive dame Carolyn McCall.

In fact, two years ago, ITV tried to buy All3Media from its then owners Warner Brothers, Discovery and Liberty Global in a deal believed to have been worth around $1.3bn.

It would have been a natural fit and it would have been absolutely the right thing to do. The deal failed presumably over price and the UK’s largest production group went to RedBird instead.

A new powerhouse

Is there a government or regulatory problem for ITV doing business with a company deemed unsuitable to take over the Telegraph because of fear that a national newspaper would have been essentially controlled by a Middle Eastern state?

The same would almost certainly apply if RedBird was trying to take over regulated national broadcasting franchises, but production companies? Almost certainly not — although there would have to be clear separation between ITV the broadcaster and the programme-making companies.

There would, however, have to be arms-length ownership even of the production companies to ensure that Abu Dhabi cultural sensibilities were not allowed to influence British TV production values.

It ought to be possible to develop a structure to bring All3Media and ITV Studios together to create a new British production powerhouse.

Such a structure would almost certainly involve a new entity in which ITV and RedBird would invest. Questions of relative value and who is in control would be important, if tricky, matters — although a positive outcome is more than possible.

Cheerful news for broadcasters

Even the broadcasting figures for reach and viewing are not quite as negative as a superficial glance would suggest.

The rate of decline of both reach and volume slowed last year for almost every age group. And if you include viewing to broadcasters on all devices, total broadcaster viewing per individual actually increased in 2024.

Broadcasters still dominate the TV set, accounting for three-quarters of identified TV set use, while the BBC remained the biggest single video provider with 25% of all viewing on the screen.

Another reason to be cheerful: the number of programmes attracting audiences of more than 5m, while well down in historic terms, rose last year from 226 to 264 — an increase of 17%, with the BBC in the vanguard.

But the message to all UK broadcasters for the future has to be: sharpen your pencils and find a way of investing more in top-quality content to protect your future.

Raymond Snoddy is a media consultant, national newspaper columnist and former presenter of NewsWatch on BBC News. He writes for The Media Leader on Wednesdays — bookmark his column here.