Multi-Channel TV To Claim Larger Share Of Ad Revenue
A new report by PricewaterhouseCoopers commissioned by media super-regulator Ofcom has predicted that TV advertising revenue in the UK will be driven by multi-channel broadcasters, as traditional commercial channels become increasingly constrained by digital competitors success.
The report also found that audience fragmentation is not as significant as first thought, with the impact on total TV advertising revenues likely to be less than predicted. However, PWC claims that revenues will “shift from the traditional commercial channels to the new multi-channel services as multi-channel increases its share of viewing”.
In addition, increased competition from new BBC channels will have an impact on advertising revenues, as will the Corporation’s commercial activities and increasing viewer share, according to the report. The BBC’s successes are expected to affect traditional and multi-channel viewing in equal measure, although a greater impact on the revenues of multi-channel operators is anticipated, due to the “higher estimated price elasticity of demand for multi-channel” when compared with traditional channel advertising.
PWC’s predictions outline a stagnation in growth for conventional TV advertising, with all future growth being delivered by multi-channel operators, and although the report explains the difficulty of making accurate predictions in an uncertain and ever-changing TV environment, PWC is confident that conventional, terrestrial broadcasters will face difficulty in expanding their current revenues much further.
Terrestrial broadcasters have long been preparing for the advent of a digital-only television landscape in Britain, with Channel 4 and Five both exploring merger and partnership possibilities to underpin sliding revenues in the future.
Five is understood to be in discussions with digital broadcaster, Flextech, following the collapse of merger discussions with Channel 4 to secure its financial future in a multi-channel environment (see Five Looks To Flextech Merger To Secure Future).
Elsewhere Channel 4 has turned to Ofcom to provide partial public funding to ensure its continued existence, claiming that it faces a £100 million budget deficit due to the costs of creating a digital-only broadcasting infrastructure (see Channel 4 Outlines Public Funding Proposals To Ofcom).
Ofcom: 020 7981 3040 www.ofcom.org.uk
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