Dept. Of Quixotic Studies: The culture secretary who wants to regulate the internet

Posted by Peter Kirwan on 29 September 2008 at 16:30
Tags: ITV, Trinity Mirror

While we’re on the subject of commercial Armageddon, take a look at the speech delivered by culture secretary Andy Burnham at the Royal Television Society on Friday.

Perhaps aware of Ofcom research which suggests that the TV advertising market could collapse by 2020, Burnham suggested it was time to “even up” the balance of regulation between the web and TV.

The rise of web, said Burnham, had eroded the “confidence” of broadcasters and diminished “innovation, risk-taking and talent sourcing” on TV.

The solution, it seems, doesn’t involve telling TV executives that change is good. No. Instead, Burnham is keen to “lighten up” regulatory burdens on the television industry. He also wants to “tighten up” regulation of the web.

Huh? How exactly? Copyright was mentioned. Taste and decency, too.

Hare-brained stuff, of course. If Burnham really is intent upon regulating t’internet, he might as well go fishing for cod in the North Sea wearing a blow-up rubber ring and carrying a £2.99 kitchen sieve from IKEA.

All the same, it’s significant that the culture secretary is promising to regulate the web on behalf of broadcasters but not (apparently) newspaper groups, whose print-based ad markets will probably disintegrate sooner than those of commercial TV.

You’ve got to hand it to the boys and girls of TV Land. Outside the Beeb, their web strategies might be gossamer thin. But dealing with regulators over the decades has left them skilled at the dark arts of lobbying.

The timing of Channel 4’s announcement of 15% redundancies was superb (a few days before a big announcement on the future of public service broadcasting from Ofcom).

As for Michael Grade, he signaled today that the argument has moved on from the death of regional TV news (yesterday’s argument; it’s already doomed).

This morning, at the Royal Television Society conference, on the same day that the Treasury nationalized the Bradford & Bingley’s mortgage book, Grade suggested that carrying national news on ITV might become too much of a burden within the next decade.

He’s right, of course — not least because TV news-gathering will become more expensive as the number of reporters churning out exclusives on newspapers dwindles. The prospective cost of doing their own reporting must terrify TV executives.

Meanwhile, Sly Bailey and her peers must find themselves marveling at the benign environment reserved for bankers and broadcasters in the corridors of power.

For years, the newspaper industry has thrived on minimal regulation. Now, even the modest pleas voiced by Bailey & Co for a relaxation in regulation are apparently falling on deaf ears.

The grim truth: if you live by the sword of free markets, you’ll probably die by it at some point. Or at least be forced to mop up after a few flesh wounds. . .

Morgan Stanley hails Roger Parry as King of the Bears: Prepare your handbasket for hellish ordeal, say bankers

Posted by Peter Kirwan on 18 June 2008 at 12:47
Tags: Daily Mail & General Trust, Future, ITV, Johnston Press, Trinity Mirror, United Business Media

Nasty. Morgan Stanley has slashed its profits forecasts for the media sector in 2009 and 2010.

In an aggressively-worded note, the bank’s media analysts foresee distress spreading from consumer-facing media companies to their B2B counterparts. Like this:

Away from the consumer-related areas we see pressures mounting in the corporate environment.

Finance directors looking into the second half of 2008 and into 2009 are likely to seek to reduce controllable costs whether in advertising, marketing, information costs, travel and other expenses.

This means that, while the thrust of this note is to reduce expectations for consumer-related companies, we also take down numbers for those exposed to B2b markets and professional publishing.

Morgan Stanley has cut its profit forecasts for what it calls “advertising inventory companies” (I guess this means anyone who sells advertising) by a whopping 17%.

Advertising and marketing agencies have been cut by 12%. BSkyB is down by 10%. And “professional publishers” are down by 6%.

Morgan Stanley is very bearish on what it calls the “cyclicals” (ITV, Trinity Mirror), which remain dogged by “a combination of structural deterioration, heavy downgrades and, in some cases, leverage fears”.

One possible exception is Johnston Press. Having endured the pain of an early rights issue, the company “could produce very attractive returns on a 2 year view”.

(Note that reference to “heavy downgrades”: The point here is that share price collapses haven’t yet been “heavy” enough to generate buying signals. The implications of this are fairly scary.)

Among the few positives, Morgan Stanley regards United Business Media and DMG&T as “safe” and “interesting”.

A big shake-out is predicted for adland, as revenue growth moves from 3.75% in 2008 to -1% in 2009. As Morgan Stanley puts it:

In 2008, boosted by a strong start to the year and by the ‘super quadrennial’ factors (Beijing Olympics, US Presidential elections, Euro 2008) most forecasters have assumed organic revenue growth of around 5%.

In 2009 estimates for organic revenue growth tend to range in the vicinity of 3-4%. Our starting point is now to ask why there should be any global advertising growth in 2009.

Losing 1% of growth (in revenues) might not sound like much. But when that 1% falls down to the profit line, it becomes a very big number. In organisations with large fixed costs (including employees), it’s also a very threatening number. . .

Scrabbling around for corroboration on this, Morgan Stanley alight upon Sir Martin Sorrell of WPP, who has been warning of a 2009 slowdown for as long as anyone can remember.

But who is the uber-bear identified by Morgan Stanley as supporting their arguments? Step forward Roger Parry, chairman of Johnston Press, Future Publishing and Media Square, the troubled marketing services company.

No doubt Parry’s unvarnished honesty horrifies the financial PRs who have to work with him. Last week, he explained Media Square’s disappointing results by commenting upon “the amazing speed with which the advertising economy has tanked out in the last six months”.

For good measure, Parry added that “the level to which confidence has fallen is really scary.”

At the time, I was rather hoping that no-one would notice his comments.

Too bad: Morgan Stanley did.

Far from Google’s slick conference, an awkward squad of media owners and agencies starts to protest

Posted by Peter Kirwan on 28 May 2008 at 17:34
Tags: BBC Worldwide, Google, ITV, Media, Trinity Mirror

Was James Ashton of the Sunday Times invited to meet Sergey Brin and Larry Page at Google’s high-falutin’ Zeitgeist conference in a hotel on the outskirts of Watford last week?

It doesn’t look like it.

Last weekend, Ashton chose not to focus on Google’s own version of the World Economic Forum, complete with cameos by Gordon Brown and Queen Rania of Jordan.

Instead, he latched on to something that Google would rather not see mentioned: its evident monopoly of the search market.

Ashton’s piece kicks off with Neilsen’s suggestion that Google’s market share has risen from 57% all UK-based searches in July 2005 to 81% last month.

Google, he adds, is used on average 23 times a month by every person in Britain. Ashton writes:

It has got to the point where media buyers cannot afford to exclude Google from their online campaigns by relying on the smaller search engines of Yahoo and Microsoft.

Against this backdrop, Ashton wheels out an impressive cast of malcontents. There’s Sly Bailey asking The Lords for lighter touch regulation. (“I am not arguing that they should be regulated more, I am arguing that we should be regulated less.”

Alongside her, there’s Sir Michael Grade of ITV who (in Ashton’s words) “regularly invokes Google’s liberty when campaigning to overhaul contract-rights renewal”.

Or how about John Smith, chief executive of BBC Worldwide, who recently wondered aloud at an industry conference whether regulators “might start to gain an interest in search engines.”

Here, too, is Jason Carter, the UK managing partner for digital at mega-agency Universal McCann, asking for relief. (“We would like more competition in the marketplace.”)

At this point, it’s worth stepping back and looking at the anti-Google coalition stitched together by Ashton.

It’s cross media (from Trinity Mirror to ITV). It’s both public and private sector (from ITV to BBC). And it includes both advertisers and media owners (who typically agree on something — anything — with about the same frequency as our planet receives visits from Halley’s Comet).

The problem, as one of Ashton’s sources put it, is that regulators “aren’t sure” how to regulate Google.

With good reason. The challenge is international — and complex. And for all the regulators know, Google’s plans to move into other forms of advertising might not bear quite so much fruit as its ventures in search. That would leave a company dependent on rapid growth in a difficult situation.

For all of that, Ashton’s piece does point to a coalition in the making. Yes, it’s blurred round the edges and unsure of its aims — but it’s a coalition none the less.

Big TV: Don’t worry, be happy

Posted by Peter Kirwan on 26 November 2007 at 10:42
Tags: BBC, ITV, Media

From Maggie Brown in the Guardian, a (small) raft of reasons to love Big Broadcasting:

1) BBC1 is “seeing only a modest drop in audiences this year”. And ITV1 is “delivering its best performance since 2001″. (OK, the latter is mostly due to sporting drama and the decision to kill kids’ programming in the afternoons, but let’s not quibble, eh?).

2) The average UK household receives 127 TV channels. Patrick Barwise, professor of management and marketing at London Business School, argues that the Big Five “heritage” TV channels spend �2.6bn a year on programming. And the rest? Just �100m.

3) Freeview is now installed in 14m homes versus Sky’s 8m. Sky subscribers tend to stop watching the Big Five more rapidly than Freeview customers.

4) Re-runs on secondary channels are maintaining overall viewing figures. So if you string together the eyeballs that watch both ITV1 and ITV2, audience levels are “largely stable”.

And, er, that’s about it.

As a list of positives, this isn�t hugely impressive. And Brown barely tries to defend Channel 4 (”suffering”) and Five (”on a slippery slope”).

Brown’s positives are wrapped up plenty of fizzy prose — the kind that might tempt Big Five sales execs to think that all is well in their world.

Hopefully, they won�t get as far as the final par, which notes a projection from the think-tankers at DGA. This suggests that the Big Five’s audience share will decline by 13% to 58.7% by 2012.

For the sake of argument, let’s assume that programming budgets follow suit.

We’d see a rise in multi-channel budgets of �46m by 2012. And, ahem, a decline of �338m in Big Five budgets.

Net loss? Err, something like �292m.

Euro 2008 wasn’t much cop, says Peter Preston

Posted by Peter Kirwan on 26 November 2007 at 10:33
Tags: Guardian Media Group, ITV

England’s exit from Euro 2008 will be nastiest for broadcasters, writes Peter Preston.

ITV has already reckoned up the damage to its own P&L: some �10m in lost ad revenue.

And the press? Always an acute watcher of ABCs, Preston notes that during the last European Championships, the Sun’s circulation fell by 4.8%. The Mirror fell by 5.9%.

“We had all the costs, all the extra pages, all the headlines,” writes Preston, “but not much you could call tangible reward.”

Really? This seems to leave advertising out of the equation: retailers pushing plasma screens, the Guardian pushing Delia’s half-time recipes, and a myriad of sponsored supplements.

According to Claire Beale at the Indy, British advertisers laid out �300m to promote their wares in and around the World Cup in 2006. On that basis, surely the uplift for Euro 2008 would have reached �150m-�200m.

For the hell of it, let’s assume that �50m of that amount would have made its way into press advertising. At least a few million of that amount would have reached Carolyn McCall’s coffers in Farrington Road.

I guess it takes a real trustafarian to be blas� about that kind of money.