Earlier this month, Priya Dogra, Channel 4’s new chief executive, announced that 28% of its staff are to be cut, the biggest round of redundancies in the broadcaster’s 43-year history, amid a slump in advertising and increasingly stretched finances. Meanwhile the BBC’s new director general, Matt Brittin, a former top Google executive, is pushing through up to 2,000 job cuts as he attempts to negotiate a dramatic overhaul of its licence fee funding model with the government to secure its long-term future. And four years after ITV announced an £800m-plus plan to create a streaming “national champion” to take on Netflix, Disney+ and Amazon, chief executive Carolyn McCall has raised the white flag, arguing that a cut-price £1.6bn sale of its broadcasting arm to Sky is the only way to survive.
The Silicon Valley behemoths are forecast to take almost $50bn (£38bn) in UK ad revenues by 2028 – two-thirds of the $74bn total – at which point 90% of all ad spend will be digital, according to eMarketer. That expansion leaves a shrinking pool of funding for commercial PSBs, which have struggled to untether from their reliance on traditional TV advertising – a market that is forecast by WPP Media to shrink by 2031 to just £2.4bn, 60% down on 2015 levels. Meanwhile, the predominantly publicly funded BBC’s licence fee income has fallen by 38% in real terms since 2010, owing to a combination of freezes or below-inflation increases to the licence fee and increasing non-payment.
The BBC has lost 2.7 million payers of the £180 annual charge since the beginning of the decade. Last year it lost a further 539,000, taking the total who still contribute to 23.3 mllion, the lowest level since 1999. Brittin, now spearheading negotiations with the government over the terms of the renewal of the BBC’s royal charter next year, has called the model a “busted flush” and “insufficient to sustain a universal public service”.
The increasingly financially stretched PSBs face competitors with huge financial resources for programme-making. Netflix alone has a content budget of $20bn this year, and enjoys a larger share of UK TV and streaming viewing than ITV, Sky, Channel 4 or Channel 5, while YouTube is close to overtaking the BBC to become the most popular platform in Britain on the same metric. So partnerships will be a defining feature of the new era.
They’re a way for the channel to compete on reach and scale while maintaining its independence.” The UK’s PSBs have a patchy record on collaboration, although notable successes include the development of Freeview, and have not been able to come together to map out a streaming future as viewing moves beyond linear TV. Earlier this year, Carolyn McCall, the ITV chief executive, expressed her frustration that talks to create a British streaming champion comprising the original three PSBs had failed because “we all have such different business models”. However, as the reality of the scale of the crisis facing the industry becomes ever more apparent, a new wave of collaboration is taking place – some say helped by a change of top executives.
Brittin has said the BBC is in talks to enable Channel 4 content to run with ads on the iPlayer, having told MPs that the commercially funded PSB looked “very subscale” given ITV and Sky are merging. This week, Channel 4, which relies on advertising for 90% of its income, made a significant move to try to address this scale issue by poaching the £300m-plus contract to sell the TV and digital ads for Paramount UK properties including Channel 5, Nickelodeon and Comedy Central from Sky. And although ITV, Channel 4 and Channel 5 now make a little over £1bn annually in revenues combined from their respective streaming se
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