The future of broadcastingan example of a sector study

British Broadcasting needs to go international

• Home market saturated and fragmenting• Economies of scale needed for programmes• Comparative advantage

– ‘ the best brand name in the business’

• Global competition for supplies & outletsBBC Worldwide - 50% of total BBC revenue

Europe’s leading exporter of TV progs and formatsGlobal TV operator – 19 commercial channels

The evolution of broadcasting

• National Terrestrial

• Continental Satellite

• Global Broadband

• From broadcasting to narrowcasting

• From national audiences to specialist niches

The value-delivery systemJeremy Mayhew (BBC Worldwide) Guardian 20/9/97

Production Distribution Retailing

Content Distribution Gateways

Transmitters‘Platforms’Networks:Terrestrial

CableSatelliteInternet

software:encryptiondecodinghardware:

set-top boxessmart cards

network servers

Multimedia convergence

• Content is key to sales of subscriptions and hardware• Multimedia mergers:

– AOL Time Warner– Universal Vivendi (Canal Plus)

Has this approach worked?

Content

Processing Transmission

Film TV and musicCable, Satelliteand terrestrial

ComputersWAP phonesiTVHardware

Where will the power reside?

• Strong content– to drive subscriptions, pay per view,audiences

• Well-placed monopolistic gateways

BBC strategy• trade on strengths in content• avoid over-dependence on any one system• joint ventures & deals with

gateways/distributors (eg Freeview/Freesat)

Ways of entering the market

• Export sales (£660m - 40,000 hrs of programmes

• Licensing (Teletubbies in Chinese)

• Joint Ventures– Discovery, Foxtel, Atlantis, Flextech– Disney magazines, Hello fulfilment, CBS library

• Direct Investment - beeb.com– new digital channels BBC Prime, World, America

New Media

• BBC website– Listen Again– interactive Media Player (iMP) – Creative Archive,

• Plans to sell pay-to-view programmes abroad via its website

Global Media Ownership

• http://www.mediachannel.org/ownership/chart.shtml

Rupert Murdoch - News Corpwww.newscorp.com

the leading player

• Originally a newspaper publisher

• Vertical integration: Fox Studios/TV

• First-mover advantage in satellite & digital– content provider & gateway controls

• Global TV channels– Fox, BSkyB, C7 (Aus) Star TV Asia

• Uses sport as ‘the battering ram’ Guardian 16/10/96

Growth markets-

• Asia (exc USSR) 60% of world

population

• Fastest economic growth rates

• Economic liberalisation of China– explosion in consumer demand (1.3 billion people)– Media and entertainment market worth £14.5 bn– 110 million internet users– 378 million mobile phone users

Star TV

• Star 20 channels English, Mandarin and Hindi

• 300 m viewers in 53 countries

• Majority shareholder NewsCorp

Relations with Chinese government crucial

• BBC World News replaced by Sky

• Yet it still failed to win over the Chinese

• 2003 Murdoch buys Direct TV USA• http://media.guardian.co.uk/rupertmurdoch/story/0,11136,933806,00.html

• Foxtel News set to rival CNN and BBC– ‘like the Sun in the Sky’ ?

• Buys minority stake in ITV– Battle with Virgin cable

How can the Government...

• Ease cross-media ownership restrictions?– create global-scale media groups– encourage innovation and entrepreneurship

• Ensure competition - consumer choice & access?

• Protect freedom of speech & news reporting?

• Preserve standards of decency?Ian Hargreaves FT Creative Business 5/12/00

The answer is Ofcom?

Communications Act• Removed barriers to ownership

– including foreign investment– allows a single ITV company

• Relies on normal competition law– and the existence of Public Service Broadcasting

• Regulates content through OFCOM– diversity, quality and impartiality

• but still limits cross-media ownership– prevents Murdoch getting control of ITV

Public Service Broadcasting aims

•sustaining citizenship and civil society •promoting education and learning •stimulating creativity and cultural excellence •representing the UK, its Nations, regions & c

ommunities •bringing the UK to the world and the world t

o the UK • Who pays?