Transcript No Slide Title

THE UK TELEVISION MARKET:
AN OVERVIEW
September 2003
Contents
• Industry revenues and expenditure
• Multichannel platforms and digital TV
• Broadcasters and channels
• Programming and audiences
2
Sources of revenue to UK broadcasters
Components of television revenue in 2002
(12 months to end September)
Trend in share of main components,
1997-2002
£82 million
1% Sponsorship
£248 million
3% Sale of goods
60%
£319 million
4% Other
50%
NAR
£1.8 billion
£1.5 billion
£3.1 billion
26% BBC licence
fee spent on TV
21% Subscription
Revenue*
44% Net Advertising
Revenue
40%
30%
BBC licence fee
spent on TV
20%
Subscription
10%
Other
Sale of goods
Sponsorship
0%
1997
1998
1999
2000
2001
2002
* defined as subscription
revenue to pay-TV channels,
not platform revenue
Source: ITC
3
UK TV Net Advertising Revenue by channel over time
80%
Channel
NAR 2002
ITV1
£1,727m
Channel 4
£623m
Five
£221m
Cabsat
and Other
£575m
70%
60%
Channel 3
incl GMTV
50%
40%
30%
Channel 4 incl S4C
Cable and Satellite and other
20%
10%
Five
0%
1997
1998
1999
2000
2001
2002
Source: ITC, figures for 12 months to September of relevant year
4
Tender payments by Channel 3, Five and Additional Services licensees,
1997-2002
£ million, nominal prices
The Broadcasting Acts 1990 and 1996 require that certain kinds of licence are awarded by
the ITC after a process of competitive tender. Licences awarded in this way are required to
make additional payments to the Treasury (via the ITC). Additional payments are in two parts.
The first is a percentage, set by the ITC, of qualifying revenue (PQR). The second part is the
cash bid, which on renewal is set by the ITC. This is index-linked and payable annually.
500
450
400
Cash Bids
350
PQR
300
250
200
150
100
50
0
1997
1998
Source: ITC, calendar year figures
1999
2000
2001
2002
Note: The drop in total
tender payment in 1999
reflects the renewal of some
Channel 3 licences. The
increase in PQR in this year
reflects the policy decision
that more emphasis be given
to the PQR component of
tender payments.
5
Programme budgets for the terrestrial channels, 2001-2003
1,200
2001
1,000
2002
2003
800
600
400
200
0
BBC1
(Network)
BBC2
ITV1
(Network)
C4
Source: Company reports, press reports and ITC estimates (for the BBC in 2003)
Five
6
The UK programme supply market
At the Secretary of State’s request, the ITC conducted a
comprehensive review of the programme supply market in
autumn 2002.
Size composition of UK production market by share of turnover 2001
BBC
Granada
Carlton
SMG
Other
independents
TV
Corporation
Fremantle
Media
Endemol
The ITC made a series of recommendations which were accepted and incorporated into the
Communications Bill. Among the actions proposed by the ITC were measures to strengthen
the growth potential of the independent production sector, including the requirement that
public service broadcasters develop Codes of Practice to provide a clear framework for their
dealings with independent producers.
Source: ITC
7
International trade by UK TV companies
International transactions of TV companies,1999-2001
£m
1,200
1,000
Others
North America
800
Other Europe
European Union
600
400
200
0
1999
2000
2001
Exports
Source: ONS (2002 figures available in late 2003)
1999
2000
2001
Imports
8
Contents
• Industry revenues and expenditure
• Multichannel platforms and digital TV
• Broadcasters and channels
• Programming and audiences
9
Range of available digital basic pay-TV packages (Satellite & Cable)
Cost:
£12.50
£15.50
£18.50
Channels
included:
102 channels
incl. some 90
free to air
4 ‘themed’ packs (Popular, Knowledge,
Kids/music, Lifestyle), each offering
some 113 channels (incl. FTA)
187 channels
(incl. FTA)
Sky
Telewest
NTL
Cost:
£13.50
£25.50
Channels
included:
More than 30 channels,
incl. some 20 ‘free to air’
More than 100 channels
(incl. ‘free to air’)
Cost:
£18.00
£28.00
Channels
included:
More than 30 channels,
incl. some 25 ‘free to air’
Some 100 channels
(incl. ‘free to air’)
 Please note: prices for NTL and Telewest packages include phone line rental;
installation charges are applicable for all three platforms
Source: Company literature, 30 September 2003
10
Multichannel TV take-up by platform
UK multichannel TV growth, 2000 - 2003
UK Digital TV Penetration,
Quarter 2, 2003
Millions of subscribers
14
12
10
8
6
4
2
0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2000
2001
2002
2003
Analogue satellite
Pay digital satellite
FTA satellite
Analogue cable
Digital cable
Digital terrestrial
Platform
Households
(‘000s)
% of UK TV
households
Pay Digital
Satellite
6,559
26.4%
FTA Digital
Satellite*
739
3.0%
Digital
Cable
2,188
8.8%
Digital
Terrestrial*
1,790
7.2%
ADSL
11
0.0%
Total
11,287
45.5%
* ITC estimates
Source: ITC Multichannel Quarterly. (Please note that these figures do not currently take into consideration
platform overlap, therefore all households are considered to be discrete multichannel units. However, the ITC is
currently working on a methodology to report more accurately on multi-platform households.)
11
How people are watching free-to-air digital television, Q2 2003
FTA DTT Adaptors
iDTV
393,000 (16%)
The number of iDTV
sets is beginning to
show significant growth
797,000 (32%)
Following the launch of Freeview the number
of set-top boxes in use (from manufacturers
such as Pace) is increasing rapidly
Ex-ITV Digital
600,000 (24%)
We estimate that 600,000 of
ITV Digital’s ex-subscribers
now use the set-top box to
receive Freeview services
Source: ITC estimates
Sky FTA
738,900 (29%)
Sky’s FTA set-top box offer has been reintroduced at £120, although it is not actively
marketed. This figure also includes estimates
of ex-Sky subscribers who continue to use
their set-top box for FTA services
12
Share of multichannel homes in the UK
Share of multichannel television homes by platform, Q2 2003
Digital Terrestrial TV
14%
ADSL
0%
Cable
26%
Satellite
59%
Source: ITC
13
The cable industry has seen significant consolidation in the last decade
Major Cable Operators
1992
1997
Today
29 companies (19 from the
US or Canada)
13 companies controlling
155 regional franchises
2 major operators
Bruncor;
Coastal/
Leonard;
Diamond Cable;
IVS;
N-Com;
Scotcable;
United Artists/US
West;
Yorcan;
BT;
Comcast;
English Cable;
Jones Intercable;
Nynex;
Starstream;
US Cable Corp;
Cable
Corporation;
CUC;
General Cable;
Leicester/Fundy;
PacTel;
Southwestern
Bell;
Vento/Wash Post;
Cable London;
Devanha Group;
Insight;
Maclean Hunter;
Alan Robinson;
Telecable;
Videotron;
Source: Cable Yearbook and ITC
Atlantic Telecom
BT
Cable & Telecoms
Cable & Wireless
CableTel
Comcast Europe
ComTel
Convergence Group
There are also two
smaller operators:
Diamond Cable
Eurobell
(NW England and
SW Scotland)
General Cable
Telecential
Telewest
(Isle of Wight)
14
Growth in broadband internet subscribers 2001-2003
2,152,000
Households (million)
2.2
2.0
BT Openworld
and BT
Broadband
accounted for
51% of all ADSL
connections in Q2
2003
1,760,000
1.8
1.6
1,334,000
1.4
1.2
1,047,000
ADSL
1.0
NTL
748,000
0.8
0.6
479,000
330,000
0.4
0.2
Telewest
147,000
222,000
Q2
Q3
2001
Source: Company data
Q4
Q1
Q2
2002
Q3
Q4
Q1
Q2
2003
Note: most
broadband internet
connections do not
currently support
TV broadcast
services
15
Take-up of digital television compared with other home technologies
80
VCR
1980-1989
Penetration (% of households)
70
60
Colour TV Sets
1969-1978
Digital TV
1998-Q2 2003
50
40
PC
1984-1993
30
20
Satellite
1987-1996
10
0
0
1
2
3
4
5
Year after launch
6
7
8
9
Digital TV’s strong initial growth is, in part, a result of the move to switch existing subscribers from analogue to
digital packages - by 1998 analogue multichannel TV had already achieved penetration of some 25% of households
Source: ITC
16
Forecast take-up of digital TV
Digital television take-up, 1998-2007
UK households (millions)
30
25
78%
20
15
58%
10
Total UK households
95% of households
Upper scenario
Average of City analysts
Lower scenario
5
0
98
99
00
01
Source: ITC / BBC
02
03
04
05
Year-end
06
07
In 2002, the Secretary of State asked the
ITC and BBC jointly to examine what the
future growth of digital penetration might
be in the UK. Given the particular
difficulty of generating projections at that
time, we considered two possible
scenarios for the market’s development.
The “upper” scenario is generated by a
generally favourable set of market
conditions for the three main digital
platforms (satellite, cable and DTT). The
“lower” scenario arises if conditions prove
more negative and / or operators adopt
more limited strategies.
In the upper scenario, digital penetration
roughly doubles over the next five years,
from 10 million households at the end of
2002 to around 20 million by the end of
2007, a 78% penetration rate. Growth is
more modest in the lower scenario, with
take-up rising to just under 15 million
(58% penetration) by the end of 2007.
17
Contents
• Industry revenues and expenditure
• Multichannel platforms and digital TV
• Broadcasters and channels
• Programming and audiences
18
Key milestones in the history of commercial television in the UK
1955: ITV launches regulated by the
Independent Television
Authority (ITA)
1982:
Channel 4
and S4C
launch
Source: ITC
1969: ITV
goes colour
1984: First
cable service
is licensed
1991: Independent Television
Commission (ITC) is
successor to IBA; the first
competitive tender is held for
Channel 3 licences
1972: ITA becomes
the Independent
Broadcasting
Authority (IBA)
1989: Sky
television launches
a four-channel
service on satellite
1997:
Channel 5
(now Five)
launches
1998: Digital
TV launches
1981: First
subscription
service, Starview,
begins
1990: BSB launches on
satellite - Sky and BSB
merge to form BSkyB
2002: ITV Digital goes
into administration;
Freeview launches in
November; number of
channels available in the
UK now exceeds 200
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Performance of the terrestrial channels and their subsidiaries
Channel
Logo
Owner
Share*
‘Subsidiary’ channels (share*)
BBC1
BBC
24.5%
BBC3 (0.7%); BBC4 (0.2%); CBBC (0.6%);
CBeebies (1.2%); BBC News 24 (0.6%);
BBC Parliament (n.a.)
ITV1
See next
slide
22.9%
ITV2 (1.8%); ITV News (0.2%)
BBC2
BBC
11.5%
See BBC1
Channel 4
Channel 4
9.7%
E4 (0.7%); FilmFour (0.1%)
Five
RTL (65%);
UBM (35%)
6.3%
n.a.
* Share figures for terrestrial channels are for all homes in August 2003; figures for the subsidiary channels
are for multichannel homes in August 2003 and are only available for those channels with 0.1% share and
above.
Source: ITC and BARB
20
The ITV licensees - ownership structure
ITV
Granada Group
Carlton Group
Scottish
Media Group
Anglia
Carlton
Grampian
Border
Central
Scottish
Granada
HTV
LWT
Westcountry
Ulster
Meridian
Channel
Tyne Tees
Yorkshire
* Owned jointly by Carlton,
Granada, SMG and Disney
GMTV*
21
Terrestrial licensees must meet targets for original programming...
ITV, Channel 4 and Five all have requirements in their licences to produce
a set amount of original programming each year.
ITC Licence Requirement for original
programmes and actual performance, 2002
ITV
Channel 4
Five
Original programmes as a percentage of
total output, 1997-2002
100
% 90
81%
80
65%
70
60
50
67%
Achieved
40
60%
in 2002
30
ITC Licence
20
58%
Requirement
10
55%
0
ITV
Channel 4
Five
1997 1998 1999 2000 2001 2002
Note: Channel 4’s original programming target was only introduced as a licence requirement in 1998;
prior to this the figures were reported in Channel 4’s Annual Report.
Source: ITC; Channel 4 Annual Report
22
…for qualifying hours commissioned from independent producers...
ITV, GMTV, Channel 4 and Five all have requirements in their
licences to commission a set amount of programming from
independent producers each year.
ITC Licence Requirement for independently
produced programmes and actual
performance, 2002
Achieved
in 2002
ITV
30%
25%
ITC Licence
Requirement
66%
Channel 4
25%
86%
Five
25%
Qualifying independents as a percentage
of total qualifying output,
1997-2002
%
100
90
80
70
60
50
40
30
20
10
0
Five
Channel 4
ITV
1997 1998 1999 2000 2001 2002
Source: ITC
23
…and for programme production outside London
ITV1, Channel 4 and Five are required to spend a proportion of their
programming budget on production outside London. The requirements for 2002
for each channel are listed below.
56.0%
50.3%
ITV1 = 50%
Channel 4 = 30%
Five = 10%
2001
2002
29.0%
30.0%
12.8%
ITV1
Source: ITC Annual Report 2002
Channel 4
11.2%
Five
24
UK multichannel television: most popular channels
Channel
Logo
Owner
Share*
Sky One
BSkyB
2.8%
UK Gold
UKTV †
2.5%
Sky Sports 1
BSkyB
2.1%
ITV2
Carlton (44%); Granada (56%)
1.8%
CBeebies
BBC
1.2%
UK Style
UKTV †
1.2%
Sky Sports 2
BSkyB
1.0%
Nickelodeon
BSkyB (50%); Viacom (50%)
1.0%
Crown Entertainment Ltd
0.9%
Sky
0.9%
Source: ITC
Hallmark
Sky Premier 1
Source: ITC and BARB
* Share figures are
for multichannel
homes in August
2003
† UKTV is a 50:50
joint venture
between Flextech‡
and BBC
Worldwide
‡ Flextech is owned
by Telewest
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Contents
• Industry revenues and expenditure
• Multichannel platforms and digital TV
• Broadcasters and channels
• Programming and audiences
26
Audience share in all homes by channel, 2000-2003
35
%
(CAGR*)
30
BBC1 (-1.4%)
Other (13.5%)
ITV1 (-7.4%)
25
20
15
10
BBC2
C4
(-0.8%)
(-2.7%)
Five
(2.8%)
5
0
Q2
2000
Source: BARB
Q3
Q4
Q1
2001
Q2
Q3
Q4
Q1
2002
Q2
Q3
Q4
Q1
2003
Q2
* CAGR =
Compound
Annual
Growth Rate
27
Audience share in multichannel homes by channel, 2000-2003
50
%
(CAGR)
45
Other
(2.7%)
40
35
%
30
25
ITV1 (-6.0%)
BBC1 (-0.6%)
20
15
10
(0.1%)
C4
BBC2 (1.4%)
(3.9%)
Five
5
0
Q2
2000
Source: BARB
Q3
Q4
Q1
2001
Q2
Q3
Q4
Q1
2002
Q2
Q3
Q4
Q1
2003
Q2
* CAGR =
Compound
Annual
Growth Rate
28
Audience share in analogue terrestrial homes by channel, 2001-2003
40
%
35
BBC1
30
ITV
25
20
BBC2
15
CH4
10
Five
5
0
Q2
2001
Source: BARB
Q3
Q4
Q1
2002
Q2
Q3
Q4
Q1
2003
Q2
29
Average weekly audience reach (3 minutes consecutive) by channel,
all homes, 2000-2003
100
%
90
BBC1
ITV
80
BBC2
CH4
70
60
Five
50
40
Q2
2000
Source: BARB
Q3
Q4
Q1
2001
Q2
Q3
Q4
Q1
2002
Q2
Q3
Q4
Q1
2003
Q2
30
Viewer profiles by type of television received
Profile of viewers by type of service
and social class, Q2 2003
Profile of viewers by type of service
and age, Q2 2003
11%
22%
All
homes
41%
All
homes
31%
35%
59%
Multichannel
homes
45%
55%
Analogue
terrestrial
homes
38%
62%
ABC1
Source: BARB
13%
Multichannel
homes
Analogue
terrestrial
homes
27%
37%
23%
6%
17%
25%
52%
C2DE
Children
35-54
16-34
55+
31
Hours viewed per household per day by age,
social class and platform, Q2 2003
No of hours
5
4
All homes
3
Multichannel
homes
2
1
0
All
Individuals
Source: BARB
ABC1
C2DE
Children
16-34
35-54
55+
32
Audience share by region, ITV1 compared with BBC1, Q2 2003
% 35
30
25
20
15
ITV1
BBC1
10
5
0
Source: BARB
33
Audience share for regional news programmes by region,
ITV1 compared with BBC1, Q2 2003
%
45
40
35
30
25
ITV1
BBC1
20
15
10
5
0
Source: BARB
34
The number of television sets per household and the number of days spent
watching television in an average week
Number of television sets
in the home
Number of days watching
television in an average week
Number
of TV sets
Total (%)
No. of days
Total (%)
One
19
7
85
Two
36
6
4
Three
27
5
4
Four
12
3 or 4
4
Five +
6
1 or 2
2
Less than
once a week
< 0.5%
Note that the figures presented are for individuals,
not households e.g 19% of individuals live in a
household with only one TV set
Source: The Public’s View 2002
35