Transcript No Slide Title

DEVELOPMENTS IN THE
UK TELEVISION MARKET
September 2002
Contents
• Digital TV
• Programming and Audiences
• Business Economics
• Focus on ITV
2
Penetration (% of households)
Take-up of digital television compared with other home technologies
80
VCR
1980-1989
70
60
Colour TV Sets
1969-1978
50
Digital TV
1998-June 2002
40
PC
1984-1993
30
Satellite
1987-1996
20
10
0
0
1
2
3
4
5
6
Year After Launch
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 - in 1998 analogue multichannel TV had achieved penetration of some 25%
Source: ITC
3
Pay TV take-up by platform
Millions of subscribers
UK Pay-TV Growth, 1999 - 2002
UK Multichannel Pay-TV
Penetration, Quarter 2, 2002
12
10
Total
analogue
multichannel
Platform
Households
(‘000s)
% of UK TV
households
8
ITV Digital*
Digital
Satellite
6,101
25.0%
Analogue
Cable
1,417
5.8%
Digital
Cable
2,026
8.3%
Total
9,544
39.1%
6
Sky Digital
4
2
Digital Cable
0
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
1999
2000
2001
2002
* Please note: ITV Digital went into Administration on 27 March 2002 and ceased trading on 1 May, therefore we
have only included subscriber numbers up to 31 March 2002. As no figures were publicly available for subscribers
as of this date, ITV Digital subscribers were assumed to be equal to the latest figures released (i.e. for Q4, 2001).
Source: Company literature
4
Quarterly growth in digital pay-TV subscribers
100%
Digital
80%
Analogue multichannel
60%
Total multichannel
40%
20%
0%
Q2
1999
Q3
Q4
Q1
2000
Q2
Q3
Q4
Q1
2001
Q2
Q3
Q4
Q1
2002
Q2
-20%
-40%
Source: Company literature
5
Range of available digital basic packages (Satellite & Cable)
Cost:
£10
£13
£16
Channels
included:
More than 14
channels, mostly
free to air
4 ‘themed’ packs (Popular mix,
Knowledge, Kids/music, Lifestyle
pack), each offering some 25 channels
More than 70
channels
Cost:
£15
£18.50
£21.50
£25.50
Channels
included:
More than 20
channels, mostly
free to air
More than 40
channels
Some 44
channels
More than 70
channels
Cost:
£20
£23
£26
Channels
included:
More than 20
channels, mostly
free to air
4 ‘themed’ packs (Variety; News &
Documentary; Kids & Music; General
Entertainment) each offering more
than 50 channels
More than 70
channels
Sky
Telewest
NTL
 Please note: prices for NTL and Telewest packages include phone line rental;
installation charges are applicable for all three platforms
Source: Company literature
6
Contents
• Digital TV
• Programming and Audiences
• Business Economics
• Focus on ITV
7
Issue of ITC licences
Issue of ITC licences and total number of licensed programme services,
1994-2001
600
Net licences issued in year
(all services)
Total programme services
500
400
300
200
100
0
1994
1995
1996
1997
1998
1999
2000
2001
-100
Note: The negative figure for net licences issued in 2000 reflects the replacement
of many regional cable licences with fewer national licences.
Source: ITC estimates
8
Audience share in all homes by channel, 1999-2002
35
%
30
BBC1
25
ITV1
Other
20
15
BBC2
C4
10
C5
5
0
Q2
1999
Source: BARB
Q3
Q4
Q1
2000
Q2
Q3
Q4
Q1
2001
Q2
Q3
Q4
Q1
2002
Q2
9
Audience share in multi-channel homes by channel, 1999-2002
45
%
Other
40
35
30
25
BBC1
ITV1
20
15
10
C4
BBC2
C5
5
0
Q2
1999
Source: BARB
Q3
Q4
Q1
2000
Q2
Q3
Q4
Q1
2001
Q2
Q3
Q4
Q1
2002
Q2
10
Average weekly audience reach (3 minutes consecutive) by channel,
all homes, 2001-2002
100
%
90
BBC1
ITV1
80
BBC2
C4
70
60
C5
50
40
30
20
10
0
Q2
1999
Source: BARB
Q3
Q4
Q1
2000
Q2
Q3
Q4
Q1
2001
Q2
Q3
Q4
Q1
2002
Q2
11
Viewer profiles by type of television received
Profile of viewers by type of service
and social class, Q2 2002
Profile of viewers by type of service
and age, Q2 2002
11%
All
homes
40%
60%
Multichannel
homes
43%
57%
Analogue
terrestrial
homes
42%
58%
ABC1
Source: BARB
All
homes
23%
32%
35%
13%
Multichannel
homes
Analogue
terrestrial
homes
28%
37%
22%
7%
18%
25%
50%
C2DE
Children
35-54
16-34
55+
12
Hours viewed per household per day by social class, 2001-2002
4.5
%
Q2 2001
4
Q3 2001
Q4 2001
3.5
Q1 2002
3
Q2 2002
2.5
2
1.5
1
0.5
0
ABC1
C2DE
All Homes
Source: BARB
All Individuals
ABC1
C2DE
All Individuals
Multichannel Homes
13
Hours viewed per household per day by age, 2001-2002
Q2 2001
6
Q3 2001
%
Q4 2001
5
Q1 2002
Q2 2002
4
3
2
1
0
Children
Source: BARB
16-34
35-54
All Homes
55+
Children
16-34
35-54
Multichannel Homes
55+
14
Contents
• Digital TV
• Programming and Audiences
• Business Economics
• Focus on ITV
15
Sources of UK television revenue...
Components of television
revenue in 2001
£84 million
1% Sponsorship
£312 million
4% Sale of goods
£382 million
5% Other
£1.7 billion
21% BBC licence
fee spent on TV
...and trend in share of main components,
1995-2001
60.0%
50.0%
NAR
40.0%
30.0%
£2.0 billion
25% Subscription
Revenue
Subscription
BBC licence fee
spent on TV
20.0%
Other
Sale of goods
Sponsorship
10.0%
£3.4 billion
44% Net Advertising
Revenue
0.0%
1995 1996
Source: ITC
1997
1998
1999
2000
2001
16
UK TV Net Advertising Revenue by channel over time...
80%
70%
60%
Channel 3 incl GMTV
50%
40%
30%
Cable and Satellite and other
Channel 4 incl S4C
20%
10%
Channel 5
0%
1995
Source: ITC
1996
1997
1998
1999
2000
2001
17
Tender payments by Channel 3, Channel 5 and Additional Services licensees,
1993-2001
£ 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
1994
Source: ITC
1995
1996
1997
1998
1999
2000
2001
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.
18
Contents
• Digital TV
• Programming and Audiences
• Business Economics
• Focus on ITV
19
The ITV licensees
Grampian
Scottish
Tyne Tees
Ulster
Yorkshire
Border
Central
Granada
HTV
Westcountry
Channel
Anglia
Carlton/LWT
Meridian
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
Tyne Tees
Channel
Yorkshire
21
Audience share by region, ITV1 compared with BBC1, Q2 2002
40
%
35
30
25
ITV1
20
BBC1
15
10
5
0
Source: BARB
22
Audience share for regional news programmes by region,
ITV1 compared with BBC1, Q2 2002
50
%
45
40
35
30
ITV1
25
BBC1
20
15
10
5
0
Source: BARB
23
Original programmes (including repeats) as a percentage of total output
(hours) by channel
ITV, Channel 4 and Channel 5 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, 2001
ITV
Channel 4
Channel 5
Original programmes as a percentage of
total output, 1995-2001
100
% 90
81%
80
65%
70
60
69%
50
60%
Achieved
40
in 2001
30
58%
20
ITC Licence
55%
Requirement
10
0
ITV
Channel 4
Channel 5
1996 1997 1998 1999 2000 2001
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
24
Qualifying hours commissioned from independent producers as a percentage
of total qualifying output by channel
ITV, GMTV, Channel 4 and Channel 5 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, 2001
ITV
31%
25%
Channel 4
25%
Channel 5
25%
Qualifying independents as a percentage
of total qualifying output,
1995-2001
100
Achieved
% 90
in 2001
80
ITC Licence
70
Requirement
60
50
61%
40
30
20
73%
10
0
Channel 5
Channel 4
ITV
1996 1997 1998 1999 2000 2001
Source: ITC
25