A bloated BBC could hamper a recovery in media
THERE was a rare spot of good news for the media industry this week. Firstly, Goldman Sachs turned positive on the industry, upping its target price for Daily Mail and General Trust to 346p and for Trinity Mirror to 88p.
It also added ITV to its conviction buy list, a move which Bank of America also followed. The struggling broadcaster received some respite this week, thanks to the Champions League final and the impending finale of Britain’s Got Talent. Susan Boyle might seem like an unlikely saviour, but media buyers expect ITV to pull in over £30m on the back of these shows.
But for all the talk of recovery, the fact remains that the traditional media will continue to suffer from structural decline, long after this recession is over. Virtually everyone will be affected, with one important exception: the BBC. Forget “green shoots” – old Auntie is more of a giant beanstalk, continuing on her uninterrupted ascent while others crash and burn.
According to its annual report, BBC Group income in 2008 was £4.4bn, an increase of £238m or 6 per cent. The bulk of this, of course, was generated by licence fee income, up 4 per cent to £3.4bn. Worldwide, its commercial arm, also had a bumper year with revenues of £916m, compared to £810m a year earlier.
On the other hand Trinity Mirror saw its revenues fall from around £1bn in 2007 to £871m this year. And for all the talk about Rupert Murdoch’s huge influence in the British media, revenues at Times Newspapers, a subsidiary of News International, were down from £447.1m to £444.8m. News Group, which publishes The Sun and News of The World, saw revenues rise slightly, from £626.3 to £626.3m, piddling growth compared to the BBC.
Increasingly, media executives say that competing with the BBC is becoming virtually impossible. Its web presence, for example, is a huge bugbear, especially as it competes with commercial publishers online – the very ground they hope to use to stage a comeback. The BBC’s huge investment in digital services distils the debate perfectly: recently, Auntie signed off a £145m annual budget for the BBC’s website. Together, the national newspapers spend just £100m, according to OC&C Strategy partner Paul Zwillenberg.
BBC insiders complain of a right wing conspiracy, but the issue of its unfettered growth is apolitical. Guardian News and Media, the publisher of The Guardian newspaper, is now one of Auntie’s largest critics; it has more to lose than The Daily Mail’s site, say, as it produces the same kind of liberal values content.
Today’s City A.M. exclusive that the Beeb is also planning an international iPlayer with Google is also sure to annoy commercial rivals, like the Murdoch-backed internet TV venture Hulu, which also plans to go global.
Any recovery for the commercial media is going to be distorted by the fact that the Beeb has grown while others have stalled or shrunk. If we’re going to nurture these green shoots, we’ll have to do something about the giant bean stalk first.