Wheeler-dealer frenzy is all set to continue

1997: A preview of the year ahead; Media

Media in Britain had a mega-1996, and all the signs point to another year of wheeler-dealer frenzy. Moreover, at least three events in 1997 - the launch of Channel 5, the birth of digital television and further consolidation in the ITV sector - could transform the media landscape out of all recognition.

But before looking at the big-league changes, it might be worth considering a few of the murkier prospects for the sector which, while less dramatic, could have profound implications for many companies.

There will be, for instance, moves toward a wholesale reform of advertising sales at ITV, as the big companies which control the commercial market for Channel 3 seek an end to the controversial "average station price" currently used to sell advertising time. The preferred option is something like "spot" pricing, where an advertiser pays a premium to get its message into a specific time slot. The change might be worth as much as pounds 100m more a year for ITV, a prospect that most investors have not yet factored in.

But there are also going to be negative changes for ITV, if not in 1997 then in 1998, when the Government will begin to phase out the controversial payments made by Channel 4 to ITV under the so-called "safety net" arrangements. These are worth about pounds 90m this year.

Some ITV companies might lessen the blow by seeking to negotiate lower licence fee payments to the Treasury, which they have a right to do from the end of 1997.

Still on TV, Channel 4 could find itself under pressure this coming year. Privatisation may have been put off, following a successful campaign by the chief executive, Michael Grade, to extol the public service mandate of the fourth channel. But there will be further questions about "public service" if Mr Grade continues to spend his hundreds of millions of pounds in advertising money on buying yet more Hollywood sitcoms and series.

But the immediate threat to Channel 4 (and ITV for that matter) is the launch of Britain's last "free" television service, Channel 5, which is expected to be on air by the end of March. The new channel will cost its backers pots of money - at least pounds 180m just to retune millions of VCRs up and down the country, a condition of the licence - but it will pay back in spades. With a potential audience of 80 per cent of UK homes, and nearer 90 per cent when you count households able to receive the signal via cable or satellite, Channel 5 will be a near-national service. It will probably lead to a growth in the overall advertising pie, but a large part of its estimated revenues will be poached from Channels 3 and 4. At the very least, that will put some downward pressure on the wildly inflated prices being charged per minute for commercial advertising, which rose by about 10 per cent (7 per cent in real terms) in 1996.

Meanwhile, consolidation of ITV will be on the agenda, even if the speed (or slowness) with which it occurs could surprise people. Yorkshire-Tyne Tees (to Granada), HTV (to United News & Media) and Grampian (to Scottish Television) are the most likely acquisitions. But in each case, the buyers don't like the high prices they would have to pay, and could decide to wait until much later to pounce.

The upshot, in any event, will be an ITV sector dominated by just two or three companies, able for the first time to present a common front as a truly national network. The implications for the current structure of ITV, with its federal vocation and its much-maligned Network Centre, will be radical. Indeed, there may not be a Network Centre at all, if some of the more reform-minded of the ITV barons get their way.

A general reform of ITV won't come a moment too soon, given the huge challenges that the launch of digital television will present. BSkyB, Rupert Murdoch's satellite service, wants to introduce 200 channels of TV programming and interactive services by the end of 1997. Digital terrestrial television will come a year later, while cable hasn't yet made up its collective mind. The huge fragmentation of the marketplace is bound to hurt traditional broadcasters, unless they themselves manage to secure a role in the digital age. So far, the only ITV companies that appear to be serious about digital are Michael Green's Carlton (which is bidding for a multiplex licence to operate a digital terrestrial service) and Granada, which has formed a joint venture with BSkyB to launch pay-TV channels.

To make matters more complicated for the commercial players, the BBC has rushed headlong into the digital age, having negotiated a joint venture agreement with US-controlled Flextech to launch pay-TV channels. These will compete directly with the programmes of commercial broadcasters, and could lead the digital field. After all, the BBC, despite its reputation for bureaucratic sclerosis, makes the best TV programming in Britain and - crucial in a crowded marketplace - has the best-known brand.

Elsewhere in the media, you can expect a few special situations to develop. Pearson will be in the news, as it struggles to agree a new strategy that could see a mammoth corporate restructuring. Newspaper companies will reap the benefits of lower newsprint prices, unless they decide to add new sections to the already groaning products that thump on coffee tables of a Saturday or Sunday. Of the main newspaper groups, both United News & Media and Mirror Group (which owns 46 per cent of The Independent) should see operating margins improve.

EMI, the music arm of the now demerged Thorn-EMI, is bound to be the target of a bid, and probably an agreed one. Favourites include MCA, the film and music giant controlled by drinks company Seagram, and the perennial predators, Disney and Bertelsmann.

Without a doubt, the media business, which has outperformed most other industries in the past five years, is set for another year of above-average growth. The uncertainties are rife, of course. but it would be no bad thing to stay overweighted.

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
football
Life and Style
Jack Cooksey goes for the grand unveiling - moments before dropping his new iPhone 6 on the floor
iphone launch
PROMOTED VIDEO
Life and Style
Life and Style
Customers look at the new iPhones on display at the launch of the new Apple iPhone 6 and iphone 6 plus at the Apple IFC store in Hong Kong
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Sport
Andros Townsend is challenged by Vladimir Volkov
football
Arts and Entertainment
Rapper Jay Z performs on the Pyramid Stage at Glastonbury in 2008
musicSinger sued over use of the single-syllable sample in 'Run This Town'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Audit Manager Central Functions

To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

Credit Risk Audit Manager

Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week