Greg Dyke On Broadcasting

The shape of things to come in 2006 (or not, as the case may be)
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The Independent Online

The great advantage of being a columnist rather than a television executive is that as a columnist you can make predictions for the year ahead without worrying: there's no-one to hold you to account if they turn out to be spectacularly wrong. In fact the odds are that most people reading this column won't even remember them by the end of the week, let alone the end of the year. So this week I make my predictions for what will happen to Britain's main broadcasters in 2006 with impunity, freed from any responsibility for the consequences.

Without doubt the biggest loser of 2005 had to be ITV who, despite a decent autumn, saw its share of the audience continue to decline faster than any other channel. Since 2000 the ITV story has been spectacularly bad with the channel losing an average of 6 per cent of its audience every year. With more and more people going multi-channel some decline was inevitable but ITV's decline has been twice as fast as the next worst channel, BBC One.

Having said that I suspect 2006 will be better for ITV - it could even be the year when the spectacular decline in ratings on ITV slows or even stops altogether. Last year ITV did particularly badly in June and July and this year that period will be dominated by the World Cup, with all the games being played at good times for the British audience. With nearly half those games being shown exclusively on ITV, and with England one of the favourites for the tournament, the channel can expect a major boost to its ratings in this period. This is likely to be particularly amongst the audiences ITV is increasingly struggling to reach - men, the young, and the up-market.

This should mean a significant jump in summer ratings year on year and logically should result in a boost to ITV's advertising revenue in 2006. Sadly for ITV the latter is not likely to happen.

The problem ITV faces with CRR, the agreement it reached with the advertising industry when the ITV merger happened, is that how well it does in the advertising market in one year is largely dependent on its ratings the previous year. So even if ITV has a spectacular year in ratings in 2006 its revenue is almost certain to be down because it did so badly in 2005. The good news for ITV is that, if I'm right, its advertising revenue for 2007 could be better than expected. Shame about 2006.

Channel 4 had a spectacular 2005 but will have an uphill struggle to repeat that performance in 2006, particularly in the summer. Last year its summer ratings were boosted by, of all things, audiences as high as 7 million for cricket. Who could have ever predicted that? This year not only is there no cricket on Channel 4 there's also the World Cup on the BBC and ITV in the period when Channel 4 did so well in 2005. Channel 4 will almost certainly lose share this year but will do well in the advertising market because it did so well for ratings in 2005.

At the BBC the year will be dominated by Charter renewal. This is the year when a new Charter is likely to be approved and a new governance system - a system which almost everyone I meet believes will be less effective and more expensive than the existing process - will be put in place. In terms of ratings I fear for a more upmarket BBC Two but BBC One should do well.

What I found surprising about 2005 was the stock exchange performance of Sky which was one of the worst performing stocks in the FTSE 100 despite the fact that the business continued to grow, Sky+ is a big success and the chances of Sky retaining the majority of the rights to the Premier League are close to 100 per cent. So why did its shares do so badly?

The answer, I suspect, is that the City now believes there is a danger that Sky will spend vast amounts on marketing to avoid going into a non-growth phase. For instance, one option at Sky is to simply give Sky+ to all Sky subscribers. There is little doubt that this would significantly reduce Sky's increasing churn rate and mean the overall business would grow, but to do so would be costly. And the money men in the City wouldn't like that.

Finally I suspect this is the year when the share growth of Channel Five - helped in recent years by the growth of Freeview - stops and goes slowly into reverse. It is hard to see the channel staying as a stand-alone broadcaster in the years ahead.

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