Tom Bennie: All set to lead viewers to the web
The Business Interview: Forget the set-top box, catch-up TV's future is online, Arqiva boss tells Nick Clark. And that's only part of what he has on his plate
Friday 22 January 2010
Arqiva is a big deal in Winchester. Say the name to a taxi-driver at the city's train station, and you'll be at its headquarters in 10 minutes. Say the name to a taxi- driver anywhere else and he'll ask if you're being funny.
Arqiva is responsible for the nuts and bolts of sending television pictures, radio programmes and mobile phones to homes across Britain, as well as much further afield, and its customers have always been broadcasters and mobile operators. This could change in the next few months.
The group is preparing to launch a brave new venture, SeeSaw, which it hopes will help drive the adoption of catch-up television online in the UK.
It will be the first time they are dealing directly with consumers. Tom Bennie, Arqiva's chief executive, tells me: "It is a departure for us; we are directly linked to demand, whereas previously we were pretty insulated".
SeeSaw was born out of the ashes of Project Kangaroo, a joint venture that was set up by the BBC, ITV and Channel 4, to provide an archive of programmes to the PC and, eventually, to the living-room TV. That project fell apart last year after being ruled anti-competitive by the regulators. Arqiva doesn't face the same problem as it doesn't make any programmes itself.
Mr Bennie said his company's move was "opportunistic and strategic", adding that it was not much of a risk. The company picked up the already built infrastructure for a sum rumoured to be under £10m, less than it cost to build. One former employee said: "Arqiva is a broadcasting technology company through and through, staffed by people who have been there a long time. It'll be interesting to see if they can do it." A full launch of the site is expected in the next few months, and the company hopes to announce that a string of high-profile broadcasters has signed up. The biggest so far is BBC Worldwide. Arqiva sees the move as a "hedge" to its traditional broadcasting business. Mr Bennie says: "There's no doubt there's a major consumer behaviour change away from sitting down and watching traditional linear TV to wanting to watch it on demand. The catch-up stuff has been a huge success."
He is under no illusions that competition is going to be stiff, as YouTube pushes further into premium content, and with US catch-up site Hulu expected to launch in the UK this year. But he is up for a tussle.
The company hoping to lead the drive into the next generation of commercial television was around at its birth, albeit in almost unrecognisable form. Its genesis was in the Independent Television Authority (ITA), which was set up to oversee the launch of the first commercial network in the UK in 1954.
The ITA was given the task of finding the locations and building the transmission stations used by the ITV network. The transmission and engineering business was privatised under Margaret Thatcher's government, with the regulation arm split out, ultimately to form part of media watchdog Ofcom. The transmission and engineering operations went through private equity ownership before being snapped up by NTL, now Virgin Media. The business was subsequently sold to Australian infrastructure investor Macquarie Communications Infrastructure Group for £1.3bn in 2004.
It rebranded the following year as Arqiva, a name intended to evoke the arc of a bridge. "We are a connecting company; we're not a well-known consumer brand. We provide the connection between content producers and customers," Mr Bennie says. Aside from terrestrial broadcasting, Arqiva's satellite operation serves clients as far as Australia from the 45 satellite dishes at its Winchester headquarters, with operatives checking feeds in its high-tech control room.
The nature of its business, with contracts that can run for over 20 years with the established broadcasters, brings in stable revenue streams. These convinced long-term investor Canada Pension Plan to buy a Macquarie fund that brought with it a 48 per cent stake in Arqiva last year. It also helped ward off the recession that has smashed the commercial broadcasters. "Compared to many companies in the UK we're in a good position as part of our business is like a utility," Mr Bennie said. It can still get hurt if a large customer goes under, such as with the collapse of Setanta Sports last year.
Mr Bennie is a lifer at Arqiva. The Scotsman decided against going into the family farming business and moved to London in 1974 for an electronic engineering apprenticeship at the Ministry of Defence. He joined the company four years later, eventually becoming chief executive in 2005, after managing the sister business in Australia.
The biggest deal for the company during Mr Bennie's stewardship was the takeover of National Grid Wireless (NGW). It had originally been the BBC's transmission business, and provided half of the network needed to reach the entire UK. Macquarie bought the other half in 2007 for £2.5bn, and after an 18-month regulatory slog put the two together. "We've been full-on creating the new Arqiva for the past 12 months," Mr Bennie said.
Another significant job for Arqiva is to shift every UKTV viewer onto digital television before the analogue signal is switched off in two years. It surprised the market in 2006 when it won the contract to supply the BBC's digital switchover contract, rumoured to be worth around £1bn, and paved the way for the NGW deal.
The process has gone relatively smoothly, apart from some consumer aggravation about retuning the Freeview boxes. "In terms of consumers who have converted, we're about 20 per cent through the digital switchover, from a network stance about 50 per cent," Mr Bennie said. The latest big move was converting its Winter Hill transmitter near Bolton, covering about 3m homes, last month. "For the vast majority of the population it will provide better a better picture and better services," he said. The drive, which was put on ice over the winter, restarts in February.
The prospect of switching the country's television signal, managing a company that has doubled in size in two years, and launching an online TV venture that marks a complete departure is not enough for Mr Bennie, however.
He is currently wooing the energy industry as Arqiva prepares to bid to provide the communications backbone for the Government's forthcoming smart metering initiative.
"We need to look at how we adapt to changing market conditions and consumer models to get the growth we need as a business," Mr Bennie said. "You're not going to do that with small moves."
Tom Bennie CV
* Married, four children.
* Electrical engineering apprenticeship, Ministry of Defence.
* In 1978 joined the broadcasting authority that later became Arqiva.
* Roles included business development director of NTL broadcast.
* Chief executive of Arqiva in 2005.
* Enjoys Southampton FC, hill walking.
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