http://wordpress.karstens.eu/wp-content/themes/press

17 Nov 2009, Posted by Eric Karstens in Television, 0 Comments

End of days for commercial TV?


Pop psychology has it that the process of mourning consists of three main, consecutive phases: denial, anger and acceptance. The Second Annual Conference of the Association of Commercial Television in Europe (ACT), which took place on 4 November, 2009, in Brussels, suggested that the business sector is finally arriving at the acceptance stage.

The event was supposed to celebrate the 20th anniversary of the ACT. But it was more of a swan song for commercial television as we know it.

Mind you, I have spent my professionally formative years working in commercial television – not because I had to, but because I liked it. Fledgling commercial TV in the 1990s was a heady mix of anarchy and opportunity replete with traits of a gold rush. When the ossified public broadcasters eventually faced strong private competition, television was reinvented on a daily basis, and the sector’s general economic surge easily flushed mistakes away. This may be why I found the Brussels event actually a bit sad.

Bubble burst

The European television industry has now been forced to realise that despite its glamorous self-image, it is basically a pretty small, relatively insignificant, even endangered business sector. Suddenly, television stations find themselves at the tail end of the food chain, falling prey to big telecommunications companies and Internet giants that gobble up rights to attractive programming and embellish their end customer relations on a grand scale with high-speed broadband. Just look at the example of Germany: In 2008, the entire commercial TV sector had revenues to the tune of around 5bn euro while Deutsche Telekom alone raked in a whopping 62bn euro; that doesn’t even count their host of competitors. While Deutsche Telekom could just buy up the TV landscape with petty cash, they do not need to. Viewing habits are shifting from broadcast to broadband anyway.

Philippe Delusinne, the CEO of RTL Belgium and ACT president, hammered this home during the conference, backed up by his colleague Vincent de Dorlodot, general counsel of RTL Group: The market for television advertising, they diagnosed, is an L-shaped curve. It will most likely never substantially recover from its current low, even if the advertising economy in general makes a comeback. At the same time, there is no denying anymore that the main competitive advantage of old-style TV was infrastructure; it is slipping fast.

Until not long ago, TV stations were privileged because they were the only organisations that could distribute what we today call multimedia content to huge audiences by way of over-the-air and cable broadcasting. They used this special access to become content aggregators, ie, to buy and produce programmes and bundle them into a coherent offering. Success depended on having a nose for the right content, on the mix of programmes and good timing. All this might not be becoming obsolete – after all, TV viewership is actually increasing – but it is no longer a special selling point.

Trends and innovations

It speaks volumes that Delusinne identified “catch-up TV” as the television industry’s most successful innovation of recent years. It allows people to watch shows they missed on TV over the Internet, usually for free, within a week after the original broadcast. RTL stations in France already count about 50 million catch-up downloads per month. This goes to show that people are, of course, still very much interested in individual television programmes, just not so much in branded television channels with fixed schedules. While this is indeed good news for the audiovisual production sector, it means the writing is on the wall for conventional, linear TV stations.

Rudolf Strohmeier, Head of Cabinet for Viviane Reding, the European Commissioner for Information Society and Media, summed it up for a stunned audience of broadcast lobbyists when he told them that their business model was simply outdated. He was referring to piracy, but his diagnosis essentially reaches far beyond this particular issue. Liberal MEP Marietje Schaake chimed in: The television industry, she observed, seems to call for European regulation merely in order to thwart rivalry from other sectors – and that goes clearly against the grain of the EU’s competition, single market and information society policies.

There are no signs that the European Commission will even consider erecting protective walls around conventional TV platforms. It will rather do the exact opposite. And with the recent Audiovisual Media Services Directive (AVMSD) it has already lifted advertising and product placement restrictions on television — very much to the industry’s satisfaction.

So the regulatory debate at the ACT conference remained rather tame. Even the usual jabs at illegal downloading on the one hand and public broadcasting on the other — two longtime tenets of commercial TV’s lobbying activities — seemed to have become merely reflexive. Wake up a TV executive in the middle of the night and he will automatically say pirates and pubcasters are ruining his business. But, judging from this conference, there are now more pressing issues than well-off public TV organisations overpaying for sports rights, or broadband-equipped enthusiasts too impatient to wait for the premiere transmission of a new series in their country.

A pity though it may be, the days of linear broadcast television are numbered. Pekka Karhuvaara, the CEO of Finnish MTV Media (not to be confused with MTV Music Television), enthused: “TV and Internet is a marriage made in heaven.”

He may be wrong about their relationship. Internet is the next generation, not an equal partner.