Sunday 14 September 2014

The Strange Death of British Television

Will Hutton writes:

It takes guts for politicians to stand up to powerful business moguls in general, and powerful media moguls in particular.

Moguls trade commercial favours for political support, and media moguls have the media power to make their support – or lack of it - much more telling.

British politicians' record is woeful, falling back on bromides about being open for business as an excuse to do nothing.

Now the drama is playing itself out in the media industry itself.

British TV is having a surge of success at home and abroad. Great programmes abound. Exports boom. But there is a downside. All this creativity creates covetous eyes, especially from the US.

Last week, Viacom completed its purchase of Channel 5. Also, leading production company All3Media, just the latest to go, has been bought by Discovery and John Malone's Liberty Global, which earlier snapped up Virgin Media.

It is, as CEO of Channel 4 David Abraham declared in this year's MacTaggart lecture at the Edinburgh TV festival, a gold rush.

The plethora of deals is turning British TV into a satellite of the US, making fortunes for the lucky few selling out today.

But by destroying Britain's delicate TV ecosystem, the result is set to deliver a wasteland of crap television. Apart from Abraham, nobody seems to care.

Now Malone, a libertarian conservative businessman who so distrusts government that he owns 2.2 million acres of land as a hedge against government-induced inflation, is preparing a bid for ITV.

His libertarianism informs his detestation of taxes and his I-eat-what-I-kill philosophy has made him one of the most ruthless deal-makers in the US.

Over the summer, he bought BSkyB's 6.4% stake in ITV, and is talking to other American shareholders about whether they would back him if he made a cheap bid.

The new fashionable media village buzzword is content – the programmes that we watch. It is content that attracts viewers to pay for TV platforms and is thus the key to commercial success.

This is hardly news, but it seems to be a revelation in the US.

A recently revitalised ITV has shown it can create very good programmes – Downton Abbey has a cult American following (as does the BBC's Doctor Who).

So Malone wants to snap it up to feed the rest of his burgeoning pay TV empire with shows that attract viewers, rather as Murdoch's BSkyB would have done eight years ago for half the price if the competition commission had allowed it.

Malone owns no British newspapers and his Discovery Channel and Virgin Media are not yet as influential in Britain as BSkyB, so the competition and plurality issues that blocked Murdoch's ambitions don't exist to the same degree.

ITV, if it is interested in keeping its independence, can expect no support from its shareholders. British company law uniquely disempowers boards, making them slaves to shareholders whose only obligation is to their own short-term pocket.

In an era of globalisation with the emergence of jumbo international asset management groups that see shares as casino chips, Britain's ownership non-rules are a licence for the great cashing out that has defined the economy for the past 10 years.

Cumulatively since 2004, £440bn of British companies have been sold abroad. In the next six months, ITV promises to add another £10bn to that total. The prevailing conservative wisdom is that this does not matter.

Culture secretary Sajid Javid, in his speech last week to the Royal Television Society, directly challenged Abraham's concerns.

Far from being a worry, the American buying-up of British TV was a vote of confidence in British creativity: they were coming here to see "how it was done", he argued.

Yet the whole point of Abraham's lecture was that "how it was done" was a direct product of the unique ecology of British broadcasting, under assault from the forces Javid welcomes.

Abraham argued that it was Britain's free-to-air public service broadcasters (PSBs) – BBC and Channel 4 – that had the resources to take big risks in creating new programmes.

And they challenged the semi-PSB free-to-air ITV into doing the same. The numbers don't lie.

"Eighty per cent of the £1.7bn spent on original commissions from UK producers in 2013 came from the PSBs," he said. "Meanwhile, Sky alone gave £750m back to its shareholders in the last financial year."

The PSB investment set the gold standard for the prized content that men like Malone wanted to buy because: "TV is clearly now a combat vehicle for tech and mobile companies and platforms to compete with each other rather than a sovereign industry in its own right."

Mega-corporations were emerging, hungry for content – but they were not hothouses of creativity.

"Scale demands an increased focus on cost-cutting and margins," ran Abraham's argument. "Reformatting ideas is more efficient than the messy business of finding new ones. Fear of risk overtakes an appetite for it." 

In this climate, Britain had to strengthen its free-to-air PSBs to keep the balance between these Davids against the Goliaths of Malone and Murdoch.

He had two proposals: the owners of pay TV platforms should pay the PSBs fees for the rights to transmit their popular programmes; and the PSBs should retain more of the rights in the programmes they commissioned to get the returns so they could repeat the investment.

He might have added that the BBC should get a decent licence fee.

He finished off by appealing to the regulators and politicians "to act and to act decisively – update and strengthen the PSB system". Otherwise, it will all be gone.

Javid's reply engaged with none of those arguments. His focus was not on ownership or design of the TV ecosystem but, wearily, on regulation.

His complacent welcome to American "investment" repeated the angry press releases written by Sky and the American pay TV platforms in response to Abraham's lecture.

Javid had no intention of strengthening the PSBs; instead, by proposing to decriminalise the non-payment of the licence fee, which will cost the BBC £200m, he will actively weaken them.

Libertarian Tories like Javid are instinctively on the side of rightwing American mega-corporations. Better help them than "socialist" free-to-air public service broadcasting.

If the public knew what was happening – and if Labour cared to alert them – it would side with Abraham.

It might even get angry about the wider gold rush, and the vacuous company law that allows it.

As it is, watch Javid and co wave through Malone's impending purchase of ITV and starve the pure PSBs. 

Witness the strange death of British TV.

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