{"id":7097,"date":"2016-10-05T12:47:44","date_gmt":"2016-10-05T16:47:44","guid":{"rendered":"http:\/\/worldscreen.com\/tveurope\/l\/"},"modified":"2016-10-05T12:48:09","modified_gmt":"2016-10-05T16:48:09","slug":"london-calling","status":"publish","type":"post","link":"https:\/\/worldscreen.com\/tveurope\/2016\/10\/05\/london-calling\/","title":{"rendered":"London Calling"},"content":{"rendered":"

\"10-U.K\"As the industry comes to grips with the Brexit fallout, Steve Clarke delivers an in-depth look at the shifts already under way in the British media business.<\/em><\/p>\n

Few shows encapsulate the changes sweeping through the U.K. TV market as the recent BBC spy thriller The Night Manager<\/em>. This glamorous adaptation of the John le Carr\u00e9 novel of the same name, which aired in Britain last winter, picked up 12 Emmy Award nominations (winning two). One local TV critic described The Night Manager<\/em> as \u201cthe BBC\u2019s glossiest, smartest, most indecently entertaining Sunday-night drama in ages.\u201d But that is only half of the story.<\/p>\n

Increasingly, high-end British drama is being funded in tandem with American partners. The Night Manager<\/em> was no exception: it was backed by AMC, famous for Breaking Bad<\/em> and Mad Men<\/em>. To further substantiate The Night Manager<\/em>\u2019s international credibility, the show was directed by the Danish Academy Award-winning filmmaker Susanne Bier.<\/p>\n

It would be hard to see the cash-strapped BBC greenlighting an expensive project like The Night Manager<\/em> were it not for the success of Netflix in the U.K. The platform has been making plenty of noise in the market with its own content efforts, commissioning the ambitious (and expensive) The Crown<\/em> from Left Bank Pictures.<\/p>\n

According to the Broadcasters\u2019 Audience Research Board (BARB), the U.K. body that measures TV audiences, almost a quarter of all U.K. homes subscribe to Netflix. BARB reported that in 2015 Netflix had more than 5 million British customers. \u201cNetflix is by some margin the market leader, and its growth continues to easily outpace the other services,\u201d said a BARB report published in March.<\/p>\n

STICKING WITH TRADITION<\/strong>
\nOne of the many paradoxes of the British TV market\u2014 regarded as one of the world\u2019s most dynamic\u2014is that while viewers are embracing online content wholeheartedly, the popularity of linear TV remains robust.<\/p>\n

\u201cSo far traditional network TV is holding up well in the U.K.,\u201d says Stephen Price, ex-ITV scheduler turned broadcast advisor and consultant. \u201cAudiences recognize the inherent quality of a lot of British TV. What happens when most of the nation has smart TVs connected to broadband and can access VOD services on their main TV set remains to be seen, but for now, the terrestrial channels continue to dominate viewing habits.\u201d<\/p>\n

In 2015, Brits watched an average of three hours and 36 minutes of TV per day, this was less than the Americans but more than the Swedes, according to regulator Ofcom. In 2014 the figure was three hours and 40 minutes.<\/p>\n

Last year, Ofcom calculated that Britain was ahead of the U.S., Japan, Australia and the rest of Europe when it comes to watching free-to-air catch-up services such as the BBC iPlayer. Ofcom predicted that over Christmas 70 percent of U.K. adults (31 million) would use these internet-driven services.<\/p>\n

The Brits\u2019 willingness to pay for online TV, provided the price is right, is clear. The popularity of Netflix reflects this. Significantly, Disney decided that the U.K. would be the first place\u2014ahead of even the U.S.\u2014to launch its streaming service, DisneyLife. At \u00a39.99 a month, DisneyLife is more expensive than Netflix, which was recently subject to a price hike in Britain, from \u00a35.99 to \u00a37.49 a month.<\/p>\n

All the evidence suggests that Netflix subscribers are likely to be heavy TV watchers who are also likely to pay for satellite or cable TV. This explains why pay TV is proving to be durable in the face of competition from OTT operators.<\/p>\n

POWER OF PAY<\/strong>
\nPay TV has long been big business in the U.K. And Sky remains the market leader. For the year ended June 30, 2016, Sky\u2019s group revenues rose 7 percent to \u00a312 billion, with \u00a38.4 billion from the U.K. and Ireland, also up 7 percent. In the U.K. 11.3 million homes subscribe to Sky, Ofcom says. About 65 percent of U.K. homes have a pay-TV subscription.<\/p>\n

\u201cSky has done a lot to improve its health by developing extra revenue streams from things like NOW TV (an online service) and the Sky Store (a buy-to-keep service),\u201d says Toby Syfret, the director of TV research at Enders Analysis. In terms of \u201ccord cutting and shaving, the U.K. doesn\u2019t have the same issues and urgency that the U.S. has.\u201d<\/p>\n

Yet the beating heart of the British TV ecosystem remains the BBC. The \u201cBeeb\u201d may be bruised, battered and constantly having to tighten its belt, but across the board, the pubcaster\u2019s programs are popular and highly appreciated by audiences.<\/p>\n

\u201cPeople are loyal to the BBC and trust the BBC,\u201d says analyst Price. \u201cThat trust bleeds into the rest of U.K. terrestrial TV. Viewers are proud of the BBC. The value of its service to British audiences cannot be underestimated.\u201d<\/p>\n

In May the license fee-funded broadcaster was given a set of guarantees by the British government that appeared to secure its future until 2027. Under the terms of its new Royal Charter, due to start next year, the BBC\u2019s license fee (currently \u00a3145.50) looks safe for 11 years.<\/p>\n

The fee had previously been frozen. Under the new plan, it will increase in line with inflation. Additionally, the loophole that enabled U.K. viewers to watch the BBC online without paying the fee\u2014levied on homes that own a TV set\u2014was closed in September.<\/p>\n

Tony Hall, the director-general of the BBC, hailed these measures as a victory for the corporation. \u201cAt the end, we have an 11-year Charter, a license fee guaranteed for 11 years, and an endorsement of the scale and scope of what the BBC does today,\u201d Hall said.<\/p>\n

But the new Charter, expected to be up for review in five years, presents another set of challenges for the BBC.<\/p>\n

LICENSE TO VIEW<\/strong>
\nCrucially, beginning in 2018, the BBC has to start paying for the cost of free license fees for Britain\u2019s growing army of people aged 75 and over; this was previously paid for by the state. This highly controversial move infuriated BBC supporters. Alongside other measures, the upshot is that until 2022, the BBC needs to save in the region of \u00a3800 million a year. For the year ended March 31, 2016, license-fee income was \u00a33.7 billion.<\/p>\n

This comes after an earlier financial squeeze that led to the axing of youth-focused channel BBC Three in February; BBC Three is now online only.<\/p>\n

There are worries that the imminent reform of BBC Studios, which is set to be reborn as a stand-alone commercial entity, could have a negative impact on Auntie\u2019s public-service ethos.<\/p>\n

Says Enders\u2019 Syfret: \u201cAt the moment, when the BBC works on, say, a David Attenborough program, an experienced team will know instinctively what is expected of them and what the vision for the project is. They are not thinking primarily of where the program could be sold to, or how it will be marketed, but have objectives consistent with the classic Reithian [a reference to the BBC\u2019s founder, Lord John Reith] ones to inform and educate as well as to entertain. My concern is that a commercially-driven BBC Studios could be disruptive and have an impact on the BBC\u2019s unique production ethos.\u201d<\/p>\n

RATINGS WAR<\/strong>
\nDespite the uncertainties, the BBC\u2019s flagship channel, BBC One, is the U.K.\u2019s most popular TV network. BBC One and the U.K.\u2019s main commercial free-to-air channel, ITV, are broadly neck and neck during peak time. Dig deeper into the numbers and the BBC emerges significantly ahead: for the first seven months of 2016, BBC One\u2019s total viewing share was 21.77 percent while ITV\u2019s was 15.72 percent.<\/p>\n

On these main two U.K. terrestrial channels, prime-time viewing is dominated by long-running, blue-collar soaps. These include ITV\u2019s Coronation Street<\/em> (a sixth weekly episode was ordered recently) and Emmerdale<\/em>, and BBC One\u2019s EastEnders<\/em>.<\/p>\n

\u201cDespite their audience decline due to massively increased competition, soaps remain popular,\u201d says Price. \u201cDay in, day out, homegrown soaps still have value in volume.\u201d<\/p>\n

Other staples of Britain\u2019s two most popular networks include BBC One\u2019s MasterChef <\/em>and entertainment big hitters Britain\u2019s Got Talent<\/em> (ITV), I\u2019m A Celebrity… Get Me Out of Here!<\/em> (ITV), Strictly Come Dancing<\/em> (BBC One) and The X Factor<\/em> (ITV).<\/p>\n

One of the main tasks for Kevin Lygo, the new director of television at ITV, is to find a fresh entertainment hit. There are high hopes for The Voice UK<\/em>, which completed its final run on BBC One earlier this year and debuts on ITV in 2017.<\/p>\n

BBC One\u2019s biggest show, The Great British Bake Off<\/em>, is an example of the U.K.\u2019s talent for devising quirky formats that over time gradually build a loyal and sizeable fan base. The consolidated peak viewing figure for last year\u2019s Bake Off<\/em> finale was 14.5 million. Only soccer tournaments played by the under-performing England team can rival Bake Off<\/em>\u2019s popularity in the U.K. The show made headlines again this September, when Channel 4 outbid the BBC for the rights to the next season.<\/p>\n

Other examples of the left-field shows that capture mainstream audiences are BBC One\u2019s Countryfile<\/em>, a popular factual series reporting rural and environmental issues, and Channel 4\u2019s Gogglebox<\/em>, in which British families are filmed reacting to the week\u2019s TV shows.<\/p>\n

BRIT SCRIPTS<\/strong>
\nDrama defines BBC One\u2019s and ITV\u2019s schedules. The popularity of The Night Manager<\/em> is part of a sustained period of success for BBC scripted shows. These programs are underpinned by long-running series such as hospital sagas Holby City<\/em> and Casualty<\/em>. Gritty crime pieces Happy Valley<\/em> and Line of Duty<\/em> also compete for viewers\u2019 attention alongside period drama such as War & Peace<\/em> (a co-production with The Weinstein Company). Sherlock<\/em> and Doctor Who<\/em> are two other mainstays of BBC One\u2019s lineup.<\/p>\n

ITV has struggled to match the BBC\u2019s spectacular run of drama. It needs to find a successor to Downton Abbey<\/em>. Lygo has poached the BBC\u2019s head of drama, Polly Hill, to help him. The aim is to commission more shows like The Durrells<\/em>, a strong performer for ITV this spring, and fewer flops such as Jekyll and Hyde<\/em> and Beowulf: Return to the Shieldlands<\/em>.<\/p>\n

ITV recently premiered the costume piece Victoria<\/em> and the revival of relationship drama Cold Feet<\/em>. Returning ITV scripted crime shows that keep the advertising pounds coming in include Midsomer Murders<\/em>, Endeavour<\/em> and Scott & Bailey<\/em>.<\/p>\n

ITV, Channel 4 and Channel 5 are all funded by advertising. \u201cSince 2013, TV advertising in the U.K. has been extremely buoyant due to the economic recovery,\u201d says Jonathan Barnard, head of forecasting at ZenithOptimedia. \u201cThe main beneficiary of this is ITV, although Channel 4, Channel 5, UKTV and Sky have all benefited.\u201d<\/p>\n

He adds, \u201cITV has done well despite audiences falling overall. While it\u2019s impossible to reach the huge mass audiences of 10 to 15 years ago due to the switch from analog to digital, ITV remains the benchmark for the overall U.K. TV market. It is the U.K.\u2019s only commercial mass audience channel. When ITV does well, it lifts the whole market. Unlike U.S. network TV, which is in decline, in the U.K. we are still expecting growth in revenues across the market.\u201d<\/p>\n

Barnard says the online viewing revolution is, if anything, helping TV\u2019s case for attracting advertising money. \u201cAs an advertising medium, U.K. TV is actually cheap and effective. Increasingly, advertisers are using TV and online video together. Online is not only a competitor to TV, in many ways it\u2019s complementary.\u201d<\/p>\n

In June, the U.K. voted to leave the European Union. How Brexit will affect the TV advertising market is as yet unclear. Speaking at ITV\u2019s financial results in July, CEO Adam Crozier suggested that at the moment the key problem was uncertainty. As a result, the company is seeking modest savings to the tune of \u00a325 million. \u201cI don\u2019t think the result of the vote changed anything,\u201d he said. \u201cThat\u2019s partly because it is too early to say, and partly because nothing much is going to happen very soon. It\u2019s going to be a two- to five-year process.\u201d<\/p>\n

Brexit is also putting the spotlight on the independent production sector. Encouraged by the fact that independents are allowed to retain potentially valuable rights to their shows, U.S. studios and broadcasters have invested heavily in British indies. Many commentators believe that these content-rich firms are the key to the future prosperity of Britain\u2019s TV sector. The BBC is the world\u2019s most prolific producer of new content by a wide margin; according to Eurodata TV, it was responsible for more than 300 new titles in 2015. But many of Britain\u2019s most successful shows domestically and abroad are produced by indies.<\/p>\n

CREATIVE HUB<\/strong>
\nDownton Abbey<\/em> was made by Carnival Films, which is owned by NBCUniversal. Kevin MacLellan, the chairman of global distribution and international at NBCUniversal, pinpointed the U.K.\u2019s importance as a global creative hub when speaking at the Royal Television Society recently.<\/p>\n

\u201cA big part of why we\u2019re in London, and one of the advantages of having our own office here, is mining the talent that exists in the U.K. so we can move that product over to the U.S. That\u2019s the home run for us.\u201d<\/p>\n

Britain\u2019s exit from the EU may threaten the U.K.\u2019s enviable position as a place where talent from outside its borders want to work. John McVay, the chief executive of producers\u2019 lobby group Pact, says, \u201cWe don\u2019t want to end up as a backwater because premium talent no longer wants to work here. The U.K. needs to have the ability to continue to attract the best talent wherever it comes from. Brexit potentially puts that at risk.\u201d<\/p>\n

When Brits voted by 52 percent to 48 percent to leave Europe, they didn\u2019t realize one of the unintended consequences could be that, once Brexit becomes a reality, genuinely ambitious and expensive homegrown shows like The Night Manager<\/em> might become even less common than they are today. Under those circumstances, global players like Netflix are likely to celebrate, but Britain\u2019s buoyant TV market could lose some of its luster.<\/p>\n

Pictured: <\/em>Celebrity Big Brother on Channel 5.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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