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Digital television advances - The storm nears

Time was that big television channels had all the audience and, consequently, all the money. Nobody under 30 years of age, in most of the world, remembers. Owners of big TV channels remember and heave a sigh with each passing ratings and financial report

stormAdvancing is the pace of digital terrestrial television as the 2012 European deadline approaches. More channels – the ‘digital dividend’ – are attracting more viewers and more viewer time. Little of this translates to financial salvation for television network operators. And the future could be even more difficult.

Reporting Spain’s television audience estimates for the whole of 2008 Sofres data showed the aggregate audience share of the three leading general interest channels - Telecinco, TVE1 and Antenna 3 - at 51%. Viewing television reached an all time high of 3 hours and 47 minutes per day, older viewers spending considerably more time with the tube – those over 45 years watching 4 and a half hours per day. Viewing analogue channels had dropped to 64.8% from 75.2% in 2007, satellite TV at 5%, cable TV to 14.6% and digital terrestrial channels (DTT) 15.5%.

Fast-forward to the first quarter 2009 Sofres numbers released last week. Audience for DTT channels jumped to 28.7%. For the same period television advertising in Spain fell 28%. Antena 3, which placed 2nd in the first quarter in audience share, saw a 19.5% drop in operating revenue and a 74.2% drop in net profit.

Spain’s Prime Minister José Luis Rodríguez Zapatero, persuaded by commercial broadcasters, stepped lively in the footprints of French president Nicolas Sarkozy to shift ad revenue out of public broadcaster TVE. Most of the €700 million earned by TVE from advertisers would be replaced by more direct State aid and a bit of a tax on commercial TV operators and mobile phone customers. If the French experience is any indicator, big TV networks will see little benefit.

Spain is suffering in its worst economic downturn in two generations. Ad spending has plunged and all media operators are scrambling to make ends meet. At the same time, pressure to offer more thematic channels to satisfy changing audience demands has never been greater. DTT is proving to be the gift with an ever-growing cost. Older viewers are watching more television but attract scant attention of those advertisers who are still spending. Younger audiences have moved on.

Obviously, it’s the younger people who have moved on first to the internet and mobile platforms. Advertisers and media buyers chase younger people. It isn’t just that youthful eyes and ears (with disproportionate disposable income) get their media mojo from new platforms. Cost per thousand, where media buyers eat and dream, for television and newspapers (about €5.40) is more than twice that for the Web (about €2.20). It’s economics every media buyer understands.

Google Spain president Javier Rodríguez Zapatero, not related to the Spanish Prime Minister, offered that digital television – and much of the rest of old media – isn’t up to the competition from the internet. “I do not know whether digital TV will be technologically equipped to offer the same enjoyment as the Internet,” he said to the 'Sociedad en Red’ conference in Madrid, quoted by Publico (May 5).  The interactivity available through the internet will be more attractive to viewers and commercial television operators need to “work with other distribution channels.”

On the effect of cutting advertising from Spanish public TV, he said it would be “palliative but not a long-term solution.” The end of advertising on RTE could arrive in July, or September depending on the mood of legislators. Unions are poised for a fight, saying independence is at stake. So to are the jobs of the 170 people in the RTE advertising department. Google Spain generated €72 million in advertising in 2003 rising to €610 million in 2008.

Of course, Google is in the business of promoting the internet. And Google, according to Sr. Rodríguez Zapatero, is not to blame.“What is happening today would happen with or without Google.”

Waxing philosophical, he described the current confluence of technology and economics as “the fifth industrial revolution.” He sees “opportunity in the crisis” as “desires” delayed are “the fuel of the internet” as consumers seek refuge from the storm on the Web.

 

 


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