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Week ending October 10, 2009

Content Economics - Get ready for more repeats as broadcasters cut their programming budgets - October 9, 2009
from James Healey/Content Economics

As the world’s television executives travel to Cannes (5-9 October) for Mipcom, the annual TV sales market, a new report from the television content research company, Content Economics Research suggests that the executives are more likely to be celebrating programme sales with cava this year, rather than champagne.

The new report, ‘Investment in original TV programming, 2008-12’, estimates that €12bn (£10.5bn; $17.3bn) was spent on original commission content* in 2008. However, the collapse in television advertising across Europe in 2009 is expected to reduce many broadcasters’ programming budgets.

Germany was the largest market in 2008, worth an estimated €3.1bn (£2.1bn; $3.5bn) and the UK was second. However, according to James Healey, the director of research at Content Economics Research, “The UK content industry has been in poor health for some time as the investment in content on the five main terrestrial channels has been declining since the mid 2000s.”

ITV Plc has gone so far as to announce that it will be reducing its programming budget by a massive €119m (£105m; $174m) in 2009.

But the UK is not an isolated case. Broadcasters across Europe are struggling. The CEO of Europe’s largest broadcasting company, the RTL Group, has suggested that, given the current climate broadcasters should be reducing their expenditure, including their programming budgets by at least 10%. Commercial broadcasters such as TF1 in France, ProSiebenSat.1 in Germany and Spain’s Antena 3, have all stated that they have either reduced their programming budgets or that they are using their ‘programme assets more efficiently’. Of the major markets, Italy appears to be least effected, primarily due to the relative strength of the local TV advertising market, and also Mediaset’s unique role in the market – such as its investment in premium sports rights for its digital terrestrial service.

James Healey also says, “Viewers around Europe have already started to notice that there are an increasing number of repeat programmes on TV. This is likely to be a long-term trend as broadcasters reduce their programming costs. Similarly, viewers should expect to see more (of the cheaper to produce) quiz shows and documentaries in their programme guides, and fewer (of the more expensive) dramas.”

Given the downturn in the commissioning market, there is expected to be a period of consolidation amongst the independent production companies (commonly referred to as ‘indies’) as they seek to survive. The larger, deep-pocketed players, such as the UK’s Shine Group and Italy’s De Agostini, may well take advantage of cheaper company valuations to make further acquisitions.

* Original commission content, or original content, is defined as all programming excluding: news, sport, and acquired content (films, TV series, one-offs – typically these are bought from the US).