| KN92194 |
| KEY NOTE REPORT : Free-To-Air TV : May 2004 |
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This report covers:Free-To-Air TV, rise of multichannel TV Household, fragmented target audience, collapse of ITV Digital, Home as a leisure centre, end of Analogue, too much to see, FTA households, Digital FTA, Analogue FTA, legislation, key trade associations, ITN, Exhibitions, current issues, changes to the ITV Licence, increased scale in the TV Advertisement Market, a new TV advertising regulator?, a new pay-TV Competition, Top-UP TV, Top-fUp TV clash with BBC, the Global market, Europe, US, Asia Pacific, Latin America, importance of Global market to the UK, future trends,
Companies and brand names covered include: Chanel 4 Television Corporation, Channel 5 Television Group, Freeview/DTV Services, ITV, SMG, Ulster Television Group, GMTV,
| Executive Summary |
| 1. Market Definition |
| REPORT COVERAGE |
| MARKET SECTORS |
| MARKET TRENDS |
| The Rise of the Multichannel TV Household |
| A Fragmented Target Audience |
| Consolidation |
| The Collapse of ITV Digital |
| The End of Analogue |
| The Home as a Leisure Centre |
| Too Much to See? |
| ECONOMIC TRENDS |
| Population |
| Table 1: UK Resident Population Estimates by Sex (000 and %), Mid-Years 1998-2002 |
| Household Disposable Income |
| Table 2: UK Household Disposable Income (£ and %), 1998-2002 |
| Gross Domestic Product |
| Table 3: UK Gross Domestic Product at Current and Constant 1995 Prices (£m), 1998-2002 |
| Inflation |
| Table 4: UK Rate of Inflation (%), 1998-2002 |
| Unemployment |
| Table 5: Actual Number of Unemployed Persons in the UK (million and %), 1998-2002 |
| MARKET POSITION |
| The UK |
| Table 6: UK Television Households† Able to Receive FTA Services (% of households), Q3 2002-Q4 2003 |
| 2. Market Size |
| THE TOTAL MARKET |
| FTA Households |
| Table 7: The Total Number of FTA UK Households† (million), Q3 2002-Q4 2003 |
| Revenue |
| Table 8: Estimated Net Advertising Revenue of the UK FTA Terrestrial Television Channels (£m), 1999-2003 |
| Market Shares |
| Table 9: The Share of the UK FTA Market Taken by the Main Platforms (%), Q4 2002 and Q4 2003 |
| Table 10: Estimated Breakdown of UK FTA Advertising Revenue by Value (£m and %), 2002 |
| BY MARKET SECTOR |
| Digital FTA |
| Table 11: The Number of UK FTA Digital Television Households (million and %), Q3 2002-Q4 2003 |
| Market Shares |
| Table 12: The UK's Major Digital FTA Providers (% of households), Q4 2002 and Q4 2003 |
| Table 13: Channel Shares on UK Digital Terrestrial Television by Viewing Times (%), Q3 2003 |
| Analogue FTA |
| Table 14: The Number of UK FTA Analogue Television Households† (million), Q3 2002-Q4 2003 |
| Market Shares |
| Table 15: Channel Shares on Analogue Terrestrial Television by Viewing Times (%), Q3 2003 |
| 3. Industry Background |
| RECENT HISTORY |
| INDUSTRY SYNOPSIS |
| Table 16: Average Financial Results of Leading Companies† Engaged in Television by Turnover and Pre-Tax Profit (£000, %, and £), 2002/2003 |
| NUMBER OF COMPANIES |
| EMPLOYMENT |
| REGIONAL VARIATIONS IN THE MARKETPLACE |
| HOW ROBUST IS THE MARKET? |
| LEGISLATION |
| Communications Act 2003 |
| Office of Communications (Ofcom) |
| KEY TRADE ASSOCIATIONS |
| Advertising Association |
| Broadcast Advertising Clearance Centre |
| Broadcasters' Audience Research Board Ltd |
| Digital Terrestrial Television Action Group (DigiTAG) |
| 4. Competitor Analysis |
| THE MARKETPLACE |
| MARKET LEADERS |
| Channel 4 Television Corporation |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Channel 5 Television Group Ltd (Five) |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Freeview/DTV Services Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| ITV PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| SMG PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Ulster Television Group PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| OTHER COMPANIES |
| GMTV Ltd |
| Channel Television Ltd |
| ITN Ltd |
| OUTSIDE SUPPLIERS |
| MARKETING ACTIVITY |
| Table 17: Main Media Advertising Expenditure by Terrestrial TV Companies, Year Ending September (£000), 2003 |
| Exhibitions |
| 5. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 6. Buying Behaviour |
| Television: THE MOST POPULAR LEISURE ACTIVITY |
| Table 18: The Most Popular Evening and Weekend Leisure Activities (% of adults), 2003 |
| The Analogue-Terrestrial-Only Viewer |
| Table 19: Penetration of Households That Do Not Currently Have Cable, Satellite or Digital TV (% of adults), 2003 |
| Table 20: Penetration of Adults Viewing ITV1 and Channel 4 Per Day (% of adults), 2003 |
| Table 21: Penetration of Adults Viewing Channel 5 Per Week (% of adults), 2003 |
| Table 22: Penetration of Adults Viewing GMTV Per Week (% of adults), 2003 |
| 7. Current Issues |
| CHANGES TO THE ITV LICENCE |
| INCREASED SCALE IN THE TV ADVERTISING MARKET |
| A NEW TV ADVERTISING REGULATOR? |
| NEW PAY-TV COMPETITION |
| Top-Up TV |
| Top-Up TV Clash with the BBC |
| 8. The Global Market |
| Introduction |
| EUROPE |
| the US |
| ASIA-PACIFIC |
| LATIN AMERICA |
| Importance of the Global Market to the UK |
| Table 23: International Transactions of Television Material (£m), 1998-2002 |
| Table 24: International Transactions of Television Material by Region (£m), 2002 |
| 9. Forecasts |
| INTRODUCTION |
| Forecasts 2004 to 2008 |
| Table 25: Forecast Total UK Number of FTA UK Households† (million), 2004-2008 |
| Table 26: Forecast Net Advertising Revenue of the FTA Terrestial Television Channels (£m), 2004-2008 |
| future trends |
| 10. Company Profiles |
| introduction |
| CHANNEL 4 TELEVISION CORPORATION |
| Company Structure |
| Product Information |
| Recent Developments |
| DTV SERVICES LTD |
| Company Structure |
| Product Information |
| Recent Developments |
| ITV PLC |
| Company Structure |
| Product Information |
| Recent Developments |
| SMG PLC |
| Company Structure |
| Product Information |
| Recent Developments |
| ULSTER TELEVISION GROUP PLC |
| Company Structure |
| Product Information |
| Recent Developments |
| 11. Further Sources |
| Associations |
| General Sources |
| Government Publications |
| Other Sources |
| Bonnier Information Sources |
This Key Note report reviews the market for free-to-home (FTH) or free-to-air (FTA) television services, in other words television channels where the consumer does not have to pay a fee for viewing the service. In 2003, the UK FTA television market was worth an estimated £3.03bn in terms of net advertising revenue.
The market has largely stagnated in revenue terms since 2001, reflecting a reluctance on the part of some large companies to invest in mass-media television advertising and growing competition for television audiences from the BBC (British Broadcasting Corporation) and non-terrestrial television. At the end of 2003, FTA television accounted for an estimated 58.6% of all UK households that had a television and for 26.9% of UK multichannel and 29.1% of UK digital households. There were 14.43 million FTA households in the UK at the end of 2003, a decrease of 4.2% from the end of 2002.
The FTA market divides into digital services, including Freeview and satellite services, and analogue terrestrial services. Analogue terrestrial services are declining in the market, while digital services are growing strongly. However, the UK market remains dominated by the terrestrial platform, which in turn is monopolised by one key player, ITV PLC, which is both the leading platform operator and a leading content provider. The market has shown over its 20-year history that scale is a key driver of commercial success, which has led to consolidation.
Today the industry is effectively an oligopoly, with only five key players: ITV PLC, Channel 4, Channel Five (terrestrial television), and Freeview and BSkyB (digital). A number of the leading companies in the industry, like ITV PLC, Channel 4 and Freeview, either are not commercial companies in the traditional sense, or have not been operating long enough for a run of audited accounts to be available. Consequently, unlike other Key Note reports, this report does not include company financials in Chapter 10 — Company Profiles.
The major players are, however, profiled in the Chapter 4 — Competitor Analysis and latest turnover and profit figures are shown, where available. Considering the main companies in the market, it is important to differentiate between ITV PLC and the ITV network. ITV PLC was formally Carlton and Granada and is the main holder of ITV franchises in the UK, the owner of LWT and also owns 50.5% of GMTV. The ITV network consists of ITV PLC as well as owners of ITV franchises in Scotland (SMG PLC), Northern Ireland (Ulster TV) and the Channel Island (Channel Television). ITV PLC is the dominant ITV franchise hold but is not the whole ITV network. Despite consolidation of the industry, which has seen ITV in England and Wales become a single operation, competition remains intense and the introduction of a digital FTA competitor to the analogue market has made competitive pressures even stronger. The level of competition will intensify in the future as new competitors, such as Top-Up TV and low-cost pay-TV packages from BSkyB, enter the market.
Today the market is in crisis. Digital television is taking a growing share of the market, while the analogue FTA terrestrial sector is increasingly losing out to the pay-TV platform. By 2008, the FTA market will essentially be a digital, not an analogue, market — a fact ensured by the proposed `switch off' of the analogue television signal progressively between 2006 and 2010. The proposed `switch off' of the analogue television signal will create a competitive battle to sign up the remaining television households that currently do not access digital television.
At present, Freeview appears to have an edge in this regard, as it is appealing to people who have been sceptical about subscribing to digital pay-TV. However, the pay-TV operators are set to alter their marketing and service packages to compete. The analogue television providers will progressively change to a digital platform. Key Note predict that between 2004 and 2008, advertising revenue for the FTA platform providers will grow by 20% in current price terms.
Text © 2004Key Note
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Last updated by Amanda Porteous June
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