Television

Broadcast TV audiences remain high - 91 percent of the population view TV at least once a week. The UK television sector is undergoing significant change due to a number of factors including 1) the switchover from analogue TV to digital terrestrial television in 2012 means that all homes receive multichannel TV; 2) the complexity of the number of ways households receive linear TV broadcasts which are fragmented across a range of platforms (terrestrial, satellite, cable, etc.) 3) the rapidly increasing shift in viewing habits away from linear to non linear viewing through catch up, video on demand and streaming services such as BBCiplayer, Youtube, Netflix, and Amazon Prime which can be accessed on multiple devices including mobile phones, tablets and laptops.

The market has fragmented into a confusing array platforms used by viewers to watch linear TV. The following shows the numbers of households in millions that receive broadcast TV through one or more of the following: 18.69 Terrestrial: (all homes which have access to digital terrestrial TV via their aerials); 11.28 Terrestrial only (the subset of terrestrial households that do not have access to either cable or satellite reception; 4.15 Cable (almost entirely Virgin Media); 2.25 YouView (all households who have the BT, TalkTalk or YouView platforms). 1.4 Other satellite (former Sky subscribers who use their satellite to access digital terrestrial services); 1.14 Freesat (free to air digital terrestrial via a satellite); 8.82 Sky subscribers.

Despite the greater choice of programming the main public service broadcast channels (BBC One, BBC Two, ITV/STV/UTV, Channel 4 and Channel 5) continue to attract more than half of the total broadcast TV audience and have maintained a 51 percent share over the past four years to 2016. The BBC is Europe’s most successful public broadcaster with a weekly reach for news via TV and radio of 67 percent. Whilst the content and method of accessing it may be undergoing major changes, the amount of time audiences spend viewing broadcast TV has declined at a fairly slow rate from 242 minutes in 2010 to 212 minutes in 2016.

The availability of catch-up, on demand and subscription programming is driving a fast pace of change towards non-linear viewing. Viewers are now able to decide what they want to watch, when they want to watch it, and on what device. Such services have taken off due to increases in the number of households with Internet enabled TVs (smart TVs) which come ready loaded with a range of free and subscription on demand services. In 2017, 39m households had smart TV and growth rates suggest that smart TV will overtake time shifting/recording devices (PVRs) in 2018. The proliferation of other Internet enabled devices is also driving audiences to access on demand services via mobile devices and computers.

Free on demand services are offered by terrestrial channels such as BBC iPlayer, ITV Hub and All4. BBC iPlayer is the most popular on demand TV service with 63 percent of respondents in Ofcom’s survey using it, followed by 40 percent for ITV. There are marked age-related differences with younger people more likely to use non-linear services and choosing different content providers: 66 percent of teens use YouTube compared to 34 percent adults, and only 54 percent of teens use BBC iPlayer. Three times as many households subscribed to one or more of the available video on demand services in 2017 (9.51m) as did in 2014 (3.83m). Subscription video on demand services are dominated by Netflix (7.89 million), Amazon Prime (3.84m), and Now TV (1.44 million). At £1.7bn, total revenue for online TV in 2016 is almost six times as much as 2010 levels of £0.3bn.

The rapid pace of change and entrance into the market of a plethora of new content providers is causing some to ask how much market share and revenue traditional TV providers such as the BBC, ITV and Sky will lose to new streaming services. It has been suggested that ‘super-aggregators’ may emerge as ‘one-stop’ platforms for viewers who want a simple way to access content. More than 20 percent of under-35s use more than seven services to keep up with their favourite shows, and 40 percent say they are becoming confused by how many options are available.

Such changes would disrupt the current pattern of ownership in the TV industry. Measurements of ownership based on revenue in 2014 show Sky as by far the largest broadcaster at £7.6bn. The BBC is the largest of the PSB broadcasters with £5.1billion (£3.7bn of which is provided by the licence fee); the cable provider Virgin Media is 3rd with £4.1bn followed by BT £4bn, ITV £2.8bn, Channel 4 £1.7bn and Channel 5 £0.9bn.

The BBC and Channel Four are publicly owned. The relaxation of ownership regulations in the 1990s opened up the television industry to international companies and has resulted in US ownership of several UK media companies. Rupert Murdoch’s 21st Century Fox owns 39.1 percent of Sky plc, and, having been seeking for some years to buy the remaining share made a formal bid in 2016. As of February 2018 the UK Competition and Markets Authority has provisionally found that Fox’s bid to take control of the 61 percent of Sky it does not already own is not in the public interest due to concerns about media plurality. Virgin Media was purchased by the US based international cable company Liberty Global in 2013 and Channel 5 was bought by US based Viacom International in 2014.

Revenue in the broadcast TV industry has shown a  small increase rising from £13.3bn in 2010 to £13.8bn in 2016. Figures for the main revenue source for television service providers are only available for the industry as a whole so do not accurately reflect the proportions for non-subscription channels which, with the exception of the BBC, rely almost entirely on advertising. Overall industry revenue is divided between subscription (46 percent) and advertising (30 percent) and other (6 percent). A further 18 percent of the total revenue of the industry represents the BBC income that is allocated to TV (the BBC also produced radio and online content). Subscription revenue includes Ofcom’s estimates of subscriber revenue for BSkyB, Virgin Media, BT Vision, TalkTalkTV, Setanta Sports, ESPN and Top Up TV. ‘Other’ includes TV shopping, sponsorship, interactive (including premium-rate telephony services), programme sales and Welsh channel S4C’s grant from the government. According to Ofcom, broadcast TV remains a strong recipient of advertising spend and has accounted for an average of 30 percent of the advertising spend in the UK since 2010.

In an attempt to plug the gap in locally produced television, particularly local news, the government launched an initiative in 2012 to create a network of local TV stations. The first stations went on air in 2014 and to date 23 have been granted licences. Each station is under an obligation to meet a quota for locally produced content. The local TV initiative was funded by a £40m subsidy from the BBC licence fee, of which £25m was spent on setting up the transmission network and a further £15m is earmarked for the BBC to buy in content from the new channels.

Until very recently, television remained the most used platform for news consumption. Ofcom data shows that 69 percent of adults used TV for news in 2016 although TV is less popular with younger viewers (49 percent for 16-24 year olds). Despite being overtaken by online platforms (74 percent) in 2017, television news remains a very common source of news (69 percent) and is far more widely used than print (41 percent) according to the most recent Reuters Digital report. Adults watched an average of 110 hours of TV news in 2016, with younger people watching far less (16-24s watched 23 hours) and older adults aged 65+ watching far more (215 hours). These figures have remained fairly stable since 2010. The vast majority of TV news viewing is on BBC One (67.2 percent), followed by ITV (12.3 percent), the BBC’s 24 hour news channel (8.6 percent), Sky 24 hour news (6.7 percent) and Channel 4 at (3 percent).

Statutory regulation through Ofcom obliges terrestrial television channels to produce news at certain points throughout the day. Broadcast news on the two main channels of BBC and ITV remains popular drawing in audiences of 4.6m and 1.9 million respectively for their late evening bulletins in 2016. Television news on all channels licenced in the UK (digital and terrestrial) is under a regulatory obligation to provide news according to strict impartiality criteria. There are in excess of ten 24 hour news channels available via satellite, cable, and digital terrestrial TV. These include Russia Today, Aljazeera, CNN, and France 24, but BBC News and Sky News are by far the most popular. Neither brings in large audiences (audience share BBC News 0.88%; Sky News 0.52 percent), and only reach a small portion of the overall weekly viewing audience (BBC News 11.65 percent; Sky News 7.2 percent).