DEVELOPMENTS IN THE UK TELEVISION MARKET June 2002
2 Contents Technology in the home (How do people get digital TV?) Programming and Audiences (Who is watching what?) Economics (How are broadcasters financed?) Focus on ITV
3 Take-up of digital television compared with other home technologies Source: ITC Year After Launch Colour TV VCR PC Satellite Digital TV Penetration (% of households)
4 Source: Company literature. Pay TV take-up by platform UK Multichannel Pay-TV Penetration, Quarter 1, 2002 UK Pay-TV Growth, * Please note: As no figures are publicly available for subscribers as of 31 March 2002, ITV Digital subscribers are assumed to be equal to the latest figures released (i.e. for Q4, 2001). We have not allowed for churn, return of STBs or conversion to the other platforms. ITV Digital went into Administration on 27 March Total analogue multichannel ITV Digital Sky Digital Digital Cable Millions of subscribers Q Q3Q Q3Q Q3Q Platform Households (‘000s) % of UK TV households Analogue Cable 1,5166.2% Digital Satellite 5, % Digital Cable 2,0288.3% Digital Terrestrial 1,263*5.2%* Total10, %
5 Take-up of various home entertainment equipment Source: ITC, the Public’s View 2001 Base = All Viewers
6 Number of television sets in the home Source: ITC, the Public’s View 2001 Base = All respondents 24% 1 35% 2 24% 3 12% 4 6% 5+ % of individuals Number of TV sets
Increased bandwidth enhances applications Current UK Broadband Connections, March 2002 Source: Company literature Kbps Kbps 2 Mbps 10 Mbps Bandwidth GPRS/Modem ; Instant messaging; Basic web browsing; e-commerce. EDGE/3G/ADSL/ Cable modem (current) Video conferencing; Fast internet access; File sharing; CD-quality audio; Real-time gaming Cable modem (future)/ADSL Full motion video Fibre Multiple video streams 125,900 Telewest 183,300 NTL 170,000 ADSL
8 Contents Technology in the home (How do people get digital TV?) Programming and Audiences (Who is watching what?) Economics (How are broadcasters financed?) Focus on ITV
9 Issue of ITC licences, and programme services available in digital households by genre Source: ITC estimates Issue of ITC licences and total number of licensed programme services Net licences issued in year (all services) Total programme services Note: The negative figure for net licences issued in 2000 reflects the replacement of many regional cable licences with fewer national licences. Programme services by Genre, Sport Film Kids Music Factual Home Shopping Entertainment Local Other (Unclassified)
10 Content available via basic multi-channel TV “The TV channels I receive at the moment give me all the choice I want” From: The Public’s View BBC1BBC2ITV1C4C PM BBC Choice UK Gold ITV2Sky 1 US DramaNewsUS Comedy Comedy Film FactualSoap Drama Light Entertainment A selection of the content available with a basic package CBBC* *BBC Choice commences broadcasting at 7pm. Prior to this, CBBC uses the spectrum. Note: This is a representative schedule only, based on a week in January % All homes 81% Multichannel 85% Digital multichannel % Agree
11 Audience share in all homes by channel, % BBC1BBC2ITV1Channel 4Channel 5Other % Q Q Q Q Q Source: BARB
12 Audience share in multi-channel homes by channel, Q Q Q Q Q BBC1BBC2ITVCH4CH5Other % Source: BARB
13 Average weekly audience reach (3 minutes consecutive) by channel, all homes, Source: BARB Q Q Q Q Q % BBC1BBC2ITVChannel 4Channel 5
14 Viewer profiles by type of television received Children Profile of viewers by type of service and age, Q Profile of viewers by type of service and social class, Q ABC1C2DE Analogue terrestrial homes Multi- channel homes All homes 58% 42% 58% 42% 60% 40% Analogue terrestrial homes 51% 27% 15% 7% Multi- channel homes 22% 35% 28% 14% All homes 36% 31% 22% 11% Source: BARB
15 Hours viewed per household per day by social class, Source: BARB Multichannel HomesAll Homes Q Q Q Q Q ABC1C2DEAll IndividualsABC1C2DE All Individuals
16 Hours viewed per household per day by age, Q Q Q Q Q Source: BARB Children Children All HomesMultichannel Homes
17 Contents Technology in the home (How do people get digital TV?) Programming and Audiences (Who is watching what?) Economics (How are broadcasters financed?) Focus on ITV
18 Sources of UK television revenue... Source: ITC Components of television revenue in 2001 Net Advertising Revenue 44%£3.4 billion Sponsorship1%£84 million Sale of goods4%£312 million Other5%£382 million BBC licence fee spent on TV 21%£1.7 billion Subscription Revenue 25%£2.0 billion...and trend in share of main components, % 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% NAR Sponsorship Subscription Sale of goods Other BBC licence fee spent on TV
19 0% 10% 20% 30% 40% 50% 60% 70% 80% Channel 3 incl GMTV Channel 4 incl S4C Channel 5 Cable and Satellite and other UK TV Net Advertising Revenue by channel over time... Source: ITC
20 PQR Cash Bids Tender payments by Channel 3, Channel 5 and Additional Services licensees, Note: The drop in total tender payment in 1999 reflects the renewal of some Channel 3 licences. The increase in PQR in this year reflects the policy decision that more emphasis be given to the PQR component of tender payments. The Broadcasting Acts 1990 and 1996 require that certain kinds of licence are awarded by the ITC after a process of competitive tender. Licences awarded in this way are required to make additional payments to the Treasury (via the ITC). Additional payments are in two parts. The first is a percentage set by the ITC, of qualifying revenue (PQR). The second part is the cash bid, which on renewal is set by the ITC. This is index-linked and payable annually. Source: ITC £ million, nominal prices
21 Contents Technology in the home (How do people get digital TV?) Programming and Audiences (Who is watching what?) Economics (How are broadcasters financed?) Focus on ITV
22 Original programmes (including repeats) as a percentage of total output (hours) by channel Source: ITC; Channel 4 Annual Report ITV, Channel 4 and Channel 5 all have requirements in their licences to produce a set amount of original programming each year. Note: Channel 4’s original programming target was only introduced as a licence requirement in 1998; prior to this the figures were reported in Channel 4’s Annual Report. Achieved in 2001 ITC Licence Requirement ITC Licence Requirement for original programmes and actual performance, 2001 % Original programmes as a percentage of total output, % ITV Channel 4 Channel 5 65% 81% ITV 60% 69% Channel 4 55% 58% Channel 5
23 Source: ITC ITV, GMTV, Channel 4 and Channel 5 all have requirements in their licences to commission a set amount of programming from independent producers each year. ITC Licence Requirement for independently produced programmes and actual performance, 2001 Qualifying independents as a percentage of total qualifying output, Qualifying hours commissioned from independent producers as a percentage of total qualifying output by channel Achieved in 2001 ITC Licence Requirement % ITV Channel 4 Channel 5 25% 31% ITV 25% 61% Channel 4 25% 73% Channel 5
24 The ITV licensees Grampian Scottish Ulster Border Tyne Tees Yorkshire Granada Central Anglia HTV Carlton/LWT Westcountry Meridian Channel
25 The ITV licensees - ownership structure ITV Scottish Media Group Carlton GroupGranada Group Anglia Border Granada LWT Meridian Tyne Tees Yorkshire Central Carlton HTV Grampian Westcountry Scottish Ulster Channel
26 Source: BARB Audience share by region, ITV1 compared with BBC1, Q ITV1 BBC Border Ulster HTV Wales North East Yorkshire Scotland North West London Midlands HTV West East of England South & South East South West
27 Source: BARB Audience share for regional news programmes by region, ITV1 compared with BBC1, 2001 % Channel Border Ulster South & South East Scottish Grampian Yorkshire North East East Midlands Wales South West London North West West ITV1 BBC1