The economic model of TV production relies upon a vibrant market for back catalogue content; programming that has traditionally driven the desirability of many linear channels and slots

New release strategies, along with the hyper-concentrated viewing encouraged by video-on-demand and the round-the-clock availability of shows calls the longevity of the value of content into question

Our analysis suggests that programmes that previously would be leisurely distributed through broadcast could now feasibly be “worn out” more quickly. This could have ramifications for the whole sector, with more content investment required “upfront” and new financial and distribution models required

After the heights that Love Island and the World Cup took ITV to in H1, the broadcaster held on over the tougher last few months of 2018 to see growth in ad revenue (0.8%) and total viewing (linear and VOD, 3%).

However, it was the announcement of the subscription video service BritBox—with the discussions around the “strategic partnership” with the BBC in its concluding phase—that garnered most interest.

ITV’s investment in the service is modest when compared to its global competitors—up to £25 million in 2019, £40 million in 2020 and declining thereafter—but it is a prudent low-risk entry into what is an expanding but difficult market.

Linear TV is still a mass market medium, watched by 90% of the UK population each week. However, our latest viewing forecasts predict broadcasters will account for two-thirds of all video viewing in 2028, down from c. 80% today, due to the relentless rise of online video services.

Total viewing will continue to increase as more short-form content is squeezed into people’s days, particularly on portable devices, but the key battleground for eyeballs will remain the TV screen.

The online shift has already had a huge impact among younger age groups, with only 55% of under-35s’ current viewing to broadcasters. Older audiences are slowly starting to follow suit, but have a long way to go.

Addressable linear TV advertising, where precision-targeted ads overlay default linear ads, could enhance the TV proposition for advertisers, agencies and viewers, benefiting all broadcasters

In the context of dwindling linear viewing and rocketing online video ad spends, the adoption of Sky AdSmart and similar services on YouView and Freeview could take addressable TV ads from a sideshow to a pillar of revenue

Addressable linear is a bigger and more strategic prize for broadcasters than BVOD ads. Sky holds the key to wider adoption of its AdSmart platform if it can find a way – or a price – to bring ITV Sales and/or 4 Sales on board 

Consolidated TV viewing continued its seemingly relentless decline in 2018, falling 5% year-on-year (YOY)—its worst drop since the phenomenon began in 2011.

Meanwhile, unmatched TV set use—which includes Netflix, Amazon and YouTube consumption, as well as gaming—continued its upwards trajectory across all age groups, now accounting for 20% of total TV set time.

Consolidated TV viewing is increasingly reliant on its core viewers, with half of all viewing accounted for by the 20% of people who watch the most, up from two-fifths in 2010.

Our central case forecast with orderly EU withdrawal predicts 2.7% growth for total UK advertising spend, down from 4.7% in 2018. We have a no-deal Brexit scenario that predicts a smaller advertising recession than in 2009, with total ad spend declining 3% and display down 5.3% in 2019

The total advertising figures partly mask the pressure on UK consumers, through an expansion of the measured advertising spend universe. This is due to significant self-serve online advertising growth by SMEs, and non-advertising marketing budgets moving to online advertising platforms

In a downturn, we’d expect advertisers to become more tactical, which would disproportionally affect display media including TV, which is further affected by declining commercial impacts among younger adults. Search and social advertising would see only small growth through the first year of a recession

BT has doubled the price of the live ECL/EEL rights to £900m in order to outbid Sky and ITV and become the sole owner from 2015/16 to 2017/18 BT can easily absorb these extra costs through cost savings in other parts of its business, but the direct revenue returns through subscription charges and advertising on BT Sport are expected to fall far below the annual rights payments of £300m BT’s Euro victory is not a game changer in itself, but eyes are now firmly fixed on the next auction in about 18 months time of live PL rights, which could prove to be an inflationary bloodbath for all market participants

The ITV Interim 2013 results show a very strong start to the year to yield an 11% rise in EBITA, reflecting primarily strong growth in content production revenues and reductions in both schedule and other costs The weak spot was the -3% fall in NAR in a market that was estimated to be down -1% in H1 2013, although this was owing to seasonal sports factors and ITV anticipated ITV NAR to be broadly flat across the first three quarters of 2013 The overall outlook for H2 2013 and 2014 looks very positive, as ITV continues to build its content and online, pay & interactive revenues, but we also anticipate strong NAR growth in H2 2013 to continue in 2014 and for ITV to return to growing share of total TV NAR

The amount and distribution by time of day of TV viewing, as well as the PSB group viewing shares have remained notably stable over the last ten years in which the major shift from analogue to digital transmissions has occurred and timeshift/catch-up viewing has become commonplace.

The topline trends nevertheless mask significant age-related under-currents of change, which have seen a large loss of younger audiences and sharply ageing profiles for BBC1, BBC2 and ITV.

Whilst the more youth-oriented Channel 4 has avoided the ageing profile effect, it faces its own challenge of averting audience decline, as it finds itself at the sharp end of change among younger adults and faces declining support among older viewers.

In 2003, the Competition Commission imposed the CRR remedy as a condition of the proposed merger of Carlton and Granada to allay advertiser fears that the new ITV plc would use its market power to leverage higher airtime prices on ITV1 CRR made it possible to stop the ITV1 premium from rising and yet the ITV1 premium has risen almost without a blip since 2003. This note asks why The answer it seems has less to do with the negotiating muscle of ITV Sales than with the enduring USP and relative inelasticity of demand for ITV1 airtime and demand elasticity for the rest, while CRR has become increasingly irrelevant