The Channel | 2002 | June

7 / 22

8 | the channel
The Global Media Business
in an Uncertain World
I am very pleased to be here at the conference
of the Association for International
Broadcasting. I know that today we will be
hearing important views on the opportunities
and challenges facing international
broadcasters. I would like to offer some
observations, after my first year at CNBC
Europe, on the major business challenge
facing all pan-European television
broadcasters – how to grow advertising on
pan-European television in the context of
today’s difficult market place.
I propose to cover two major points. First, the distribution of cable
and satellite channels across Europe has faced difficulties that are
well known. Amidst all the focus on the difficulties, not enough
attention has been given to two major milestones
• As of last year, more than 50% of all Western European TV
households have access to cable and satellite channels on either
a paid or free to air basis.
• Audience migration from terrestrial channels to cable and
satellite channels – particularly among upscale and younger
viewers has also began to achieve critical mass.
Second, the key business challenge for all pan-European channels is
to expand the total pan-European TV advertising market. Pan-
European channels as a whole (approximately $400 million) are still
behind pan-European print (around $700 million), and simply get
far too little of the advertising dollar compared to Europe’s national
TV markets which achieve in excess of $20 billion every year.
That growth cannot be fully realised without international channels
becoming more effective in two areas. The industry must move to a
new level of effectiveness in marketing the general growth of cable
and satellite distribution and the accelerating movement of the
audience to this family of channels, which includes the pan-European
channels. In many countries, this task is being intensively shouldered
by national multi-channel distributors. But, in my judgement, a
focussed joint marketing effort on behalf of the pan-European
channels in co-operation with national efforts would be important.
In addition we must address an issue that has plagued pan-European
TV over the years – developing measurement systems that can
achieve more credibility and acceptance with advertisers and with
media agencies. This is not a new issue. But the pan-European TV
channels as a group – and the news channels in particular — remain
too reliant on once a year “recall” surveys that are simply not adequate
to take the industry to a new higher level of achievement. Studies
such as Europe 2001 and EMS as far as TV is concerned have not
achieved a sufficient level of credibility with advertisers and agencies.
And there is a good reason—“recall” studies are not a very accurate
way to measure TV viewing. Pan-European channels must develop
better and more uniform audience measurements to replace the
current often inconsistent and confusing data.
Before I explore that issue in further detail, let’s take a look at the
positive trends I believe we should be marketing co-operatively. In
the last year, the European television market passed a key milestone
when, for the first time, more than 50% of European TV households
had either cable or satellite access.
Even more importantly, audience viewing is moving toward the cable
and satellite channels. And viewing by upscale and younger
demographic groups is moving most strongly toward cable and
satellite channels. Let me quote just a few figures:
• Between 1997 and 2000, the average viewing share of the
highest rated over-the-air channel in each Western European
country declined from an average of 33% to less than 29%.
• In the UK, from 1997 to 2001, the main commercial
networks share of all adult commercial viewing fell from 59%
to 45%, while cable and satellite’s share increased from 18%
to 29% over the same period.
• During this same four-year period, this shift in the UK was
even more pronounced among the important “ABC1 men”
segment, where ITV’s television viewing declined from 52%
to 38%, while cable and satellite’s share increased from 23%
to 33%.
• In March of this year, for the first time ever, the delivery of
males 16-34 advertising impact by cable and satellite channels
exceeded ITV. Because UK cable and satellite channels reach
only about 45% of TV households, this key demographic group
watched cable and satellite channels (in homes where they are
available) almost twice as often as they watched ITV. That is
something to write home about!
These figures demonstrate that, as cable and satellite distribution
has increased, audiences are seeking those channels out. Even more
importantly, these figures also show that the migration is most
pronounced among upscale and younger viewers – the very
demographic groups that are most attractive to advertisers.
The extent of the migration among upscale viewers needs to be
relentlessly marketed and documented, on a pan-European basis.
Much of this migration is for new formats in national channels. At
the same time, viewers in general and upscale viewers in particular
are also selecting pan-European channels in greater numbers. Only
time will tell which pan-European channels will demonstrate the
greatest appeal on a cross-border basis from among the major genres
which have emerged – including general news, financial news, sports,
music, up-market documentary and ethnic.
From CNBC Europe’s perspective, I believe that, in the long run,
financial news is likely to emerge with the strongest pan-European
appeal. Mainly this is because it reflects the reality of today’s markets
and the rapidly developing pattern of investing and of corporate
growth objectives which transcend Europe’s traditional borders.
Financial news limited to one national market no longer tells the full
and accurate story of the investment markets, which now operate on
a pan-European and even global basis. Despite occasional setbacks
and complexities, it is now apparent that European financial markets
will continue to consolidate. European corporations and businesses
– large, medium and small – will increasingly look outside their
home markets for growth – for sales, shareholders, and capital raising.
That means that senior corporate executives increasingly seek out
real-time electronic sources of information to stay informed about
daily market developments that affect their businesses.And Europe’s
investors are also looking, slowly but surely, cross border as they
diversify portfolios in search of the best return regardless of
geography. This process reflects the historic transformations bought
about by the European Union and the introduction of the Euro which
will continue to drive the financial marketplace toward pan-European
perspectives and actions. As these trends continue, corporate
executives and investors will seek out the most timely and accurate
pan-European market data. And that is what CNBC Europe offers to
its audience.
Advertising budgets, however, are not making the corresponding
move to cable and satellite channels generally, and, specifically, to
Rick Cotton, President and Managing Director of CNBC Europe, made the opening Keynote Speech at
the AIB Global Media Business Conference. Here is the text of his address - which raises interesting
questions about the validity of audience ratings for pan-continental broadcasters.