There’s a lot of talk in the UK at the moment about the future of one of our public service broadcasters (PSBs). Channel 4 is a national channel set up in the 80s with a remit to present a culturally diverse view and to invest heavily in independent production.

Privatisation is one option being explored, with a line up of international channel and content groups — from Viacom to Discovery — touted as potential buyers.

The sale of publicly-owned assets has a bit of a chequered history in the UK, but politics aside, one of the main concerns being expressed about a shift to a private owner is the view that such a move will lead to a drop in the quality and innovative nature of its programming.

Channel 4 is supported by advertising and skews heavily towards a younger audience because of the nature of its content. That audience is increasingly moving online and looking to alternative means of viewing content. While the launch of a family of secondary channels by Channel 4 and the other UK broadcasters has so far allowed them to retain market share, that is starting to change, with Channel 4 suffering a greater decline in reach and audience share than the other UK PSBs.

Fragmentation necessitates diversification. Look at any international channel or content business over the last few years and you will have seen free TV groups buying into pay TV and pay TV groups buying into free TV. Now everyone also wants in on the move online. By joining in the multichannel fragmentation channel owners have been able, if not to ‘beat them’, at least to keep up.

The rapid changes in TV delivery and viewing behaviour of the past few years, however, has led not only to an acceleration of fragmentation, but to a new variable: fragmentation with content disaggregation. That’s been driven by SVoD players like Netflix, and has brought extra competition to the channel business.

At the same time, technological barriers that previously slowed down the globalisation of channel brands have all but disappeared—literally into the cloud.

This cycle has led to an interesting pattern in the content industry. Where once ‘premium’ was defined by blockbuster movies and sport, high quality cinematic drama, has emerged as a new battleground. And innovative documentary and comedy is performing a supporting role.

If technological barriers to globalisation have all but disappeared, rights issues have not. Geographic licensing means Netflix had no choice but to move into its own production. And because of the fragmentation and competition we’ve been talking about, that production needs to be quality production.

In a competitive market, quality begets quality. Pay TV operators like Sky in the UK and Canal Plus in France are ramping up original production investment. They are not doing it to fulfill a public service ideal, but because they have to in order to remain competitive in today’s market.

There’s one final part of the cycle: the cost of producing high quality drama means it needs to work on a global basis, so the investment can be recouped through international programme sales. Co-production across geographic divides is one way to help that process. Look at recent co-production successes like Canal Plus/Sky’s The Last Panthers (MIPCOM 2015’s World Premiere Screening) or RTL/AMC German-language break-out hit Deutschland 83.

So, perhaps the very market changes that have brought the future sustainability of public service broadcasting into question, may ultimately have created a safeguard against one of the pitfalls of placing a channel business at the mercy of shareholder return. Whatever cuts a content business decides to make, quality can no longer be one of them.
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Top photo: The Last Panthers, © Sky TV

About Author

Guy Bisson is Research Director of Ampere Analysis, a new breed of analyst firm deploying multiple research methodologies to forecast and quantify the global TV business. Based in London, Ampere provides comprehensive, worldwide market and industry data, consumer research and detailed content analytics.

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