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TV Battleground: Freeview Wins (For Now) GREG DYKE

Greg Dyke former BBC Director General“Britain is now left in the distinctly strange position whereby the only large terrestrial player also in the pay business is the BBC, which owns half of UKTV and is now making good money from it. And, of course, the BBC doesn't take advertising.”

 - Greg Dyke, former Director General BBC

Broadcast television is something of a battle ground at the moment, with a lot of changes under way that are muddying the waters for those of us who are just viewers. These are strategic decisions happening now that could affect all our television futures. Former Director General of the BBC Greg Dyke has been observing the situation and looking into his crystal ball to study the knock-on effect these changes will bring to the rest of the UK TV broadcasting industry......

“Channel 4's decision to turn its pay film channel FilmFour into a free-to-air channel, funded only by advertising revenue, is a particularly interesting move and has ramifications for a range of different players,” Dyke says.

Netribution reported this change here:

Film Four has 400,000 subscribers forking out £7 a month to receive the channel and has had them for some years back. Channel 4's chief Andy Duncan must be hoping he can up the numbers to a bigger chunk of the 20 million who can receive Freeview and so get a better return from TV advertising alongside the movies.

According to Dyke, this will affect the nature of the films that will be available to viewers.

“The output of FilmFour will change. It will inevitably become more populist - just as the rest of Channel 4's output has become more populist in recent years - with many more commercial movies on offer.” Dyke says, but there are further changes as well.”


“The move also means that Channel 4 is now completely out of the pay television business, in common with the other two British commercial terrestrial players, ITV and Five. This is an odd position for British television to find itself in and it certainly bucks the international trend: only last month figures were published to show that, for the first time ever, in 2005 total pay TV revenues in Europe were higher than total advertising revenues.”

This bucks the international trend, because most large commercial media companies worldwide with a stake in free-to-air television, also have a stake in pay TV. So why are British  broadcasters  going the other way?


Five was never a pay channel and ITV ditched pay television in 2002 when ITV Digital went bust and doesn't look like stepping back in that diresction. So Channel 4 was the sole terrestrial commercial player in the UK in the pay business, until now. Until Andy Duncan became chief executive.

Duncan, came from the BBC where he was director of marketing. Dyke says “He was clearly enamoured of free-to-air television.”

“As one of the three or four people at the BBC most responsible for the creation and launch of Freeview, he watched its incredible growth and clearly decided that that was where Channel 4's future lay,” Dyke surmises.


First Duncan moved E4 out of the pay arena to make it free-to-air, and FilmFour is now to follow, which leaves the BBC in a very unusual position, according to Dyke's analysis.

“Britain is now left in the distinctly strange position whereby the only large terrestrial player also in the pay business is the BBC, which owns half of UKTV and is now making good money from it. And, of course, the BBC doesn't take advertising.”

Television advertising revenues in Britain are growing relatively slowly but pay revenues are expanding faster, so this is all difficult to figure out. Dyke explains his thinking on the idea.


“On the one hand, Duncan is saying that Channel 4 can't rely on growing advertising revenue for ever and should have some public funding, but on the other he is walking away from the fastest growing revenue stream in British television - pay TV. He's clearly decided that, given Channel 4's current success, it can grab a bigger share of the advertising cake.”

So the shift has clearly been strategic. How does the former DG assess who will be the winners and who won't be?


“The losers, as a result of Channel 4's decision, will be Sky and the cable companies. Their basic pay proposition will appear far less attractive and their biggest rival, Freeview, looks very tempting.  Why take Sky and the cable companies' basic services, which you have to pay for, when you can have Freeview for nothing?”

But it doesn't end there in this dog eat dog world. Freeview, almost in th sense of a TV “brand”, like “satellite” or “cable” will become more attractive and as far as Dyke is concerned, ultimately, this is the big prize....


“What has really boosted Freeview is that Channel 4 will be heavily promoting E4 and FilmFour on its main channel, encouraging people to take Freeview. When you add to this the BBC promotions for their free-to-air channels on Freeview and ITV1's promotions for ITVs 2,3,and 4 - also all available on Freeview - suddenly things look very rosy for free-to-air digital television. And Five will be next with its new free-to-air channel.”

If you believe Dyke, Freeview wins then.
So, Only one huge question remains, as yet, unanswered.

Is there enough advertising revenue to pay for all these channels? Because there's little sign at the moment of the advertising cake expanding.