Digital, Interactive and Web TV

Controversy 2000 (May-December)

• December 2000: Government clears the way for single ITV company.
  • On 12 December the Government issued it long awaited White Paper (i.e. proposal for legislation) on the future of regional television. The paper supports a single independent television (ITV) company able to compete on the world stage. Specifically the paper proposes removing the rule that no one ITV company can have more than 15% of audience share. However, there would still be a need to comply with Fair Trading Legislation (i.e. there could be no monopoly in TV advertising) and there were no proposals concerning limits on cross-media ownership but comments were welcome. The paper also proposes a new regulatory and complaints body for ITV.
  • The BBC seemed to have come off lightly in the White Paper. Unexpectedly there was no proposal to reduce the powers of the BBC Governors (its effective Board), particularly in the area of complaints handling excepting viewers would be able to appeal to Ofcom. However, the Government will review the remit of Channel 4 that is also has a public service duty. All current free-to-air channels will have to be available on all platforms.
  • A new regulatory body, Ofcom, will combine media and telecommunications. The government said the paper was a "communications revolution" but many in the industry disagreed. Legislation is expected to be placed before the 2001-2 session of Parliament but an election could change the plans. And this indeed did happen and no legislation is expected until 2003.
• October 2000: BBC slips over intellectual property rights for linked web sites.
  • Many BBC programmes are produced by independent programmer makers. Many of these companies have set up web sites to promote the programmes that they have produced but which of course are broadcast by the BBC. One example is Have I Got News for You and the HIGNFY web site both produced by the company Hat Trick. Hat Trick asked the BBC to agree to reciprocal web links but the BBC declined saying it was against policy to promote commercial companies. However the BBC changed its mind when (for some unpublished reason) it needed Hat Trick's cooperation to move the programme from BBC2 to BBC1. Other production companies who had been battling against the BBC for similar concessions, and getting nowhere, then called foul!

• August 2000: BBC TV shake-up. Arts programmes to move to digital channel.

  • Greg Dyke, the new Director General of the BBC, plans a major shake-up. He sees BBC1 becoming a general entertainment channel, BBC2 for more serious programmes such as documentaries and political analysis, BBC Choice (a digital channel) becoming a youth channel as BBC3, and the other digital channel, BBC Knowledge becoming an arts and education channel as BBC4. In August 2000 the autumn programme schedules were announced and clearly showed this strategy. By 2003, Dyke promised an extra £480m, a 30% real increase. He also announced that the main evening news would move to 10 pm (see controversy re ITV moving their main news from 10 pm!).
  • Critics, including government ministers, were concerned that arts were being marginalised and that BBC1 was dumbing down. Channel 4 also complained that public money (i.e. the licence fee) was being used to launch new channels in competition with the commercial services such as Channel 4's youth channel E4.
  • Dyke said the BBC's business coverage was "pretty inadequate" and demand action. Areas for change included extending the BBC2's Working Lunch programme, making each Money Programme cover a single issue in-depth and making news programmes cover financial stories, especially ones covering the new economy, that may impact directly or indirectly on the lives of viewers. There was however no reported mention of using interactive services.
  • In October 2000 the BBC began experiments with broadcasting similar programmes on BBC2, BBC4 and Radio 3 and monitoring viewer/listener preferences and their willingness to switch channels. [Comment: of course the outcome is dependent on whether viewers can receive digital programmes!]
• July 2000: Disagreement over TV horse racing broadcasting rights
  • Though not on the same scale as the football broadcasting rights bitter dispute there are many similarities. Horse racing is currently funded to the tune of £67m a year by a levy on betting. But as this is to be abolished, higher income from broadcasting rights is seen as a good substitution. Currently the rights belong to the BBC and Channel 4. The 12 leading race courses (known as the Super 12) wanted £250m for the TV rights for 10 years. This upset both the broadcasters and the other 47 smaller race courses and the broadcasters walked away from the negotiations.
  • Two rival schemes were then proposed. One by Arena Leisure involves a £320m joint venture company owned by the race courses, Channel 4 and the BBC plus an additional £80m marketing costs. Arena owns Arena One, an online betting service as well as 6 race-courses. The other scheme is headed by Peter Savill, chairman of the British Horseracing Board (BHB) involves the BHB and the Racecourse Association (RCA) each owning 50-50 in a company having all the non-terrestrial media rights. Some in the RCA saw this as a sell-out to the BHB.
  • Then in October 2000, Carlton Communications made a surprise £400m bid. Carlton already has expertise in sports broadcasting, for example it handles the Premier League football matches for Sky. Horse racing could be shown on ONdigital on a pay-per-view basis and viewers could place bets via internet and interactive TV. The BBC was considering joining with Carlton's bid rather than Arena's and later said it would join whichever was the winning bid.
  • Within days BSkyB came to the rescue of Arena Leisure and Channel 4. The 3 companies formed Go Racing with the intent of offering a fully integrated terrestrial, digital, pay-TV and interactive gaming. Carlton then increased its bid to £350m, plus an additional £50m marketing costs, and then later to £500m.
  • Then, within days of the bid closure, NTL joined Go Racing raising the bid to £750m (£320m in cash, £80m in marketing, and £350m predicted revenue sharing over 10 years). Go Racing by that time had signed up 40% of the race courses. Carlton again increased its bid, this time to a final £860m (£320m in cash, £50m in marketing, and £490m in predicted revenue sharing), with a Friday deadline which passed without acceptance. Apparently industry sources said the company felt it was being used by the RCA to simply boost the bidding of Go Racing, the RCA's favourite.
  • By April 2001, some 6 months later, no agreement between Go Racing and the RCA had been signed and a new bidder, GG-Media entered the fray. GG-Media intends to show the racing from smaller racecourse using Satellite Information Service's racing channel that is currently beamed to betting shops. GG-Media was backed by Fleming Family & Partners and Lord Hesketh, chairman of the Towcester racecourse. The delay was attributed to disagreement between the BHB and RCA over how the industry should share out the proceeds from the viewing rights. BSkyB, a member of Go Racing, threaten to withdraw from the consortium. However, agreement was reached between Go Racing and the RCA over the broadcasting rights but this still left the issue of pre-race data, information that was owned by the BHB.
  • June 2001: Some 2 years since the whole tendering process began, it became close to collapse when Go Racing said the BHB was "plainly ludicrous" in not being forthcoming how much the BHB wanted for pre-race data, simply saying it would be no more than the amount Go Racing was paying the racecourses for the broadcasting rights. The data was crucial for the betting service. Go Racing was forced to suspend dealing in it shares and if the deal falls through it will have to return the £85m it has raised from shareholders. BHB said it had made a mistake in choosing Go Racing over its rival Carlton. Also, it wanted more money for the data if it was to be used with other media such as mobile phones. Apparently, BHB was aggrieved at being left out of the Go Racing - RCA negotiations and then being asked to "rubber stamp" the deal including the fee for the data, an amount it thought was close to giving it away.
  • On18 June, after an all-night negotiating session, the parties broke up without agreement. The Office of Fair Trading (OFT) was already investigating BHB's pricing structure for racecard data, said it would also look at the collapse of the Go Racing deal. A few days later agreement looked possible when Go Racing suggested a joint 50-50 company with BHB to provide and exploit the data rights plus £20m to BHB for the rights to use its data on new technology, such as 3G mobile phones.
  • Just to add the finishing touch, so to speak, the BHB announced that it wishes to increase the levy paid by off-course betting shops from 1.5% to 2.5%. Naturally, the betting shops say this will drive away punters (slang for those gambling) who can easily stay at home and bet via interactive TV and telephone. Off-course betting is a £7bn business in the UK with £5bn of that coming from horseracing. One of those complaining was Ladbrokes. This is strange seeing as they would benefit via their new joint interactive TV betting company set up with BSkyB but then it takes time to change people's habits.
• July 2000: BBC announces job cuts of 1,100.
  • The Government has set the BBC a £1.1bn cost savings target by 2006 as part of an overall target to increase income spent on programmes and services to 85% from 76%. As a major step to achieving this, Greg Dyke, the new BBC Director General, announced that 1,100 jobs were to go, mainly in support services, saving £750m. Other saving were to come from additional commercial revenues (a new trading company BBC Technology was one such initiative), smarter buying, simpler processes and a review of its extensive property portfolio. Also, in a reverse of policy of John Birt, the former DG, the internal market is likely to be disbanded.
• June 2000: Premier League Football clubs divided over share-out of £2bn television rights.
  • With NTL biding £1.75bn for the broadcasting rights to Premier League Football from 2001, compared to the £670m for the previous period, one would have thought that there would be plenty to share out. Not so. Under the present scheme the 50% is shared equally by all clubs and the other 50% according to the number times they appear on television. Currently a top team typically gains £20m compared to £7.5m for a bottom rung team, a gap of £12.5m. If the same rules were to continue the gap is expected to widen to £30m. Small teams want new rules to avoid such discrepancies. However, the major football teams argue that it is they who bring in the major slice of the audience and they disserve the higher payouts. 15 of the 20 clubs need to approve any changes to the rules.There is the potential danger that the top 5 biggest teams may decide they have the strength to go it alone.
• June 2000: Selection rules for Premier League Football viewing rights announced as bidding closes.
  • In early June, days before the auction closes for the Premier League Football viewing rights, the selection rules are announced! Any winning bidder for the 66 live games is automatically withdrawn from bidding for the other licences. Winners must win by a clear 10% margin else the bidding is continued as a conventional auction on the day the bidding closes. Analysts estimate the bidding could reach £1bn or more, perhaps twice the £670m for the earlier rights.
  • On 7 June 2000 the winners were announced. BSkyB secured the rights to screen 66 live matches a year for 3 years with a bid of £1.1bn. NTL secured rights for 40 pay-per-view matches with a bid of £328m. With a bid of £183m, ITV beat the BBC's bid of £123m for the rights to screen football highlights. Therefore the BBC came away with nothing, adding further to its sporting woes, having already lost Formula 1 motor racing and Des Lynam, its top football commentator, to ITV. The BBC accused the Premier League of encouraging ITV to bid against the BBC in order to increase the level of bids. In response, the Premier League said that ITV had been in the bidding since the beginning. However, the next day the BBC announced that it had purchased from BSkyB the broadcasting rights to FA matches for £400m. This is over £300m more than the previous £96m deal.
  • Many analysts couldn't see how NTL's bid of £328m for 40 pay-per-view matches per year for 3 years was viable. At a £4 per match pay-to-view fee the company would need 900,000 takers, yet its total subscriber base is under 400,000. It was no surprise that in October 2000 NTL withdrew its bid. BSkyB could step in but this would raise concerns with the regulators as the company already has won the rights for 3 years to broadcast the matches live. The Premier League could themselves manage the media rights for pay-per-view.
  • At the end of January 2001, the Office of Fair Trading (OFT) announced it would investigate the BSkyB award. It seems the OFT was worried that BSkyB might also get the pay-per-view licence.
• May 2000: Dyke suggests BBC could be privatised!
  • The BBC's new Director General Greg Dyke, unlike his predecessor, believes in open management and discussion about the future. Being funded via a national licensing fee has both advantages and disadvantages. The advantage is a fixed guaranteed income set for some years in the future but the disadvantages can be many. The BBC needs to win the rating wars with the commercial channels if it is to maintain favour with the Government who set the fee level. Second it needs to avoid charges of unfair competition if it tries to use its public service position to subsidise and cross promote income generating commercial ventures. Finally a license fee is unlikely to provide sufficient funds to fully invest in new digital technologies and services. Some of the options being "considered" for the future include advertising, becoming a limited company with all viewers (i.e. the vast majority of the population) being given shares, and becoming a mutual organisation. The future looks interesting if not politically explosive!

Back to Controversy January-April

JS

External Resources

1. See the Controversy Content page for a list of resources prior to 30 July 2000
2. Anon, 2000, EC hitch for $20bn music deal, Sunday Business, 10 September 2000.
3. Cope, Neil, 2000, EMI aims to revive Time Warner merger, The Independent, 6 October 2000.
4. Goodman, Matthew, 2000, New talks on Net and TV racing, Sunday Business, 20 July 2000.
5. Harrison, Michael, 2001, Go Racing warns TV rights deal is in danger, The Independent, 14 June 2001.
6. Lister, David, 2000, BBC digital channel 'to be home of arts on TV', The Independent, 18 August 2000.
7. Lister, David, 2000, BBC programme cash to rise by 30 per cent [plus news on channels revamp], The Independent, 26 August 2000.
8. Lister, David, 2000, BBC experiment puts arts shows on digital channel, The Independent, 23 October 2000.
9. Lister, David, & Moyes, Jojo, 2000, Ministers clear way for ITV giants to merge, The Independent, 13 December 2000.
10. Lister, David, & Moyes, Jojo, 2000, Smith lets BBC off the hook in broadcast shake-up, The Independent, 13 December 2000.
11. McIntosh, Bill, 2000, Clubs 'may take charge of football broadcasts', The Independent, 20 October 2000.
12. Morrison, James, 2000, 'Crown jewels' of sport must be free for all to watch on television, says EU, The Independent, 22 August 2000.
13. Power, Ben, 2000, BSkyB in joint bid to stop Carlton winning horeseracing media rights, The Independent, 13 October 2000.
14. Rees, John, 2000, Dyke orders BBC to tune into business, Sunday Business, 16 July 2000.
15. Robins, Jane, 2000, BBC backs down in battle over website, The Independent, 12 October 2000.
16. Shah, Saeed, 2000, Bertelsmann approaches EMI for music merger discussion, The Independent, 11 November 2000
17. Shah, Saeed, 2001, Go Racing TV rights deal hits the rocks, The Independent, 15 June 2001.
18. Shah, Saeed, 2001, Go Racing defeated by media rights turf wars, The Independent, 19 June 2001.
19. Shah, Saeed, 2001, Go Racing offers last-ditch deal for TV [should be data?] rights, The Independent, 21 June 2001.
20. Thackery, Rachelle, & McIntosh, Bill, 2000, Carlton makes late £400m bid for racing rights, The Independent, 9 October 2000.
21. Warner, J, 2001, Off course betting, The Independent, 31 August 2001.
22. See the full list of resources for this web site for other related resources.

Players: [Service (Delivery) Providers] [Content Providers] [Value Added Service Providers] [Transmission Companies]
[Hardware & Software Suppliers] [Regulatory & Standards Bodies] [Controversy]

[Digital TV Content] [Introduction] [Summary] [No. Customers] [US Scene] [European Scene] [Scene Elsewhere]
[Delivery Channels] [Players] [H/w & S/w] [EPGs] [Existing Services] [New Services] [Audience] [Disadvantages]
[Advantages] [Sceptics] [Advertising] [Financial Services]

[Mediums Overview] [SIM Report Mediums] [More Recent Developments] [Which to Use?] [Other Technologies]

[SIM Overview] [One to One Marketing] [Mass Customisation] [Interactive Mediums] [STEP Analysis]
 [SIM Executive Summary] [SIM Report] [SIM Project] [SIM Framework] [SIM Methodology] [SIM Illustrations] [SIM Links]

[Key Information & Resources] [Guest Contributions] [List of Support Topics] [What's On]

[Contact] [Company] [Disclaimer] [Privacy] [Legal] [Copyright Fair Use] [Feedback] [Publications]
[Publicity] [Why Ads?] [What's New] [What's Coming] [Technical Info]
 [Home]   [Site Search Form]     [For a Full list of Contents see the Site Map]