TV: ‘It’s carnage out there’

A high-profile panel of TV industry experts speaking at a Royal Television Society event in Reading Jan 21 heard Roger Stanwell, CEO of the International Association of Broadcasting Manufacturers (IABM) say that the current economic downturn was “significantly more severe than even our recent study suggested”.

The event took place amidst news that financial losses at Sony Corp were more severe than anticipated, and that Warner Bros would lay off 10% of its global workforce. One speaker referred to the current state of play in the industry as “carnage”.

The IABM, in an extensive report published last September, suggested that TV industry suppliers were likely to see their normal annual growth rates of 12.5%-15% fall to nearer 5% this year. “The situation is much worse than we predicted,” said Stanwell.

He was still confident that some overseas markets would experience growth, but forecast that there would inevitably be a shake-out, with – at best – mergers between some players, and some of his members going bust.

However, any merger usually requires a marriage broker in the shape of willing banks, venture capitalists or active debt markets. “None of these exist at the moment,” said Jonathan Dunn, media M&A director at Ernst & Young. “I am not saying that a good deal could not get done, but it is going to be tougher than ever to get finance.”

Jeff Henry, until a few weeks ago CEO at ITV Consumer, said the shake out would also affect UK and other international broadcasters. He predicted that there simply wasn’t enough advertising income about to fund hundreds of digital channels, with new media and online activity draining away the normal ad-revenues that commercial broadcasters needed. “They will either have to cut their cloth, or go under,” was his stark message.

However, there was consensus that when this current crisis ended – as it would – those still standing would be stronger. “There’s another potential benefit,” stressed Stanwell. “Hard times usually drives creativity, and technical innovation. I have no doubt there are people today who are being affected by the downturn yet will be inventing the very ideas that will help broadcasters save cash and improve their productivity. It’s what our members do.”