“I wouldn’t be surprised if the BBC or Channel 4 disappeared,” says one of the thousands of TV staff at risk of redundancy, as British broadcasters face what has rapidly become a fight for survival against US digital rivals.
“My generation grew up with Netflix and YouTube … Honestly, I feel like it is a losing battle.”
Over the course of the summer the crisis facing the UK’s biggest public service broadcasters (PSBs) – the BBC, Channel 4 and ITV – has reached fever pitch amid announcements of deep job cuts and talk of business models unfit to face up to the deep-pocketed streamers.
Earlier this month, Priya Dogra, Channel 4’s new chief executive, announced that 28% of its staff are to be cut, the biggest round of redundancies in the broadcaster’s 43-year history, amid a slump in advertising and increasingly stretched finances.
Meanwhile the BBC’s new director general, Matt Brittin, a former top Google executive, is pushing through up to 2,000 job cuts as he attempts to negotiate a dramatic overhaul of its licence fee funding model with the government to secure its long-term future.
And four years after ITV announced an £800m-plus plan to create a streaming “national champion” to take on Netflix, Disney+ and Amazon, chief executive Carolyn McCall has raised the white flag, arguing that a cut-price £1.6bn sale of its broadcasting arm to Sky is the only way to survive.
“What is happening is not unique to the UK, it is all across Europe and beyond, it relates to ‘local’ broadcasting operations,” says Sir Peter Bazalgette, the former ITV chair who has also sat on the board of the culture department. “I cannot see a future Europe where there are four or five domestic broadcasters in each country with viable financial models.”
US tech companies such as YouTube owner Google, Facebook and Instagram parent Meta, and streamers such as Netflix, have deployed their billions in funding to develop their businesses into viewing, subscription and advertising juggernauts.
The Silicon Valley behemoths are forecast to take almost $50bn (£38bn) in UK ad revenues by 2028 – two-thirds of the $74bn total – at which point 90% of all ad spend will be digital, according to eMarketer.
That expansion leaves a shrinking pool of funding for commercial PSBs, which have struggled to untether from their reliance on traditional TV advertising – a market that is forecast by WPP Media to shrink by 2031 to just £2.4bn, 60% down on 2015 levels.
Meanwhile, the predominantly publicly funded BBC’s licence fee income has fallen by 38% in real terms since 2010, owing to a combination of freezes or below-inflation increases to the licence fee and increasing non-payment.
The BBC has lost 2.7 million payers of the £180 annual charge since the beginning of the decade. Last year it lost a further 539,000, taking the total who still contribute to 23.3 mllion, the lowest level since 1999.
Brittin, now spearheading negotiations with the government over the terms of the renewal of the BBC’s royal charter next year, has called the model a “busted flush” and “insufficient to sustain a universal public service”.
The increasingly financially stretched PSBs face competitors with huge financial resources for programme-making. Netflix alone has a content budget of $20bn this year, and enjoys a larger share of UK TV and streaming viewing than ITV, Sky, Channel 4 or Channel 5, while YouTube is close to overtaking the BBC to become the most popular platform in Britain on the same metric.
“If you think about the shrinking money and budgets I feel we are heading toward a two-tier system,” says a senior executive at a leading TV production company. “It is great that the big US corporates like Netflix, Amazon and Disney have these mega-budgets and do produce great ‘British’ shows like Adolescence, Black Doves and Slow Horses but they are becoming in a class of their own.
“My fear is we end up with a system where the UK public service broadcasters will diminish to such an extent, while facing such big budgets wielded by rivals, they will become a bit like a cottage industry.”
The crisis in which Channel 4 finds itself has renewed talk of whether those who advocated privatisation to ensure its long-term survival may well have been right, or whether a tie-up with the BBC might build the scale needed to survive.
“Channel 4 has always punched above its weight and being a challenger is nothing new,” said a source at the broadcaster. “But it was never meant to operate in isolation – it was designed to be part of the creative ecosystem. So partnerships will be a defining feature of the new era. They’re a way for the channel to compete on reach and scale while maintaining its independence.”
The UK’s PSBs have a patchy record on collaboration, although notable successes include the development of Freeview, and have not been able to come together to map out a streaming future as viewing moves beyond linear TV.
Earlier this year, Carolyn McCall, the ITV chief executive, expressed her frustration that talks to create a British streaming champion comprising the original three PSBs had failed because “we all have such different business models”.
However, as the reality of the scale of the crisis facing the industry becomes ever more apparent, a new wave of collaboration is taking place – some say helped by a change of top executives.
Brittin has said the BBC is in talks to enable Channel 4 content to run with ads on the iPlayer, having told MPs that the commercially funded PSB looked “very subscale” given ITV and Sky are merging.
This week, Channel 4, which relies on advertising for 90% of its income, made a significant move to try to address this scale issue by poaching the £300m-plus contract to sell the TV and digital ads for Paramount UK properties including Channel 5, Nickelodeon and Comedy Central from Sky.
And although ITV, Channel 4 and Channel 5 now make a little over £1bn annually in revenues combined from their respective streaming services, which continue to grow at pace, it is not fast enough to bridge the gap from lost legacy TV revenues in the short term.
“Despite the attention that video sharing platforms receive, public service streaming is the untold success story of the year so far, outpacing viewing growth to YouTube and subscription video-on-demand services,” says the Channel 5 president, Reemah Sakaan. “Audiences and advertisers alike still want trusted, relevant and distinctly British content, and they are choosing our platforms as go-to destinations.”
The UK’s PSBs had realised as far back as 2009 that coming together was necessary to ultimately compete, but the British streaming platform, called Project Kangaroo, was blocked by the competition regulator. Three years later Netflix led the US expansion of the international streaming era to the UK.
The BBC’s Brittin has warned that the issue of scale is now more acute than ever saying UK broadcasters risk being “underweight” as global players dominate content creation and distribution to audiences.
“What is at stake? It is about the criticality of local content, and independent impartial news about our country,” Bazalgette says. “Content made for us, by us about us. There are some marvellous programmes [made by the global streamers] but that is not the same as an absolute commitment to sustained investment in local content.”
The quest for scale extends to working more with rivals, exemplified by the BBC’s recent deal to create bespoke content for YouTube to expand its reach with younger audiences. However, none of the UK’s PSBs have yet pushed collaboration as far as France’s TF1, which has made all its channels available on Netflix.
As the fight for the commercial survival of Britain’s biggest broadcasters continues, many of those affected by a brutal summer of restructuring remain unconvinced there is a bright future for the TV industry.
“I would say it is a watershed moment,” says one TV executive. “Our sector of the media industry has peaked, we are definitely in decline.
“If you are young enough your next job will most likely not be with another broadcaster. It is all about downsizing; it is where your skills and experience might fit into another industry. It is bleak, very bleak.”
