The Digital Switch

The British television industry has been hit hard by the global economic downturn and the companies are looking at cutbacks and job losses, how will this affect the productions being made?

The Global economic downturn has effected most industries and the television industry is no exception, the commercial television are having to reduce costs, whilst still compete for viewers against the BBC and satellite companies, this means that budget cuts and job cuts are needed to mean the quality of the programs are high and attract large enough audiences to tempt companies to advertise again.

ITV is the biggest producer of television drama in the UK but in 2008 ‘the broadcaster’s previously impregnable £1 billion-a-year programmers budget was cut by £65m a year – equivalent to about 100 hours of 9pm drama’ (Mingley, N. 2008), cancelling the television programs that cost too much and keeping the ones that bring in the largest viewing figures, ‘big-budget costume dramas are a “luxury ITV cannot afford”, its director of drama has said, adding that all drama productions will have to cut their costs if the genre is to survive on the commercial broadcaster’ (Holmwood. L. 2008), this is a problem though because its main rival the BBC, doesn’t have to worry about interesting advertisers and just concentrate on the productions they make and also because the BBC don’t have to worry about pleasing the advertisers, they can do something different with their productions instead of using the same format, which is what the commercial companies don’t have the luxury of because the chance of the program failing would cause a loss in revenue, all they can do instead is copy the BBC and try and get a success, this means that only the BBC is creating new inactive programming in the UK, which isn’t good in expanding the industry and creating original productions and breath new life into the television arts.

The drop in revenue for Channel Four and Five has become so bad that merger talks have been considered between the two companies, this would bring a new company with more revenue and influence, but is sure to bring job losses and less competition in the industry, the two companies share allot of the same characteristics and because they both use external producers instead of making their programming in house, they need to cut costs in other areas, so the idea that the merger would bring more advertisers, would be what the companies want, keeping the two as a growing concern in the UK entertainment industry, but Caitlin Fitzsimmons argues that a merger would be

harmful to the British television industry, because ‘Channel 4 would be forced to pull back from public service broadcasting and become more overtly commercial unless a solution was found to what his organization claims will be a £150m-a-year funding gap from 2012’.(Fitzsimmons. C, 2009), and the public service broadcasting area would suffer with the loss of revenue, forcing the companies to have to look for more competitive programming. This has wider appeal than public service programming and like ITV they would have to copy the BBC, using the formats that work, this is sure to be damaging to the industry but also to society because this is sure to lead to the loss of local drama programming and outlets for British pride, As Anthony Smith posits, ‘Of all collective identities which human beings share today, national identity is perhaps the most fundamental and inclusive…. other types of collective identify – class, gender, race, religion- may overlap or combine with national identity but they rarely succeed in undermining its hold’ (1991:143) this is especially true in with the television dramas, which represent different aspects of society, so cut backs would be detrimental to the parts of society that would become excluded, The process of the cutting back on local programming has also stated, with the ITV closing its Yorkshire studios and moving other regional programming to the main studios in London, Birmingham & Manchester, ‘Up to 500 jobs could be cut from ITV regional operations, the National Union of Journalists said today – before adding that Ofcom was “failing” as a regulator by endorsing the broadcaster’s cost-cutting plans’.(Sweeny. M, 2008) Still producing old favorites but not taking chances on new ideas, developing regional drama and investing in the industry as a whole.

The economic downturn isn’t completely bad for the television industries though, because the lack of money and job losses has led to the television and cinema industries gaining higher viewing figures and this should give hope that television drama can still bring in large audiences, creating a form of escapism for people experiencing monetary worries, this is likely to bring back advertisers and give much needed funding to the companies that need them, not just the main broadcasters but also the small production companies that rely on the contracts from the main broadcasters, so the turbulent times effect more than just the main broadcasters.
It’s clear that the industry needs to change to survive, but cut back in productions, job losses and mergers don’t seems to be good for television drama, because they stagnate the industry and force the companies to re-use the same productions, instead of developing new ideas and expanding the regional productions, that promote the British identity.

The problem facing the commercial television companies isn’t the same reason the BBC is cutting back on drama, they are still producing large amounts of drama and selling their formats abroad, but without a serious competitor they don’t are cutting back because they have nothing to compete against, so they put their money into cheaper programming and other areas such as films, because films bring in revenue which drama doesn’t because it don’t bring money into the company, just use it, this is the same for channel four which is partially funded by the license fee, they have used funding, that was used for drama in previous years and put it into films instead, which brings in higher amounts of revenue than television productions because they don’t have to attract as many advertisers and they can sell the films abroad with more success, than dramas because the dramas lower budgets and regional feel make it hard to sell aboard, especially because channel 4 doesn’t have the same history and fame abroad as the BBC, this is one of the arguments for why ITV proposes merger with Channel 4 and Channel Five to create advertising-funded operation to counter the BBC and BSkyB, and sale of assets, including Friends Reunited, SDN, cutbacks in studios, programmers budget and payments to stars, to try and raise the profile of the company abroad, but maybe this would just lead to more cut backs and job losses across the UK, with three separate companies joining together and trying negotiate a way through the economic downturn, but the damage to the original drama might be too much by the time the economy is starting to look better.

This might come back to haunt the companies in the future though because with the loss of original drama productions, large amounts of the viewers that watch these productions, would watch another channel instead, that is still producing drama, this would most likely be the BBC and with the audience moving to another channel, the commercial companies will find it hard to attract the advertisers once again, this will damage the commercial companies further, while the BBC will be in a much more healthy state in the run up to the digital switch-over, where the main terrestrial channels lose their advantage over the ones on digital TV and with this advantage lost the audience has allot more choice and with lower regional programming and drama productions, the audience will move to other channels and move away from the original terrestrial channels, to ones that show drama and productions that attract audiences, which will then attract the advertisers, further damaging the companies that lost their audience share.

The digital switch might cause the opposite and cause the companies to start producing more dramas to try and compete more in the larger market than before, this might end the stagnation in the market because the companies will have allot more channels to compete against, this is another reason the channels want to merge, so than they can be established in the market before the switch-over, so to have people trust the organization and have their finances sorted before they switch off the analogue signal.

The main problem in the UK television industry today is the convergence of the industry and the divergence in the near future, it means that the industry can’t settle and the productions suffer, either they are cut back due to the lack of money in the system and not being able to make original productions, the convergence of the companies might secure the continuance of the three channels but with the end of terrestrial television, it will diverge into a large amount of channels, that will all be looking for the same thing, large audiences and advertising revenue, maybe leading to more mergers to compete against the BBC which doesn’t need to worry about the same things as the commercial channels.

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