Time for optimism?

From publishing to advertising, a new report from PricewaterhouseCoopers shows there is cause to be optimistic about the UK’s media sector – and even the decline of magazines and newspapers is expected to ease off between now and 2017. Raymond Snoddy takes a look at the figures and notes that confidence begets confidence – and in the end becomes self-fulfilling…

Is the worst over for the UK’s publishing sector? Surely not? There have already been so many false dawns and so many unresolved issues buried deep in their funding models.

Yet there is more than a crumb of comfort in PricewaterhouseCoopers’ latest look at media and entertainment spending in the UK over the next four years.

There is of course no sign of real growth for newspapers and magazines – that would be too much to expect. But the encouraging sign is that rates of decline will really ease off between now and 2017.
It is almost enough to put up in lights – albeit red lights.

The annual fall in newspaper publishing will average a mere 0.5 per cent while business-to-business will drop by only 0.3 per cent.

Media spending on consumer magazines will fall by 1 per cent.

If the forecasts turn out to be close to reality then these are falls that almost amount to stability, or if not that, at least they sound like business challenges that can be managed. The news, relatively speaking, is not so bad.

Publishers do of course have to put the best shine on a report that overall predicts that spending on advertising communications and entertainment will grow by four per cent a year until 2017 to a total of £65.5 billion.

The pattern of overall growth in the sector comes amid signs that confidence is returning to the UK economy with citizens less fearful for their jobs and even the construction industry returning to growth.

For the Labour Party it could be the ultimate nightmare – the recession coming to an end just before the next General Election.

The PwC report is also optimistic about growth in UK advertising, predicting a compound rise of 4.4 per cent a year to £17 billion representing an increase of £3 billion over the period.

The ad world will obviously benefit from continuing growth of internet advertising which at 9.9 per cent a year shows no sign of abating. Such growth rates will maintain the UK’s position as the leading digital advertising market in Europe.

As Phil Stokes, head of UK entertainment and media at PwC puts it, digital technologies are now so pervasive that it is wrong for companies to think about having a digital strategy.

“Companies need a business strategy that’s fit for the digital age,” says Stokes in a verdict that few would dispute.

The increasing dominance of online is emphasised by the latest record figures from the US, which show a rise of nearly 16 per cent in the first quarter – up from $8.3 billion for the same quarter a year ago to $9.6 billion.

The PwC report depicts what is now the traditional hierarchy of media growth with publishing at the base and internet advertising at the tip.

Once again out-of-home advertising will perform well with annual growth of six per cent predicted ahead of a healthy 4.7 per cent growth for television advertising.

At the moment things are looking so good for ITV that the share price has now surpassed the 130p a share offered by Greg Dyke for the company in 2006.

ITV rather grandly turned down the offer as undervaluing the company, something that Dyke must still say occasional prayers of gratitude for. In 2009 ITV reached a record low of 23p.

The importance of individual reports from consultants, however distinguished, can be exaggerated but what they do help to do is set the tone.

Confidence begets confidence and in the end becomes self-fulfilling. We may have now reached that point.

More BBC woes

It will take more than improvements in the general economic outlook to increase the happiness levels at the BBC.

Another week – another inquiry – this time into the activities of Stuart Hall. We now have a retired High Court judge, Dame Linda Dobbs, reviewing his BBC career and reporting in to the other retired High Court judge, Dame Janet Smith. Dame Janet has already spoken to more than 600 witnesses into the life and times of Jimmy Savile.

The sexual allegations are in a class of their own but in conventional managerial terms the greatest embarrassments could come from the £100 million digital media fiasco.

The latest instalment involves revelations that Bill Garrett, former head of technology at the BBC’s programming division wrote to Lord Patten, the BBC chairman a year ago warning that the project was in serious trouble. There was also the suggestion that the National Audit Office may have been misled.

If Lord Patten did anything of substance as a result of the warning there is so far little evidence of it.
There have also been suggestions that £100 million will not be the end of the matter and that the total bill could eventually reach as much as £150 million.

Naturally the BBC will now face a Parliamentary inquiry into the loss of so much of the public’s money; a sum that could have funded many hours of top-level drama and protected the jobs of hundreds of journalists and broadcasters.

There is nothing unusual about large computer projects going astray in both the public and private sectors but the BBC insisted that the DMI project was central to the future of the Corporation.

Delivering digital versions of the entire BBC archive to the desktops of editors was going to massively increase efficiency and save money.

Instead tapes continue to be transferred laboriously and expensively in the old way and will presumably continue to do so for the foreseeable future.

PricewaterhouseCoopers – yes them again – who have been asked to carry out an inquiry, will have many interesting questions to ask.

They include:

• When Siemen’s involvement in the project came to an end and DMI was taken inside the BBC was it possible to have bought off-the-shelf software for between £1 million and £2 million?
• How well did former director-general Mark Thompson supervise the DMI project – after all he was DG throughout its life and clearly understood its importance?
• How well did Lord Patten and the BBC Trust acquit themselves once problems started to emerge?

Doubtless the PricewaterhouseCoopers inquiry, complete with the answers, will be published in its entirety.