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Broadcasters on FAANG: "They want us to be potato farmers"

29 Mar 2019  |  David Pidgeon 
Broadcasters on FAANG: "They want us to be potato farmers"

As new and sometimes uneasy relationships are forged between traditional TV broadcasters and the world's most powerful tech companies, the extent of those commercial partnerships have been revealed, with some experts warning the endgame can only deliver bad news.

Broadcasters are all forging partnerships with different elements of Facebook, Apple, Amazon, Netflix and Google (FAANG) - from selling them content, to using their platforms for distribution - yet the digital entrepreneur Matt Heiman (pictured top) has warned that the industry is "deluding" itself over the terms of the relationship.

"This is my own personal view, but [FAANG] want [broadcasters] to be potato farmers," he said at the 2019 Connected TV Summit.

"They want us to each have our own small allotment. You can pretend you're growing by owning three or more, but you're still just a potato farmer and the Kingdom can come and say 'that's my potato farm' and knock you out."

Continuing the analogy, Heiman, who sold his digital content business Diagonal View to Sky in 2017, said broadcasters, like potato-farming serfs, could build co-operatives to shift the power-balance, or better yet rebuild their own empire.

"But what [the tech giants want] is a lot of very small, very healthy potato farms that help feed their empire."

Despite the rather dire warning, broadcasters have still built often unexpected alliances with the new competition.

Sharing a stage with Heiman, ITV's head of digital entertainment, Janine Smith admitted the relationship with FAANG was "complicated", but also served strong commercial interests.

"We're not just the UK's largest commercial broadcaster - we're also a global production company, so different parts of the business have different wants, needs and opportunities from FAANG," she said. "That makes the position of ITV a difficult one."

For example, ITV as a broadcaster both competes with Netflix for viewers, but also sells the streaming service original content.

"The FAANG businesses want our budgets and audience, and on the ad sales side it's a particular threat - but we've diversified our business to mitigate against that and make the threat less impactful," said Smith.

Meanwhile, James Tatam, vice president of commercial, digital and operations at Channel 5, said FAANG had become a "very important part" of the wider Viacom-owned ecosystem.

"We compete with some of elements of FAANG, but err on the side of partnering," he said. "We're a very partner-centric organisation with lots of irons in the fire."

For example, Channel 5 works with Facebook on marketing, Amazon on distribution and Apple on app distribution, amongst others things.

"But we absolutely compete with Facebook and Google for advertising revenue - and that's something we share in common with the rest of the TV industry."

Tatam added that Channel 5 was not afraid of competition. "It's actually a good thing," he said, adding: "But no relationship is stable in this environment. We have to constantly test and re-evaluate how best to move the business forward and see what deals to pursue and which partnerships to seek."

However, TV broadcasters want a "level playing field" for that competition, with online companies held to the same standards as the highly regulated TV industry.

"There are different regulatory standards between online and broadcasting," Tatam said, "But progress is being made."

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