The genesis of the event, “Sale or scale”, lay in 21st
Century Fox boss James Murdoch’s comments at last year’s RTS Cambridge Convention
on the benefits of size: “Scale buys confidence to invest strategically and take risks, and supports the development of new technologies and innovation.”
Subsequently, a number of attempted takeovers – Fox’s bid for Sky, the sale of Fox to Disney and AT&T’s bid for Time Warner are just three – have given force to Murdoch’s words: that media companies are bulking up to hold off Apple, Amazon and Google.
Financial Times global media editor Matthew Garrahan, who chaired the RTS event, suggested that, for traditional media companies, this “deal frenzy” could be interpreted in one of two ways: “Have they lost their bottle or is it the only realistic response to the challenges posed by this new era?”
The huge tech companies dwarf TV’s traditional players, said Mathew Horsman, joint managing director of media consultants Mediatique. He explained: “Apple’s revenues are three times those of BT, Sky, Liberty Global, the BBC, ITV and Channel 4 put together.”
“Even Netflix is an absolute minnow compared to Apple, Amazon and Google,” he added.
The former COO of Sky and head of News International, Mike Darcey, agreed with James Murdoch on the need for scale in the modern media landscape, not least to mitigate risk. But he added that “vertical integration” – operating as both a media platform and a creator of content – was equally important.
"Scale isn’t what creates hits and tells stories – people do"
There was a consensus on the panel that smaller British broadcasters are finding it increasingly hard to compete against the US behemoths. Garrahan pointed out that Channel 4 “took the risk on Black Mirror”, only to see a bigger beast, Netflix, snatch the Charlie Brooker science fiction series from its hands.
“The broadcasters are under pressure, but it doesn’t mean that Channel 4 is out of the running,” said media journalist Kate Bulkley.
Not all parts of the UK broadcasting landscape, however, are under the cosh. “As a content creator,” said Tim Hincks, joint-CEO of the indie, Expectation Entertainment, “this is a genuinely exciting [time]”.
UK sports rights, particularly football, argue many media commentators, are ripe for plucking by the US tech giants – but it hasn’t happened yet. “There was so much coverage saying Amazon, Netflix and Google are going to bid for [Premier League rights] and you look at the results of the first bit of the tender and Sky and BT [won],” said Horsman.
Earlier this month, Sky and BT Sport paid just under £4.5bn for the five main packages of matches from 2019-22. “There are probably more targeted ways to try to grow the subscriptions of Amazon Prime than spending £5bn on football rights,” said Mike Darcey.
There are still two Premier League packages available, which will permit all 10 matches in a round of fixtures to be broadcast simultaneously, four times during a season. But, said Darcey, “They’re pretty poor packages.”
Nevertheless, the US tech giants are massing at the UK border. Apple’s signing of former Channel 4 and BBC exec Jay Hunt to run the creative side of its European video operation – and based in London – sends a clear message to broadcasters that it has serious ambitions here. “They’ve hired a really serious player in this territory,” said Tim Hincks.
“These guys have very deep pockets. Why did [Left Bank boss] Andy Harries do The Crown with Netflix? There was a huge cheque,” said Kate Bulkley.
Horsman agreed that while Apple, Amazon and Google have huge amounts of money to spend on programming, “I’m not so sure Netflix does have the sustainable cash funds”.
“The question is, do they have the business model. You can splash come cash for a while, but in the end, [because] you’ve got shareholders – it’s got to work,” said Mike Darcey.
“Do these new guys have a new model, which allows them systematically to spend more on content? I think the jury’s still out on that.”
“Ultimately, it’s not about scale. Scale isn’t what creates hits and tells stories – people do,” said Tim Hincks. But talent will look for “a home where they feel most comfortable” and where “they can get their idea in front of as many eyeballs as possible”.