Feedback

1. A few random observations, mostly about TV.

   I did find the comments about sports “not being big enough to be on Sky” to be interesting, because the British TV market is an aberration. Much of the biggest sport (Premier League football, and test cricket to an extent too) is not on free to air TV, because Sky is able to bid more that any other channel. This is not what happens in Australia, the US, or a lot of other markets. In those markets, free to air television is dominated by private, advertising supported networks, who are able to outbid the pay operators for big events. (Sometimes they are helped by government regulation in this). The pay networks tend to show more obscure events and lots of games for people who want to watch them. (If there are eight baseball games on at once, the one or two biggest might be on free TV, but the remainder will be on pay TV). Test cricket has always been on free TV in Australia. Australian Rules football and rugby league has always been on free TV in Australia. Baseball and American football has always been on free TV in the US.

   What Britain lacks is rich and powerful private free to air TV networks. This is because the BBC is dominant, and for a long time there was only one private network (ITV) that was prevented from becoming rich by weird ownership regulations and having its programming set by a government bureaucracy. Sporting events that were shown on free TV were often divvied up between ITV and the BBC by government committees rather than competitive bidding. The second advertising supported television network (Four) was and is still owned by the government and actually had a cap on how much revenue it was allowed to generate. Privately owned free to air television networks that could operate more or less however they wanted did not come into being until about a decade ago, and by that time there was too much competition for them to become powerful players. Thus you have ITV and Channel Five, both of who are weak and poor, whereas the equivalent channels in Australia and the US are strong and rich. The only player that is strong and rich is Sky, and this has led to top sport being on subscription led pay channels rather than advertising led free channels as in most other places. (The IPL is advertising led, obviously).

   Kerry Packer was never really a newspaper man.  His father Frank was, but the newspapers (most notably the Sydney Daily Telegraph) were sold to Rupert Murdoch before Kerry inherited the empire. (The Packer family still owns a large number of mass circulation magazines, though). Frank Packer had also persuaded the government to give him the licence for Australia’s first television station in the 1950s, and the network that was built from this was Kerry’s principal asset. Private, advertising funded television networks have always been dominant in Australia, and government networks have never had more than about 15% of the audience.

   Cricket was only semi-professional in Australia in the early 1970s. Even international players had to have other jobs outside cricket to pay the bills, and domestic cricket barely paid anything. (The equivalent of a county signing you to a contract and paying you a regular wage did not exist at all - players received small match fees and that was all). Cricket was televised by the ABC, government owned, and which paid very little to the cricketing authorities.

   Kerry Packer had a lot of television airtime he needed to fill in the summer, and he realised that cricket was great for commercial television because of all the breaks in play, in particular that there was room for a 30 second advertisement at the end of each over every 4 minutes or so. (Australian cricket had used 8 ball overs up until that point. This was brought into line with the six ball overs used in England to allow more commercial breaks). Thus World Series Cricket occurred. Packer was willing to innovate, which gave us more one day cricket, white balls, lights, coloured clothes, etc. When the cricketing authorities surrendered to Packer two years later, the official game in Australia turned into what Packer had invented.

   I think the “lots of summer airtime to fill” factor relates to Sky showing English cricket to an extent, too. Sky Sports are essentially football channels. Other sports are not treated with great respect, and in a clash between any other sport and even fairly obscure football matches, the football always wins. However, in the summer when there is no football on, cricket is a good thing to fill the channels with. One reason why the IPL is less attractive to Sky is that it clashes with the football season, and this is the time when Sky does not have a lot of airtime to fill. Another thing is simply that nobody appreciated that there would be a substantial audience for the IPL in England. The tournament got given to ITV4 for not much money because nobody else was interested. As it happened, lots of people were interested (I wouldn’t have picked Patrick) and they have done very well out of it. It might well be that in a year or two it does move to a slightly less obscure channel.

   Posted by Michael Jennings on 16 June 2011 at 01:20pm
   
   

2. “Privately owned free to air television networks that could operate more or less however they wanted did not come into being until about a decade ago, and by that time there was too much competition for them to become powerful players. “

   This is the bit I don’t get.  I tend to think that no matter what the initial conditions might be if the subsequent conditions are the same then you’ll get convergence.

   Or to put it another way, if ITV is operating under more or less the same rules as Kerry Packer then over time one will do about as well as the other.

   But this doesn’t seem to be happening.  ITV seems to be in constant trouble.

   Posted by Patrick Crozier on 16 June 2011 at 08:50pm
   
   

3. One can make the observation that these industries are capital intensive, viewers change their viewing patterns slowly and breaking down the status quo is a slow process. And you have a vicious circle. Sky makes huge amounts of money from football, and with those huge amounts of money it bids for the rights, and makes huge amounts more money. A competitor has to raise the capital somewhere, which is not necessarily impossible but is easier if you simply have the money in the bank.

   The Australian and British markets still don’t resemble one another very much, and neither is free. The BBC still takes a huge portion of the British market, but the private channels that exist are not protected from competition. (There are an enormous number of free channels on Freeview and other platforms that sell advertising). The the advertising supported sector accounts for a smaller portion of viewing, and is fragmented.

   There is nothing like the BBC’s position in Australia,and the private commercial networks are protected from competition. (There are no other free to air advertising supported channels - the government has not licensed any, after intense lobbying from the existing networks). A freer market might give you something in between. I think the US is a freer market, actually, and the result there seems to resemble Australia possibly more than the UK.

   Posted by Michael Jennings on 18 June 2011 at 04:11pm