An ever-greater diversity of outlets and fragmentation of audiences, combined with the current recession, is putting almost unprecedented pressure on the media industry. But those changes bring opportunities for those brave and agile enough to grasp them.
The Canaccord Adams Media Magnate Awards, co-sponsored by Business XL and hosted by bubbly Big Brother presenter Davina McCall, celebrated some of those who have done just that.
Rob Woodward, CEO of STV Group, won the award for CEO/Entrepreneur of the Year for restoring the fortunes of the Scottish broadcaster when it had become an incoherent jumble of assets, mired in debt.
STV’s key shareholders brought in Woodward, formerly commercial director of Channel 4, in early 2007 to lead a turnaround. ‘I made a traditional 100-day plan and decided what needed to be done,’ he recalls.
To cut a crippling £192 million debt burden, he sold non-core assets, such as Virgin Radio and the company’s outdoor advertising division and raised £92 million in a rights issue in December 2007, when such things could still be done – ‘timing is everything’, says Woodward. Moreover, he renegotiated STV’s banking arrangements, brought in some key senior people from outside the company, including content producer Alan Clements and Alistair Brown, who was general manager at scotsman.com, and set about making the Scottish TV business, maker of the long-running Taggart detective series, a core activity again.
Woodward says STV has rebranded its TV content ‘with a more contemporary feel’. This, though not the greatest money-spinner, provides ‘our contact with the Scottish audience’, from which he hopes to build STV’s ‘ventures’ division as the growth engine of the company. Last year, STV launched a new video player and online recruitment service and its website is, says Woodward, ‘bang on target’, with nearly a million unique users every month.
‘We may be a 52-year-old company, but we have a start-up mentality’, he declares proudly. Last year, STV, which had repaid £30 million to shareholders, increased pre-tax profits threefold to £12 million despite an eight per cent drop in turnover.
Woodward gave himself three years to turn STV into the company he wanted it to be. Events, however, have required him to modify his plans: ‘I now say three years plus the recession.’
Competing in a new era
David Abrahams, chief executive officer of UKTV, named Broadcaster of the Year, is another energetic rebrander. He is clear that his policy of taking channels with generic names, such as UK Drama and UK History, and giving them more distinctive monikers such as ‘Alibi’ or ‘Yesterday’, is paying off with the public.
‘We may be a 52- year-old company, but we have a start-up mentality’
Abrahams, who joined UKTV from overseeing content investment strategy at Discovery Networks USA, says the company, a 50-50 joint venture between BBC Worldwide and Virgin Media with ten channels of UK-made programmes, has conducted extensive research to come up with ‘evocative, but clearly branded’ channel names. He insists this is crucial to winning and keeping consumers as they adapt to technical change and an ‘on-demand future’. UKTV obtains most of its content from the BBC, though ‘we are now doing more ourselves’ and, following the ‘overnight success’ of the rebranding of UKTV G2 as Dave, plans to relaunch UK TV Food.
‘Rebranding is not an end in itself’, explains Abrahams, ‘but it is a preparation for competing in a multi-platform era’. Looking ahead, he foresees a period of ‘painful disruption’, but argues UKTV is already ‘looking across the valley to the next era of audio-visual media accessible over a variety of different technologies’.
Not that looking backwards is always bad. UKTV’s recent relaunch of sci-fi spoof Red Dwarf attracted 2.6 million viewers, ‘the highest rating in multi-channel history’, and UKTV Gold will soon launch a show about the making of comedy series Fawlty Towers.
UKTV, which draws revenue from subscriptions and advertising, has delivered audience growth and sales of more than £200 million a year. ‘We are profitable to a considerable extent,’ says Abrahams coyly, pointing out that robust viewing figures enable the company to ‘negotiate a better share of the advertising pie’.
Another at the forefront of the digital revolution is Anthony Rose, who launched iPlayer, the BBC’s video-on-demand service enabling UK viewers to watch programmes online seven days after their broadcast, which won the Groundbreaking Media First Award. Having overcome initial scepticism and irksome teething troubles, the iPlayer now accounts for seven per cent of the UK’s total online traffic and took 20 per cent during the Beijing Olympics.
Rose, who left the music sharing website Kazaa in 2007 to become the BBC’s head of digital media technology, can enjoy the iPlayer’s ‘fantastic’ success to date with 6.5 million people a week visiting its website and 13 awards under its belt. He cites forecasts ranging from a ten to 60 per cent share for the iPlayer within the next five years. ‘We are exploring new ways of driving traffic from a linear to an online proposition,’ he explains.
The iPlayer team is covering new ground. ‘We are looking to define how to engage with the traditional TV audience in a new, internet-driven way’, says Rose. ‘Our goal is to persuade more people to engage with the BBC and we will be incredibly important to the BBC in the medium to long term.’
Rose recalls that the iPlayer began as an idea four years ago, when the BBC decided it needed to be ready for a time when people took TV and radio content on demand over the internet. ‘Broadcasters have a relationship with millions of users and a proportion are now going to consume their product online.’
He sees scant direct competition, only ‘clips and trailer sites’, plus some US companies and sites for illegal programme downloading. Rose argues most websites look to other internet outlets for content comparison, but ‘we look to TV for quality content and provide a new, high-quality means of distribution’.
Rose is bullish about long-term prospects: ‘We will reach a tipping point in three to five years and then it will flip and boom.’
Growth and innovation are also hallmarks of TrafficBroker, an internet marketing agency specialising in paid search. From its head office in north London’s Camden Town, the company, founded five years ago by web designer Neil Hutchinson in his bedroom with a loan from his employer, manages online spending for blue-chip clients.
TrafficBroker, which now has 50 staff worldwide, turned over more than £26 million last year and makes money. Search management director Oliver Adler states the company is on target for sales of £40 million this year. ‘We only get paid if there is a successful lead – for example, if someone buys from Amazon via one of our links’.
Now part of Forward Internet Group, TrafficBroker acts on an agency basis for larger companies such as hotel group Hilton and otherwise works with a network of smaller affiliates. ‘When Google makes changes to its display card or merchants change their terms and conditions, we can adapt quickly,’ says Adler.
Even for an online business, personal face-to-face contact can be crucial. TrafficBroker has therefore established satellite offices in the US and Japan so it can meet its clients.
A transaction of a different kind won TV producer RDF Media Group the award for Deal of the Year. That was RDF’s £52 million takeover by a management team headed by chief executive David Frank and backed by key shareholder John de Mol, founder of Big Brother producer Endemol, and his investment manager, European finance boutique Cyrte Investments.
‘We will reach a tipping point in three to five years’
RDF, whose award-winning range of programmes extends from Wife Swap, Location, Location, Location and Rosemary Shrager’s School for Cooks to Scrapheap Challenge and The Secret Millionaire, delisted its shares from AIM and went private after the takeover, which was clinched near the end of 2008. The deal, supported with £36 million of bank funding from RBS, Bank of Ireland and Barclays, left the company 50-50 owned by management and Cyrte, whose controlling shareholder, Dutch finance group Delta Lloyd, is owned by the insurance group Aviva.
Frank argues that coming off the stock market provided RDF with ‘a far more effective platform on which to continue our record of 15 years’ unbroken growth’. He maintained being private would allow the company ‘greater flexibility in meeting the challenges and exploiting the opportunities we face’, while Cyrte’s chief executive Frank Botman endorsed Frank’s leadership and said his company would contribute to RDF’s future growth by ‘leveraging its experience in the media and content sectors and providing financial support’.
Deals pay off
Guardian Media Group (GMG) won the award for Investor of the Year after last year’s purchase of magazines, data and events company EMAP in a £1 billion deal with investment group Apax. In 2007, GMG, owned by the Scott Trust and charged with the duty of keeping the Guardian newspaper alive, emerged with 30 per cent of the company and the majority of the votes. It was primarily interested in its business-to-business side, rather than better-known consumer titles such as Heat and FHM.
The EMAP deal followed another, in 2007, when GMG sold Apax half of its share in magazine company Trader Media Group, owner of Auto Trader and other hard copy and online publications, in a £1.35 billion transaction.
Pervasive British Sky Broadcasting (BSkyB), with a powerful position in football and other sports and entertainment broadcasting, was named UK Company of the Year. Though some brokers recently downgraded the company on cyclical concerns and a legal challenge to its investment in ITV, corporate affairs director Graham McWilliam is upbeat.
‘We have performed well in increasingly challenging conditions,’ he comments. ‘We now reach more than one in three homes in the UK and Ireland and have successfully diversified by entering the home communications market, where we are the UK’s fastest-growing broadband provider and home phone company.’
McWilliam points out BSkyB made a commitment to high definition TV ‘long before anyone else’ and has now ‘taken a clear leadership position’. But, he adds, it is the company’s investment in broadband and home telephony that took it to a new level.
The evening was wrapped up with a typically splenetic Bob Geldof picking up a lifetime achievement award, presented by Sarah Ferguson. Geldof, famous for his Band Aid and Live Aid fundraising work and co-founder of TV producer Planet 24 (creator of The Big Breakfast and the unforgettable doyen of Friday night post-pub TV – The Word) is now chairman of Ten Alps, the ten-year old TV production company that specialises in factual content and has a turnover of £80 million.
Accepting his award, Geldof noted that it isn’t the large companies ‘like BSkyB’ which should be receiving recognition, but the smaller, innovative ventures which help the media to grow and change.