Colin Grimshaw, Media Week, 17 June 2008, 08:00am

US TV buoyancy highlights irrational UK depression

LONDON - American broadcasters and advertisers wrapped up their annual "upfront" trading round last week, with prime-time TV spots achieving 5% higher prices than last year and the NBC and ABC networks each taking in an extra $100m in revenue.

Colin Grimshaw, deputy editor of Media Week

Evidently, the surging demand for TV advertising continues unabated over the pond - this despite the pervading US economic malaise, the credit crunch, a property market collapse and a Hollywood writers' strike that caused the axing of many top-rated shows, contributing to a 10% slide in ratings last year.

Contrast this with the position in the UK where the TV market has been sliding into decline all year. ZenithOptimedia ended last year predicting 2.2% growth in 2008. Reading the runes of a disastrous second quarter, even the most sanguine of pundits are now expecting a 2% decline in TV this year.

And that's after factoring in a hoped-for return of retail advertising in the run-up to Christmas. Should that fail to materialise, some say, by year's end, UK broadcasters could be counting the cost of a 6% shortfall in their revenue.

So, why is UK media looking so sickly? Our economy is nowhere near as bad as that in the US, or many others in the developed world, yet their media markets are outperforming the UK in most sectors.

It can't be that our programming is less appealing to consumers. UK formats are constantly being copied, and the best US TV is widely available here.

One theory developing among media owners is that an over supply of media agencies and media is deflating media prices. Advertisers have become accustomed to agency pitches that lead on lowest media price and are exploiting this.

Another theory revolves around the surge in online advertising - the UK's only booming sector, out performing international media markets. That is that, here, media buyers are keen to supplant traditional media with online, which earns them much higher margins.

Should these trends continue apace, then traditional media content budgets will be cut, standards will fall and, since most valuable online content is derived from an offline source, this becomes a problem for everyone.

Those who believe that their current difficulties are down to purely cyclical market conditions will decry these theories as doom-saying bullshit. Maybe they are, but the depression in UK media cannot be fully explained away by the economy.

Meanwhile, US networks are already selling ad inventory for the next TV season at rates 6% to 10% up on last year.