Tim Westcott / Published - 24 Apr 09

Broadcasters in Europe's big five territories are responding to precipitous declines in ad revenues (examined in detail in a recent GMI, Market Monitor: European TV Advertising April 1, 2009) by radically reviewing their cost bases and cutting, or keeping under tight control, program budgets. This is the first time this has happened on such a wide scale, an indication that the downturn in advertising revenues has changed the rationale that reducing programming expenditures runs the risk of losing market share. Given that this downturn is affecting almost all free-to-air broadcasters and almost all TV advertising markets equally severely, the focus of broadcasters is on trying to protect the bottom line and thus limit the damage to profits. With the cost of free-to-air rights to high-rating sports events continuing to escalate, and some broadcasters tied into long term contracts, the brunt of the cutbacks will fall on entertainment programming, in particular costly genres like drama. Networks will try to keep a big chunk of programming expenditures in-house - further bad news for outside suppliers who will already be under pressure to lower fees. The market for post-network runs of US entertainment shows, which have been in the past a major source of revenue for the studios, is also likely to be affected. Generous license fees achieved in recent years will become a rare phenomenon.