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The recent announcement of a proposal to merge M6 and TF1 in France brought back memories for television executives of a certain age. In 2009, the equivalent of the current Competition and Markets Authority (CMA) blocked a proposed collaboration between the BBC, ITV and Channel 4 to establish an on-demand streaming platform.
With sufficient time now having elapsed, I can also reveal that Sky had agreed a tie up with Lovefilm to build a streaming business before being advised by competition lawyers not to pursue the deal.
Either initiative would have given the UK the jump on Netflix and Amazon Prime. With fabulous strength in the creative industries, an international outlook and English being the lingua franca of streaming, who knows what might have been. But the UK’s competition regulator took the ball away before we could even get on the pitch.
That was then. But even today, while the Government forges ahead to build Global Britain, too often and in too many sectors our competition regulator gives the appearance of wanting to build 1950s Britain: a world of cosy certainty where what happens beyond these shores needn’t intrude too loudly.
Why does this happen? My view is that the CMA too often bases its decisions on looking in its rear-view mirror and on a narrow interpretation of the public interest being exclusively about the lowest short-term price. This ignores the considerable societal and consumer benefits which may arise from firms of national scale better able to invest in infrastructure or to compete internationally.
Rural dwellers clambering the nearest hill to get the required three bars of signal on their smartphone or waiting in vain for gigabit broadband to make it to their postcode are, in my experience, unlikely to console themselves by the purity of the CMA’s theory of what makes for a competitive communications market.
No one wants regulators to contemplate wildly speculative scenarios, but when British tech unicorn Just Eat made a modest domestic move on Hungry House, the regulator’s failure to look at the widely trailed entry of Uber Eats into the market put the chills on its growth. Just Eat is still a great global company but today it is one based in Amsterdam.
While UK businesses are arguably over-regulated, one of the most astonishing facts from the Furman review of the UK’s competition regime in 2019 was that over the previous 10 years the five largest tech firms had made more than 400 acquisitions globally, none of which were blocked.
Back to my example of broadcasting – that UK-based TV players need as much scale as they can get to compete with giant US players in investment in content, technology and marketing is now unarguable. The growing risk is that the US majors and global online tech platforms displace often free-to-view, nationally focused content, making it both hard to find and undermining the advertising economics that pay for it. Such an outcome would not be in the public interest and certainly not in the interests of UK plc.
I don’t personally favour the answer that some offer which is more micro-interventionism to shore up public service broadcasters, but I would support increased scale for national players as we are already seeing in France with other countries likely to follow. In fact, broadcasting is but one sector where consolidation in yesterday’s markets may be the only basis in which to compete in tomorrow’s.
And building greater scale isn’t just about making sure that viewers have real choice. Outside of the CMA’s HQ in 25 Cabot Square it would be hard to find anyone who doesn’t think that Facebook and Google – two of the world’s biggest companies – aren’t fighting for the same ad dollars as ITV, Sky or Channel 4. Since 2015 almost the entire market growth in advertising has been from online video. Advertisers and agencies can plan their campaigns in a forensic way to meet their needs as never before. They are quite capable of looking after themselves in this competitive world. Continuing to define a separate UK TV advertising market has made UK broadcasters the tethered goat to the Jurassic Park tech giant T Rex.
All is not lost. The UK still has remaining scope to consolidate in both broadcasting and telecoms. The Government’s consultation on the future of state-owned Channel 4 is a case in point. Its chief executive, Alex Mahon, has done a terrific job of stabilising and then steering that ship through the pandemic. Like anyone approaching 40, Channel 4 has already been a number of versions of itself. Its next, and possibly most enduring, contribution to the UK media landscape may be to keep some of its distinctive remit but as part of adding useful scale to another UK-based operator.
Now is possibly our last chance to be bold, to look dynamically at what will happen over the coming few years and to facilitate scale through consolidation. The CMA has recently evolved a more forward stance in digital. Extending that understanding to other markets which are being transformed – and giving a signal of that policy shift – would be a useful contribution to our post-Covid prosperity.
Andrew Griffith MP was a board director at Sky for 11 years before its purchase by Comcast and is former senior non-executive director of Just Eat. He is founder chairman of the Campaign for Economic Growth.
Competition watchdog is dragging us back to the 1950s
CMA's gaze is fixed firmly in the rear-view mirror, making it harder to see a bright future for our broadcasting and telecoms industries