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Is there a place for new ad-supported news channels?

Can GB News (or any other ad-supported linear TV news channel for that matter) succeed in a world where younger audiences skew towards streaming alternatives? As part of The Drum’s deep dive into the future of TV, we look at why it is betting on a subscription product to bolster its ad revenue.

Andrew Neil’s news channel GB News has itself been the source of headlines since its launch was announced. It has signed up some significant talent – often poached from other UK news outlets – and announced a suite of programing designed to separate itself from the nominally objective Sky News and BBC. It is by no means a cheap experiment in adding to media plurality in the UK, even if its proponents claim it appeals to a marginalized part of the population.

At the same time, it is launching into an environment that is commercially hostile. One erstwhile rival has already bowed out, citing the weak state of TV advertising. Younger audiences are also turning away from linear television for their news content and are – anecdotally at least – opposed to the ‘anti-woke’ sensibilities of GB News, depriving the news channel of a significant opportunity for growth. So, what are the odds that GB News and any other ad-supported linear TV news channel can succeed? And if they can, in what form?

Digital killed the video star

Linear television is in a transitory period. Many multimedia publishers are divesting themselves of their television stations as they either focus on their core verticals or because the market did not support them. Instead, most of the money is flowing into advertising-based and subscription video-on-demand (AVOD and SVOD), with Vice for example closing its own UK linear channels to focus on AVOD following a disappointing and brief existence on the set-top box.

It joins publishers such as Vox, which has instead created bespoke programming for streaming services like Netflix, in avoiding the need to create thousands of hours a week of costly live content for linear TV.

That is also the route taken by GB News’s nearest rival, Rupert Murdoch’s News UK TV channel. Last month it tacitly gave up on the idea of a linear channel, instead choosing to go digital-first. Its head of broadcasting David Rhodes, who was brought over from Fox News, is out after less than a year and Rebekah Brooks told staff in a memo that it was not ‘commercially viable’ to launch a linear news channel.

The fading resilience of linear TV advertising was laid bare in Ofcom’s Media Nation 2020 report: “Since 2015, TV ad revenues have contracted by £1bn in real terms (or -18.4%). Macro-economic factors such as weaker business confidence and reduced consumer spending as a result of the EU referendum in 2016 are likely to have played a significant role in the gradual decline in TV ad revenue since 2015.”

The latest IAB report into broadcast channels found that many US advertisers were shifting into connected television (CTV), following the audiences. Nearly three-quarters (73%) of CTV buyers said they shifted budget from broadcast and cable to CTV in 2020, and more than a third (35%) of buyers expect to increase CTV video ad spending in 2021.

Lindsay Clay, who is the chief exec of Thinkbox, the marketing body for UK commercial television, says: ”Modern broadcasters are both platform and ad revenue agnostic; they don’t mind how people watch, nor where advertisers invest their TV budgets. The key thing for advertisers is to take a total TV approach, use the right blend of linear and broadcaster VOD and maximize their cost-effective reach.”

Even the giants of the ad-funded TV world have been hugely exposed to the pandemic, which has precipitated that revision of budget among buyers. ITV reported a 43% drop in ad revenue in the second quarter of 2020, though it does expect to see a significant rebound this year. Notably, however, that rebound is on the back of its suite of entertainment products, like Love Island, which dedicated news channels typically do not commission.

A bet on the future

In late 2019, the Reuters Institute for the Study of Journalism and analysts at Flamingo found that broadcasters in general and news channels in particular have a hard time reaching younger audiences:

“There is a great level of ‘background’ or ‘indirect’ exposure to news (through social media, other online conversations, documentaries and TV shows, etc), which means that while news still plays a role, there is less motivation to seek it out in its traditional spaces.

“Much of the excitement and gravitas for younger people is on the periphery of the news space (infotainment, lifestyle, cultural, grassroots, bloggers and vloggers). These are not traditional news brands’ areas of strength.”

Mihir Haria-Shah, the head of broadcast at media agency Anything Is Possible, says that typically with TV advertising, ”brands choose to advertise on the channels where their audiences are”, and that for brands going after younger audiences, ”they are less likely to find them on a rolling news channel”.

She says there are exceptions to this. ”For example, when broader channel mixes mean preferable commercial deals, then brands may find their ads in environments that aren’t necessarily typical of their specific target audience.”

Instead, GB News – which has hired many right-wing pundits and is reportedly launching a ‘wokewatch’ segment – actually seems designed to turn off as many younger people as possible. So its core proposition appears to be based around luring viewers who believe themselves to be disenfranchised away from broadcasters such as the BBC – a tall order considering that the BBC currently enjoys the highest level of trust among any broadcaster and news provider in the UK.

It follows Al Jazeera, which is also attempting to ride the wave of right-wing disenfranchisement, by launching the Fox News-like Rightly in the US – though that platform is primarily digital.

GB News, then, is launching into a shrinking and saturated market just as many other players are following the ad revenue and transitioning to AVOD and SVOD. Unless its tacit bet on providing a reactionary, hysterical news service on par with Fox in the US pays off, it will undoubtedly need to find other sources of funding for its 6,500 hours’ worth of broadcast on Freeview.

Small wonder then that it is reportedly seeking to offer a subscription product to recoup its £60m start-up costs, estimating that up to 135,000 ‘superfans’ will pay £5 a month to access exclusive digital content. It is effectively a bet that linear TV news will act as content marketing for a subscription product – one that puts it in direct competition with the countless other subscription services available.

From late April until early May, The Drum is taking a deep dive into what’s in store for the small screen as we launch our Future of TV hub.

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