The battle of the budgets [part one]

The times, they are a changing. They’re not “dumbing down” as some pundits would have it. They’re changing the programme model to suit a changing audience profile. Television viewership is growing, not because the population is growing, but because more and more people are getting wired to the grid and can afford a TV set.

Media professionals who use the words “dumbing down” are too highly educated, and earn too much. They shouldn’t be working with audiences. But it is this changing focus in tastes that is now the biggest driving force in the revolution in TV budgeting that will dominate us for the next five years.

The upper LSM view group is growing more by affluent people coming into that group than those who are leaving. By the same token, more viewers with slightly lower LSM values are entering the next LSM group above them.

What are LSM values?  Well in the upper LSM’s, you have arrived; you don’t aspire as much as flaunt it. The lower LSM’s are far more aspirational. People watch programmes to see people better off than they are, not worse off. We define audiences by LSM precisely because it gives us a picture of people by what they buy, what they would like to buy, and what they no longer buy. Behind those buying experiences are complex dynamics of education, life experience, world outlook and moral values.

When we talk of broadcasting, we inevitably mean the SABC, because the SABC is 70% of broadcasting. There are a lot of people who have a direct financial interest in broadcasting besides the broadcasters. They are advertisers, suppliers of services, producers and sellers of programming – lots of people whose income depends on broadcasting, and who de facto rely on the SABC.

Wakey time came for M-Net and e.tv a few years ago. More TV channels, new radio stations, and digital terrestrial transmission – all these things would fragment audiences.

We have channels and stations growing at an exponential rate, and the overall population of viewers hardly moving. So each broadcaster’s share of the audience is getting smaller and smaller.

Economic theory in broadcasting says that as your audiences become more niched, so they will become more loyal and attentive. Since advertisers are prepared to pay for attention rather than a headcount of eyeballs, then theoretically you would be able to raise your ad rates, even though your viewer numbers are declining.

So the theory goes. The problem is, it has never been tested. So while we are waiting for the fairy story to come true, we have only one option and that is to cut costs.

Costs in broadcasting are notoriously hard to cut except in staff and content. Don’t forget broadcasters have to pay for transmission, and this chews electricity, the cost of which is rocketing.

Both M-Net and e.tv have done that. They trimmed all the non-essential jobs. Then they started cutting production budgets.

The problem is that the viewers have made their preferences known – they want local content. But local content costs roughly 10 times that of importing schlock from the international markets. So increasing your local content is very costly.

Unless you can reduce its price – and this is where it gets interesting.

South African television has seen three phases, or “Ages”, over the past fifteen years. This roughly since DStv came in as a major player.

The Age of the Battle for Quality

From about 1995, everything, foreign and local, was about selling quality. Initially there were only the three SABC channels, M-Net and DStv. DStv offered the best quality the outside world had to offer. M-Net offered the best local content it could offer. Egoli was always the flagship and money was poured into it. It was the first programme to go fully digital – flaunting the “highest quality”.

The SABC responded by throwing money at local content, and flaunting things like Soul City and Yizo Yizo as examples of how it could produce quality equal to anywhere in the world.

The SABC and M-Net generated a fashion for international awards. The SABC started spending even more money flying its managers in style to every pisspot awards ceremony in the world – just to collect awards.

When e.tv came on the scene, it had little money, did things on the cheap and boy, it showed.

By now we had established a benchmark for quality. It had to look splendid. It had to have dynamic sound, and original music. The cinematography had to move through the full spectrum of colours and contrasts. If there weren’t really “wow factor” digital effects, you were dead in the water.

In other words, South African quality became what everyone else in the world has always called “production values”.

Production values can be measured in terms of lavish sets and costumes, helicopter shots, digital effects, big name stars, and extravagant marketing.

“Quality” cannot be defined, cannot be measured, and people who are bruised and battered with experience, won’t use the word.

In short, from about 1995 until 2003, the race was on for the highest quality, and bugger the cost.

But people at e.tv and M-Net were getting worried. These sort of cost ratios didn’t maker sense for long term profitability, so you started hearing expressions like “fit for purpose” being used in corridors.

“Fit for purpose” simply means, that if it is going to be used once, and there will be a small audience and small revenue, then make it as cheaply as possible. In other words, the cost of a programme should be directly related to short and long term revenues. Long term revenues were becoming important because the pundits were writing long boring books about the “Long Tail”, a theory that you could make money from your archives forever and ever, as long as they are digital. ”Fit for purpose” pushed the term “cross subsidisation” out the window.

The “Long Tail” has yet to stand the test of time; it was initially based on the money TCM and other rights holders of digital archives could make from old movies. It was somewhat supported by the “repurposing” that channels like Discovery and National Geographic did. They used shots from all over the place to make new doccies, shoot only what was necessary and slash costs.

The SABC immediately reacted to this by creating a repurposing department that managed to make programmes at double the cost of doing everything from scratch.

M-Net, DStv and e.tv were having doubts, but not sure of where to go next. This led to the next age.