ITV, BBC Agree on U.K. Streaming Venture to Take on Netflix
ITV, BBC Move Ahead With Streaming Venture to Take on Netflix
(Bloomberg) -- ITV Plc and the British Broadcasting Corp. reached an agreement on a U.K. streaming venture, as they seek to respond to the incursion from digital rivals including Netflix Inc.
The BritBox service will launch in the final three months of 2019 and cost 5.99 pounds ($7.50) a month for high-definition programming on multiple televisions and devices, the companies said in a statement on Friday after months of discussions. That’s cheaper than Netflix’s 8.99 pounds subscription fee for its standard service in the U.K.
BritBox is part of ITV Chief Executive Officer Carolyn McCall’s push to diversify revenue away from traditional TV, as consumers seek to watch content whenever they want and advertisers increasingly direct more spending online. Shares of ITV, the country’s biggest free-to-air commercial broadcaster, were up 1.3% as of 9:02 a.m. in London.
“After several delays, confirmation of launch is good news,” Conor O’Shea, an analyst at Kepler Cheuvreux, wrote in a note. There is a market for local content to complement Netflix’s offering, but it’s too early to judge whether the quality of the content will win over U.K. consumers with multiple subscription alternatives, O’Shea wrote.
European broadcasters are increasingly coming together to pursue streaming to try to gain scale and share the cost of new platforms as they respond to U.S. rivals Netflix and Amazon.com Inc. moving into local markets.
There’s concern among some industry observers that the efforts come too late, however. ITV and the BBC were part of a group of British broadcasters that had tried to pool their content online in 2007, but were blocked by regulators fearing they would prevent new entrants.
BritBox will include previously shown episodes of ITV and BBC series, such as “Love Island” and “Gentleman Jack.” The companies also plan to commission new original series and pull in some shows currently licensed out to other subscription video on demand services once those agreements expire.
What Bloomberg Intelligence Says
The 5.99 pounds a month price point for the streaming service, BritBox -- ITV’s JV with the BBC -- and the promise of original content from 2020, is as we expected, suggesting it’s unlikely to boost results much for some time. Further content and distribution agreements are being negotiated, which will be essential to BritBox’s success, in our view.
--Matthew Bloxham, telecom analystClick here to read the research
ITV will own 90% of the equity in the new venture, while the BBC will own the remaining 10% and have an option to acquire additional shares up to 25% over time.
U.K. communications regulator Ofcom has given a provisional green light to the BBC’s involvement in BritBox and said it’s unlikely to gain an unfair competitive advantage from the streaming service. The publicly-funded corporation has strict rules over its commercial activities.
The BBC and ITV launched a similar service called Britbox in North America in 2017. It now has 650,000 subscribers, and McCall said on Friday that it was “proving to be very successful, exceeding its targets.”
To contact the reporter on this story: Greg Ritchie in London at gritchie10@bloomberg.net
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer
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