As proposed restrictions on food and drink ads loom large, TV channels are already counting the cost, says Andy Fry.
Childrens' channels and mainstream commercial broadcasters could see hundreds of millions of pounds wiped off the value of their combined businesses if the government pushes ahead with proposals to ban or restrict the advertising of food and drinks high in fat, sugar and salt (HFSS).
In its controversial White Paper on public health, the government argues that restrictions on TV advertising are a key factor in tackling the UK's child obesity crisis. It is not just snack food and burger brands that are being targeted; yoghurts and cereals are some of the high-profile categories that could also fall foul of Food Standards Agency guidelines, which the government uses to assess healthy foods.
The government might even impose a complete ban on HFSS food and drink ads before the 9pm watershed. This would be a huge blow to broadcasters' ad revenue. According to Nielsen Media Research, the advertisers in the restaurant chain and food and soft-drinks sectors spent pounds 190m on peaktime ads (6pm-10pm) over the past year. Another pounds 34m was spent within dedicated kids' airtime - a total of pounds 223m.
Nickelodeon UK commercial director Dave Jenkins says the effect of an outright ban on dedicated kids' channels would be 'devastating'. He adds: 'The categories in question account for about 30% of our ad revenue. People ask me how we'd replace that, but we can't. It's money off our bottom line.'
Jenkins says the uncertainty surrounding the food sector is already having an adverse impact on revenues. The irony, he adds, is that one of the first areas to suffer from an ad ban would be Nickelodeon's editorial content, which actively promotes better health choices. 'It is inevitable because it is such an expensive exercise,' he explains.
Jetix Europe executive director of commercial sales and development Mel Alcock says a total ban would lead to cost-cutting at mainstream entertainment networks, although he downplays the impact on his company. 'As a European company that derives revenue from subscription, ads and licensed products, we are well-cushioned.'
Among mainstream channels, the scale of the problem is illustrated by the fact that ITV made pounds 105m from food, confectionery and soft-drink advertising in the first half of 2004. No surprise, then, that ITV claims banning food ads would 'have a detrimental impact on investment in high-quality programming'. As with Nickelodeon, there is no way that ITV could replace a category the size of food, which would be forced to find alternative media or squeeze its spend into the post-9pm period.
The latter is unlikely since advertisers are keen to place their products in front of kids. A more likely result is ITV's claim that a ban would put investment in home-grown children's shows at risk.
Channel 4 is less exposed to food than ITV, but still makes 5%-10% of its ad revenue from the sector. Head of commercial marketing Hugh Johnson says a ban would have a serious economic effect on all channels. 'We don't have any children's shows, but a lot of children watch our programmes,' he says. 'Even without confectionery and soft drinks, food is our fifth-biggest category.'
There is some good news for broadcasters and advertisers. The government has asked media regulator Ofcom to consult the industry on what to do. …