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Swot and pestel analysis of tv industry Essay

The television industry in the U.K has seen a major change in its structure since the merger of Granada and Carlton. The pair have completed an 4.6 billion merger which is an major landmark in the television industry. The merger increases ITV television advertising market hold to 52%. This enlargement of the company has significantly increased ITV impact on the competitive side of the market. Mrs Hewitt regional franchises quoted “ITV would be better equipped to compete with rivals, including BSKYB and BBC.”

ITV now seem stronger and able to invest in and provide programming of high quality. ITV clearly seem to be a new business now being able to compete more effectively in today’s multi channel industry. However, having said that, the Carlton and Granada merge still have not managed to appoint a new chairman for ITV Plc. Since the removal of ex chairman Michael Green who was head of the new company board.

(2.2) Competition

The rivalry between ITV and BBC has been very intense towards the number 1 spot in the UK television industry. Previously BBC has had the honour of being and holding the number one spot. Although they still hold the number one spot, ITV has become and is remaining the most dominant channel at peak time hours taking a 31.6% share of the audience compared to BBC at 27.7%. ITV1 peak time line up is overcoming BBC1 schedule on 2 out every 3 evenings so far this year (67% of evenings). Moreover ITV1 has formed a bigger audience in peak time hours than all its commercial rivals can muster between them. ITV1 31.6% share equals to an average audience of 6.8million viewers compared to the other 6.4 million commercial share audience average. However, some commercial rivals such as Channel 4 has managed to break 5 million viewer barrier on certain programmes sharing success in their side along ITV.

On the other hand, BSKYB is gathering percentage increases in audiences rapidly especially with its large amount of variety of channels to suit all needs. However BSKYB in the past have face acts from the office of fair trading, which has been lobbied by rival broadcasters to probe 2abuses” by BSKYB under the competition act. Although declined to reveal any specific area of concern in BSKYB trading practices. BSKYB kept to its promises and made in 1996 pay television open to rival broadcasters. ITV tried to enter this market through on-digital. This investment was not a success and BSKYB were charge with overcharging for its premier channels making it difficult for rivals to make profit from broadcasting. ITV on-digital dream went into administration. This has made BSKYB the leader in pay television and UK TV industry with no real competition. ITV, BBC and the all other commercial broadcasters the U.K are suppliers to BSKYB.

(2.3) Technology

Television sector is undergoing major change. Technological developments have led to a rapid increase in the channels available, and in the number of households able to receive them. Multi-channels penetration is likely to continue to grow as a result of the progress of the satellite and cable companies, the successful launch of free view and government announced its intention to close down analogue transmissions by the decade. This clearly shows development in technology is a necessity for all TV networks in the TV industry. The merge between Granada and Carlton has come at a time were investment in technology is been seen as a necessity. In 2003 ITV is in the forecast to receive just over half of all television advertising revenue, down from the 60% in 1999. Its audience share has fallen from 55% to 40% of viewers of commercial television. This decline has been very beneficial to multi-channel broadcasters like BSKYB and rivals such as channel 5. Multi-channel penetration is likely to grow as a result of continuing progress of the satellite and cable companies.

However, when taking in terms of technology BSKYB leads the market ahead of BBC and ITV. BSKYB are developing and introducing technology at a extreme past. Features such as WAP (Wireless application Protocol) and WML (Wireless mark up Language) have released new commodities to TV, by giving viewers a broad environment that enhances the viewers to experience TV in a wholly different way such as allowing them to engage interactively while watching T.V

(2.4) Entertainment

Entertainment on TV today is undergoing a dramatic change. Audiences today vary from many ethnic backgrounds and possessing a large variety of new hobbies. To suit all the needs for potential audiences is challenging. This is the direction the TV industry seems to be heading towards. Providing viewers with a vast amount of variety through many channels. BBC aims of increasing viewers are to connect with all audiences. One way BBC is going about in achieving this, is by bringing younger audiences to BBC services by adopting bold and innovative programmes and ensuring that it is meeting with the needs of the audiences of all nations and regions in the UK.

BBC possesses 8 channels, which display a variety of programmes suiting all age groups. ITV on the other hand, own and display 14 channels. This is a small contrast to the leaders BSKYB who display over 400 channels. As a result ITV have become supplier to BSKYB for their broadcast services. BSKYB dominate the display of big events that attract a huge audience in the UK such as rights to premiership football and other main sporting events. BSKYB offers entertainment for all viewers of any background or interest leading the TV industry in terms of entertainment

(2.5) SWOT analysis of ITV

* Strengths

* Well known brand name

* Leading producer of television programming: variety of popular programmes

* Large market share

* Large viewers’ audience

* A “highly experienced and successful management team, who have a proven track record of growing the business both organically and through acquisitions;

* Established reputation as a premium producer of content;

* Proven ability to attract and retain key on and off-screen talent;

* The largest pool of production talent in UK commercial television;

* A successful track record of growing its programme production business, principally through the exploitation of existing brands and development of new ones;

* A content creation capability able to supply the growing demand for content from both single and multi platform operators – free to air and pay TV broadcasters, telecommunications operators and ISPs;

* Recently created new media assets, and broadcasting assets such as ONdigital with significant new media opportunities;

* A substantial programme library with large amount of hours of programming; and

* A strong reputation and established relationship with advertisers”


* 20m subscription charge to BSKYB

* Unable to advertise ITV sports channel on BSKYB

* Shareholder discontent over their corporate governance since merger


* Merger between Carlton and Granada will enable ITV to raise the economies of scale, reduce costs and increase the quality of broadcasting both in terms of content and service.

* Acquisition of other companies to extent the market share and areas of influence

Vertical integration: for example into video rental

Horizontal integration: for example to other countries or regions.


* Rise in cable and pay-per-view TV

* Rise in broadband connections makes Internet the serious competitor to TV

* Potential mergers between other TV companies (NTL and Telewest)

(2.6) PESTLEI analysis


Technological factors have significant effect on TV industry.

Fast pace of technological change. To keep up with technological developments TV companies need to conduct updates and modifications to their service on the constant basis. Pay-per-view is the example of innovation that was made in the recent years. Companies in this industry also compete on the basis of technological development and it is vital for them to adopt the innovation before the competitors.

R&D. Resulting from the fact that TV companies both produce and distribute their products (Carlton) extensive research and development is compulsory for them. R&D into demand, fashion and technology gives companies the opportunity to compete successfully on this market. Apart from that R&D of minor improvements is essential: polls, premium rate phone lines and etc.

Technological factors have high impact upon the TV industry as most of the innovations bring either cost cuts or service improvement. This leads companies like Carlton and Granada towards adapting changes in the battle for consumer.

Political and legal

Political environment is highly important for TV companies as it provides government legislations, licences, quality standards and other governing information.

Anti-monopolies legislations and Competition Commission suggest the maximum market share the company may have. (International Journal of Retail & Distribution Management, 1994). As in the case of Granada and Carlton Competition Commission revealed that the combined group would have about 54 per cent of the television advertising market. This was the reasons why planned merger between the ITV companies Carlton and Granada was referred for a full Competition Commission inquiry.

Environmental protection laws imply certain rules on the corporate social responsibility of the companies. Taxation policies direct companies to pay high corporate taxes from profits. Due to this reason several companies donate proportion from their profits to charities, which decreases the amounts charged.

Foreign trade regulations have significant impact upon the TV companies because the distribution and sales of content take place both inside and outside the UK. Government laws affect operations of Carlton and Granada: content, advertising space, advertising price, employment issues and etc.


Social (cultural) environment consist of “institutions and other forces and affect society’s values, perceptions, preferences and behaviours” (Kotler et.al, 1999).

The fact, that Britain’s population is aging (HRMagazine, 2000) affects TV companies as they need to adapt the content of their programmes according to the tastes and demands of ageing population. Increased level of educations affects the consumer preferences, which requires TV companies to conduct continuous research for new information and entertainment products.

Change in lifestyles requires TV companies to be adaptive. For example offering of home shopping. Social responsibility affects Carlton and Granada in terms of recruitment policies, environmental policies and other business ethics.

The growth in single-person households, and working women influence the assortment of programmes and films that TV companies need to place on offer.


Economic environment is presented by the “factors, which affect consumer buying power and spending patterns” (Kotler et.al, 1999).

Interest rates affect TV industry, as when interest rates rise people spend less and when interest rates fall spending levels increase. This have the influence on the sponsors of TV programmes, which select the optimal time for their commercials to be shown.

Inflation also affects prices which companies need to pay and money that they receive from the advertisers. Level of unemployment in the country also affects the advertisers which select to advertise certain products or services, thus alter the amount TV companies receive.

Level of disposable income also influence spending pattern.

Availability of resources alters the costs of TV companies.


Increased cost of energy and other resources have significant impact upon the TV companies, which forces them to search for the cheaper options and increase the price for advertisers. Despite the fact that TV transmission has almost no effect on pollution and natural resources used TV sets produces some radiation.


Due to the fact that Carlton and Granada are producing untouchable products – industrial factors do not have influence upon these companies.

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