Gideon Spanier: UK's vibrant media industry set for strong 2016

Britain’s media industry is thriving. In the past five years, the value of London-listed companies in the Footsie media sector has surged 70% compared to the general FTSE 100 index, which has been little better than flat.

Conditions should remain benign in 2016 as we consume more media and London benefits from its role as an early adopter of new technology and a European superhub.

Advertising buying agency ZenithOptimedia is forecasting ad revenues will rise almost 10% in the UK this year — a rate not seen since 1998, in the early days of Tony Blair’s premiership.

Four trends are accelerating growth: mobile technology, superfast broadband, high-quality video on demand and social-media sharing.

It is the convergence of these trends that means 2016 will be a year of major disruption and consolidation.

The first big change will be to Britain’s media infrastructure: BT, the country’s biggest broadband company, is poised to complete the acquisition of the largest mobile network, EE, within weeks.

Sky, Europe’s biggest pay-TV company, is planning to respond by offering mobile to its customers via O2’s network.

And Vodafone, Europe’s biggest mobile company, is anxiously trying to launch its own TV service in the UK by March, while thinking anew about a possible merger with Virgin Media owner Liberty Global.

Then there is the changing way that we are consuming content on our screens as the lines between TV and online blur.

Two key moments will be the switch-off of BBC3, which is due to stop broadcasting as a channel later this month and become an on-demand service, and the launch of former Top Gear presenter Jeremy Clarkson’s motoring show, which will debut on Amazon’s streaming service in the spring.

Whether BBC3 or Clarkson’s show work as online-only ventures is a moot point.

Netflix, which has won four million UK subscribers, has already proved there is an audience who will pay to watch TV content with high production values over the internet.

There has been a lot of talk about the rise of vloggers and user-generated video on YouTube and Facebook in recent years but that misses the bigger picture.

In an online era where we share recommendations with our peers, there has been a renaissance in expertly crafted and curated premium content — much of it made in Britain.

Record sales of Star Wars: The Force Awakens, which was shot at Pinewood Studios, and Adele’s album, 25, are two examples.

Traditional TV broadcasting has been performing strongly for the same reason in Britain because of a renewed appreciation of unique, premium content that can engage audiences at scale.

TV advertising revenues leapt 8% in the UK last year and are forecast to be up 7% this year.

For further proof that TV is not dead, look at the sports-rights deals agreed at the end of December as Channel 4 snapped up Formula 1 for three years and ITV poached the horse racing for four years.

There is also the record £5 billion Premier League deal which begins in August, with live games on Friday evenings for the first time.

2016 could turn out to be a watershed year for British TV.

It is perfectly plausible that Sky could be bought by Rupert Murdoch’s Fox, Channel 4 could be privatised and ITV could be taken over.

The dollar’s strength against sterling could encourage American buyers such as Liberty Global and Comcast although both deny interest in an ITV bid. Other suitors could include BT, Discovery or Vivendi.