Linear Television is the Elephant in the Room

Everyone talks about a future in digital, but the money is still in linear

For the best part of a decade, the story of television has been told as a tale of inevitable platform migration from the old to the new.  Viewers moving from linear schedules to streaming, apps, FAST and VOD.  Advertisers, we were told, were following the audiences. Revenues, we are still told, will naturally shift from spot advertising into a rich mix of VOD, SVOD, FAST and data-driven, IP-delivered video ads. 

The future advertising market, according to a thousand, thousand-pound conferences and self-promoting Linked-In webathons, is addressable, personalised and platform-agnostic: it follows the audience, it follows the programming, it follows the IP address of the home or device that is watching it.  This hi-tech vision of a brave new digital world has been well-sold, but has it actually arrived?

In the UK market, the reality is way more complicated and far less comfortable.  Digital and IP revenues are in broad terms growing in importance, strategically and operationally, for sure, and according to analyst reports.  But financially, traditional linear television advertising remains the central economic pillar for most UK broadcasters.  I’m going to say that again, because it feels mildly shocking for a modern digital reader: traditional linear ad revenue is still the core of television channel revenues, and it always has been. 

For smaller and mid-tier broadcast players in particular, the promise of digital transformation has often looked more like margin compression than salvation, if not in some cases, a disaster. The result is not a clean transition from “old” to “new”, but a prolonged period of hybrid economics in which linear continues to carry the weight whilst digital strains to prove it can do more than defend an element of what already existed.  In some cases, the early promises of high costs per thousand for digital advertising have evaporated entirely.

The Enduring Weight of Linear

Despite sustained audience decline in some demographics, linear television still delivers the scale, predictability and trading simplicity that no IP model has yet matched in the UK: all broadcasters are selling the same commodity.  The enduring weight of linear advertising still defines the UK broadcast market and, very importantly, its traditional pricing model.

More than a decade after the shift to digital began at pace, the price of television advertising in the UK is still benchmarked against the ITV cost per thousand of the universal BARB ‘all adults’ measure.

For commercial public service broadcasters such as ITV, Channel 4 and Channel 5, linear spot advertising has historically accounted for the majority of their ad income.  Even as broadcaster VOD platforms such as ITVX, Channel 4’s streaming service and My5 have grown, linear advertising remains today the largest single revenue stream.  Digital is obviously growing from a much smaller base, but it is not replacing like for like.

This matters because the cost base of our biggest and best broadcasters was built in a linear world.  News operations, regional production, compliance, transmission, marketing and programme investment are still funded primarily by linear revenues.  That is why it is largely only the BBC that produces significant volumes of digital-only television content. Digital income, though strategically critical, has not yet reached the scale required to shoulder those cost obligations alone. 

For smaller commercial broadcasters and channel operators riding on the famous long tail, the dependency is even starker.  Many thematic channels, especially those reliant on EPG prominence and carriage on Sky, Virgin Media and Freeview, still derive the huge majority of their income from linear advertising and affiliate arrangements.  Their digital operations are often subscale, margin-thin or heavily dependent on third-party platforms, none are content creators of scale in their own right.

BVOD Growth, Perhaps, but Not a Gold Rush

Broadcaster VOD is the UK’s most credible IP success story.  ITVX and Channel 4’s streaming offers have delivered rising viewing hours and improved ad products: better targeting, frequency management and dynamic ad insertion.

Yet three structural constraints limit the revenue impact.

First, scale.  Even strong BVOD growth sits alongside very large linear bases.  A double-digit percentage increase on a smaller digital revenue pool does not offset modest single-digit declines in linear spot income.  The arithmetic remains unforgiving.

Second, yield and usage.  BVOD is often deployed tactically by buyers rather than as the core of campaigns.  It helps solve specific problems — younger reach, frequency control, finding light TV viewers — but it does not yet carry the full weight or purpose of major agency budgets.

Thirdly, and more controversially perhaps, the future has been challenged by the dominance of the BBC’s iPlayer in hoovering up a vast proportion of the addressable eyeballs with a free service that sells no advertising.  The largest part of the BVOD market has for most of its existence been unavailable to advertisers, so BBC BVOD is now doing to connected television exactly what it did to local talk radio.

This leads to a crucial but under-discussed question: how much of the commercial broadcasters “digital growth” is genuinely new money?

Digital Growth: Expansion or Substitution?

Broadcasters understandably present digital advertising growth as evidence of successful transformation to e-obsessed shareholders, how else to justify the investment?  In practice, a material share appears to be mix-shift: the same agency pot being redistributed from linear airtime into broadcaster-owned streaming inventory.

ITV’s push into digital illustrates this dynamic.  Its new platforms are central to its pitch: better targeting, cross-platform reach, data-led planning.  But from the buyer side, the funding often comes from within the existing ITV line on the campaign plan, not from entirely new budgets.

The acid test is whether a broadcaster’s total share of an advertiser’s video budget rises, or whether digital simply displaces linear within the same spend envelope.  In many cases, the latter appears to be true.  A campaign that might once have been entirely linear becomes a blended linear and BVOD buy.  The broadcaster retains the money, but it is not incremental growth.

Digital, then, for our major commercial BVOD players, is as much about revenue defence and retention as it is about expansion.

FAST: Infrastructure Without Integration

FAST has been widely touted as the next frontier: linear-like channels delivered over IP, long-tail content monetised through programmatic advertising.  On paper, it looks tailor-made for secondary windows and heaven-sent for smaller broadcasters.

In practice, the UK FAST market exposes a huge structural weakness.  Premium value in connected TV comes from integration: platform-level ad aggregation, household-level data and the ability to deliver targeted campaigns at scale AND at a premium price.  Today, the ad sales process across many FAST environments remains fragmented.  Data sits variously with platforms, sales houses and intermediaries and they are in commercial or GDPR-protected silos.  Individual channel broadcasters lack full visibility or control of the data about the homes they are selling, and are in fact the least equipped in the chain to monetise the household-level data that they do not own.  Virgin Media knows which of its households have children in them, but the individual FAST channel operators do not, so how can the channel sell a premium streaming ad product to households with children?  Only the platform can do that.

The result is that much FAST inventory is sold in ways that resemble digital linear rather than true addressable advertising.  The premium value of household viewing data is diluted, and CPMs in today’s market do not reflect the theoretical power of connected TV.  For smaller channel providers, FAST often resembles digital syndication rather than a core business.  It extends reach and squeezes incremental value from libraries, but rarely transforms the underlying P and L.  In fact, in many cases, the drop in the connected channel CPMs delivered by streaming channels in the Covid and post-Covid eras have resembled a suicidal dive from a cliff.  That might in part be due to the growth in inventory supply as FAST channel advocates launch multiple services, but it is also because most FAST channel advertising sellers are not selling the platform-owned data that would make the premium value real.  The product is labelled a “digital” buy, but it is in fact in many cases just re-branded linear advertising on loads of teeny-tiny audience channels.

SVOD: Scale Without Broadcaster Control

Subscription VOD has captured vast viewing time and valuable subscription income, but much of that revenue sits outside the UK broadcaster ecosystem.  It is the only part of the eco-system that has generated significant production budgets.

For UK broadcasters, SVOD has increased competition for attention and rights while offering limited direct subscription upside.  UK-Broadcaster-owned subscription models remain niche.  SVOD economics favour global scale and deep libraries, conditions few UK players can match.  We can also be sure that as advertising opportunities begin to appear in SVOD platforms (in particular as they play harder and better at delivering trophy live sports events), the inventory will be managed and sold largely by the SVOD platform that has the real household data it needs to monetise audiences at a premium, and not by a thousand individual channels vying for a few FAST linear pounds.

 Linear and the Freeview Reality

Much of the industry management consultancy narrative assumes a relatively near-term end to traditional terrestrial broadcasting.  The idea that DTT, and by extension Freeview, could be switched off in the mid-2030s is frequently floated, and 2034 is the current contractual position for transmission contracts.

Yet despite everyone receiving an invitation to its funeral, Freeview remains the dominant viewing platform in the UK for both eyeballs and advertising spend.  Tens of millions of homes still rely on it, often alongside IP services rather than instead of them.  For many viewers, especially older and lower-income households, it is the primary gateway to television.

From a commercial perspective, planning as if linear distribution is a short-lived legacy platform makes little sense.  Broadcaster business plans routinely extend five or ten years or more.  Linear strategies, including spectrum, transmission and investing in EPG positioning, remain economically rational within that horizon.  The transition to IP will be gradual and uneven, not a cliff edge.

The Quiet Power of Prominence

One of the fastest ways to influence broadcaster revenues is not technological but regulatory and platform-driven: prominence.

Where channels and services appear in guides, interfaces and home screens has a direct impact on viewing, and therefore on advertising value. In a fragmented environment, discoverability is currency.  Ensuring strong prominence for public service and other broadcaster services on connected TVs, set-top boxes and aggregated platforms may do more for revenue sustainability than marginal gains in ad tech.  It is a concern that the current Ofcom consultation on connected guide prominence is focused heavily on PSB prominence, rather than on the commercial value of prominence overall.

Improved prominence helps linear and on-demand revenues alike.  It drives reach, stabilises share over time, and strengthens the case for advertisers to continue investing in broadcaster environments rather than drifting entirely towards non-UK global streaming platforms and isolated SVOD apps.  Ofcom and the government have to date steered away from regulating digital EPGs, passing huge power to the platform operators to determine for themselves which services and whose content to promote, but as market power shifts to those platforms, the digital Wild West EPGs have to accept they ought to be a regulated space.  How can it be right that the SKY EPG on Glass is unregulated, barring access to content or channels that Sky doesn’t like (or have a jolly deal with), whilst the SKY Digital EPG is an open access regulated space?  The consumer product advertising rests on a proposition that it is largely the same as “TV”, but the regulations are entirely different: this surely can’t be a sustainable regulatory position.

 Linear’s Paradox and a Long Hybrid Era

Linear television appears to be in managed audience decline, yet it remains economically resilient.  Digital and IP models are the strategic future, but they are not yet large or integrated enough to stand alone in UK broadcaster business plans.  Even the new wave of archive drama and music channels that are making good returns on Freeview, struggle to do the same on any streaming platform.  It will be a very long time before those revenues could justify a new programming budget.

The likely outcome is a long hybrid era.  BVOD, data and addressability will grow.  FAST will evolve as platforms integrate but monetisation will only improve as platform-level inventory aggregation models emerge and a real digital household-based currency emerges.  But for the foreseeable future, linear advertising will remain the most important single revenue stream for most UK broadcasters — and linear prominence may still prove more powerful than new technology in protecting that position.

The digital revolution as at 2026, turns to me to be less of a leap into the brave new world than many industry experts and investors suggested, and it is my view that success in this new world, will be based on slow and thoughtful negotiation with the economics of the old, not by prayers and hope for radical change.