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There is an inclination in this country to assume that consolidation and cost-cutting are the answer to every industrial problem.
This may be because the financial sector is disproportionately influential in the economy, and pushes restructuring as a solution because it makes a lot of money from the fees and delivers a short-term fix which allows everyone temporarily to forget about the underlying long-term problem. It is partly because of a political refusal to do the vision thing and embrace forward thinking, in the mistaken belief that the British can't do big projects and that it should all be left to the market to determine because planning won't work, and it is partly that the art of management has been degraded by the cult of shareholder value and executive remuneration strategies to the extent that the only constraint on what can be achieved in business is the size of the carrot dangled in front of executives.
Other countries do not have these hang-ups, which is why they are much better positioned than we are to be competitive in the modern digital world.
Nothing underlines this more than the debate about the media industries in digital Britain. The problems of many UK broadcasters and media outlets have become visible because of the recession-induced advertising slump, but they will not go away when the advertising comes back, because the nature of the business is changing.
The cyclical problem is concealing a structural challenge and the ideas that Channel 4's problems can be solved by merging it with Channel 5, or ITV will be transformed if it can shed its obligation to deliver local news broadcasts are frankly risible. The industry needs to be repositioned for a global digital world.
This is a huge opportunity, and one the Government ought to encourage given its desire to use the economic downturn to move Britain forward. The creative industries in Britain generate £60 billion of economic benefit and support two million jobs, according to a report from the National Endowment for Science, Technology and the Arts. But they are not punching their weight globally because the arrival of the internet and everything that goes with the digital environment has fundamentally changed the game.
Two things emphasise this. First the US-owned Discovery Channel, which broadcasts on satellite networks worldwide, was recently valued at $12 billion. BBC Worldwide, which has access to natural history and science programming in the BBC library vastly superior to anything likely to be screened by Discovery, has nothing like that value because it is simply not structured in a way which allows it to capitalise on that market opportunity.
TV advertising revenues last year in the UK were £3 billion, more or less the same as in 2000. But in eight years, internet ad revenues have grown from zero to about £3 billion. There is growth in the market but the ad revenue goes to Google, Yahoo, Microsoft and AOL. None of it is captured by UK media companies to support and develop British-made content.
Andy Duncan, chief executive of Channel 4, said in a speech last week that the UK advertising base is simply no longer big e nough to finance the production of enough creative content of quality to capture a world market.
The issue is not the digital divide in Britain and how long it will take someone in the Highlands to download a movie. It is how one of Britain's key industries will escape being relegated to a backwater in the face of a tidal wave of American content from producers structured to exploit the digital world.
The old economic models are not relevant, nor is tinkering with them, issues such as merging Channels 4 and 5 suggesting clichés about deckchairs and the Titanic. Yet sadly it is on parochial issues such as these that so much of the debate revolves. Someone needs to grasp the big picture.
This is the real issue that needs to be tackled by Lord Carter's report on digital Britain, to be published this month. It, and a report from Ofcom, will shape the digital future. But what is crucial is first that it has the boldness of vision to embrace the world opportunity, and second that those in the industry respond appropriately.
