Close Up: Live Issue/BBC-Flextech Joint Venture - BBC strengthens its hand with lucrative marriage - Richard Cook looks at the benefits for both sides in the latest TV joint venture

By RICHARD COOK, campaignlive.co.uk, Friday, 28 March 1997 12:00AM

There was a time when all of us - press, planners, punters - were excited by the prospect of a new TV channel. No matter how often we had surfed gleefully through 30 channels on trips to the US - only to find them all playing either M.A.S.H. or I Love Lucy re-runs, our enthusiasm never waned. These new channels, after all, were the start of our very own broadcasting revolution, and we all wanted to be at the forefront, kicking down the establishment gates.

There was a time when all of us - press, planners, punters - were

excited by the prospect of a new TV channel. No matter how often we had

surfed gleefully through 30 channels on trips to the US - only to find

them all playing either M.A.S.H. or I Love Lucy re-runs, our enthusiasm

never waned. These new channels, after all, were the start of our very

own broadcasting revolution, and we all wanted to be at the forefront,

kicking down the establishment gates.



But that was then. What we weren’t prepared for was the sheer number of

launches. And that’s without adding digital television to the

equation.



With digital, the numbers become simply baffling: BSkyB, for example, is

promising a 200-channel digital satellite service, while the Cable

Communications Association has settled on a prediction of 1,000 channels

’for the near future’.



It would be understandable, then, if the announcement last week of

another eight channels - in fact, up to 11 have already been approved -

failed to set pulses racing. Add the BBC name to the mix, sprinkle

liberally with the news that these will not be free to air, but more

exclusive subscription services, and the interest level will increase,

but not by that much.



After all, the complicated joint venture between the BBC and Flextech

Television - the offspring of TCI, the largest cable company in the US -

had been in the public domain for months. And the existing BBC joint

venture, UK Gold, has been successful, but has hardly changed the face

of broadcasting.



The protagonists themselves haven’t helped. The joint venture comprises

36 separate agreements spun out over a mouth-watering 2,000 pages of

closely worded legalese. Consequently, no-one is willing to make more

than the blandest predictions on how the link-up will work.



For the BBC there is the added pressure of its classic Catch 22 - it

wants additional revenue streams to take pressure off the licence fee,

but if the audience of its subscription-funded channels come anywhere

near that of its licence-funded stations, the raison d’etre of that

licence fee becomes less compelling.



’This agreement marks an historic development for the BBC and I greatly

welcome the partnership with Flextech,’ says the BBC’s deputy

director-general and the chief executive of BBC Worldwide, Bob

Phillis.



If anything, Flextech’s managing director, Brent Harman, sounds even

more downbeat. ’Our aim is not to be a provider of mass audience

channels on satellite and cable,’ he says, ’but to be a major provider

of carefully targeted, niche programming.’



That’s the very least Flextech is hoping for from the deal, to which it

is contributing pounds 140 million.



Because what Flextech ends up with is a brand name, a block of available

space and a short cut for viewers and advertisers looking for a way

through the mass of available choices.



’There is no question that what is largely missing on cable and

satellite services at the moment is the sort of quality programming

attractive to a BBC audience,’ Harman says.



’So for us the value of association with the BBC brand is

inestimable.’



For the BBC the value is more directly quantifiable - a dollars 1

billion revenue stream over the next three years according to Adam

Singer, the president and chief operating officer of TCI’s international

arm. He adds: ’We’re the first company to have cut a deal like this with

the BBC.’



The potential is huge, because the revenue stream generated by the joint

venture and by a half share of profits from the channels, offers another

opportunity. The BBC will now be in a position to bid for sporting

events, for example, that so far it has neither the airtime nor the

funds to support.



’The joint venture won’t be bidding against BSkyB for sports rights, we

won’t be going to Hollywood for film rights and although we will be

doing some commissioning, we won’t be spending pounds 10 million on a

drama series like Rhodes,’ Harman says. ’That’s not what we’re about.

Our sports channels, for example, will show things like Question of

Sport or clips of sporting cock-ups.’



The joint venture might not be bidding, but the BBC almost certainly

will be. And it will be doing so with a vastly improved hand. By the

time the next tranche of rights comes up, the joint venture should be

firing on all cylinders and the revenue stream firmly established.



’Part of the problem the BBC has had in competing for sports rights, for

instance, and in clinging on to the major events is that it hasn’t had

the space to do them justice,’ one TV broadcast director says.



’You could argue that Sky goes too far the other way, but at least it is

prepared to put on Coventry v Wimbledon and not just Newcastle v

Manchester United. The BBC couldn’t do that in the past because it

wouldn’t get good enough ratings. Now it can.’



The joint venture will also offer advertisers access to a raft of

channels that provide an alternative to Sky. They will deal direct with

the former Abbott Mead Vickers BBDO broadcast director, Tony Wheble, who

will be heading the sales team.



The first five of these new channels will launch in the autumn,

accompanied by an ad campaign from BST-BDDP. It might be forgivable if

we missed its significance amid the probable barrage of launches. It

might be forgivable, but it would be wrong.



This article was first published on campaignlive.co.uk

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