'Change is the only constant,' says Channel 4's Andy Barnes

Channel 4's sales director Andy Barnes talks to Harriet Dennys about the newly self-reliant broadcaster's move into e-tail, the shows lined up to replace Big Brother, and what Project Canvas will mean for the market

Andy Barnes, sales director, Channel 4
Andy Barnes, sales director, Channel 4

The sweeping changes at Channel 4 since David Abraham took the top job in May are mere rumbles in an industry that has been turned on its head.

IDS and Viacom Brand Solutions have been consigned to TV history, press baron Richard Desmond has swooped on Channel Five, and internet-broadcast fusions are set to become the default choice for the iPod generation.

"Change is the only constant," says C4’s sales director Andy Barnes, who has stuck fast, limpet-like, as five chief executives and four chairman have come and gone and technology has evolved so far even his two-year-old nephew can change the home-page photo on an iPhone.

"All the things I can conceive of in television are on their way; project forward to 2015 and the medium will be unrecognisable."

A far cry from the days when Michael Grade told Barnes not to bother presenting to the programming team more than once a year, and a shift that has prompted the broadcaster to knock down its walls to create a new, modern house.

The only problem is, it’s raining, and the foundations that will allow the channel to compete in a converged, consolidated world – a new chief executive and chairman, a new structure for the sales team and a reshuffle of senior management – are only just in place.

What’s more, the broadcaster is set to lose its ratings bulwark Big Brother at a time when its rivals are upping their game, with Sky announcing bumper profits and a tie-up with HBO, ITV moving into pay-TV through its HD channels deal with Sky, and Channel Five given a timely boost by Desmond’s millions.

Even the umbrellas on the "4" sculpture outside the C4 building – "what goes on that four is part of what the channel is" – are starting to look a little tired.

However, C4 has a few cards of its own up its sleeve, most notably the 10-year deal with UKTV to handle its ad sales from 1 January, which will take C4’s share of 16 to 34 year-olds to 33% and boost its share of the TV ad market to 29%.

Going it alone

There will be no more talk of licence fee raids, partnerships with other broadcasters or government intervention, as in the Andy Duncan days; C4 has a new message of self-reliance. "Who is going to give us money?," says Barnes. "No-one here wants it or expects it. The world has turned and we will get on with making what we can. We are not looking for help from anyone else."

The bedrock of C4’s commercial operation is still TV trading, known in the business as "the trade". Barnes says: "The trading side is still massively important. If you get that wrong you are not even on the page."

Mick Perry is a "fantastic signing" to fill the gap left by former head of agency sales Matt Shreeve, while the restructured sales team has created a "better base to do business" with agencies and advertisers.

Barnes attempts to illustrate C4’s newly configured sales team using two footballs branded in the colours of his beloved Arsenal FC, but gives up when Media Week looks mystified to deliver the key message.

"The thing that is interesting for agencies and advertisers is that the people who are closest to the art of the possible is us. If you are an agency, the answer’s yes, now tell us what the question is."

Last month, Adam Crozier announced his intention to reduce ITV’s revenue from TV ads from 74% to 50%, and Barnes is similarly keen to diversify C4’s income away from advertising, which accounts for 92% of its revenue. "We want to diversify," he says, "but the $64m question is ‘ok, into what, and how?’"

Channel 4’s on-demand business is booming editorially but, says Barnes, this is not the solution. "On-demand is spoken about as the great white hope - and in time it will be - but in the short-term it is relatively small and totally cannibalistic. The money that goes on 4oD comes straight out of the TV budget."

Nor can the broadcaster boost its profits by developing its hit shows such as Deal or No Deal in-house and exporting the formats around the world, because C4 is bound by terms of trade to outsource its programme-making.

"We fully fund and cash-flow independent producers, then we get maybe two showings on Channel 4 and six on digital, then we have to buy the [secondary] rights back. We don't own our shows long term," Barnes says.

Expanding into e-tail

Instead, C4's preferred strategy is to attack DRTV budgets by moving into e-tail: allowing consumers to buy the products featured in its shows, either online or through the TV. Barnes says: "If you are watching Friends, for example, you could think ‘I really like Rachel’s top,’ press a button and buy it."

Plans for C4’s e-tail operation are in the early stages, but Abraham is in the process of appointing a director of e-tail and Barnes hints at the launch of a shopping channel. In July, C4 launched its first online e-tail site, 4Beauty, which sells brands including Dove, Chanel and L'Oreal. Channel 4 takes a slice of revenue from online stores through an affiliate deal with online retailer ShopStyle.

Barnes says: "Channel 4 is a provider of quality content, so how do we harness that content to make more money from it in a different way? E-tail is an obvious way we could do that, and it could provide us with a lot of money in the future. But we don’t have any models yet, we are just dipping our toe in the water."

Abraham has indicated he is looking at more commercial tie-ups, and a logical move, with UKTV’s sales contract and former chief executive both now at C4, would be to buy the company outright.

So is C4 interested in acquiring UKTV? Barnes laughs. "Possibly. It is all about the money they require and our view on the investment. UKTV is a very good asset and I am sure conversations will be taking place."

On the programming side, the loss of Big Brother has freed up an extra £70m, and Barnes jokes: "We are open for business. Come and give us your ideas." The broadcaster will unveil its autumn programme schedule on 7 October, and the shows attempting to replace the "once in a lifetime" BB phenomenon include a reality show set in a police station; a docu-drama about Notting Hill; and The Food Show, which Barnes describes as a "Top Gear for food".

Making online pay

Channel 4 has integrated its broadcast and online editorial teams ahead of next year’s launch of Project Canvas, and online viewing is soaring, with full-length programme views on 4oD up 60% in 2009.

Barnes believes internet-broadcast hybrids such as Canvas and Google TV will be "fantastic" for consumers and advertisers - "what do you want us to do with Canvas? It will be unbelievable" - but the downside is that the increased supply of online content will deflate prices.

Revenue from 4oD is currently "tiny" - even though ads are sold for four times the rates of broadcast ads - and Barnes admits the sales team will have to become even more creative as prices drop. He says: "It costs us 12 times the amount in people terms to sell an impact online as it does on television. That is not a business model that can survive."

Drawing similarities with online newspapers, Barnes backs Murdoch’s "brave" decision to erect paywalls and rules out producing online-only TV shows unless his team is "pretty sure we have something we can make money from".

He says: "Content being free online is not a valid business model. If we make something for online, why would you not make people pay for it? It’s madness."

Although the future won’t be easy, and will require broadcasters to "change and change again", Barnes believes C4 is still "a brand of style and difference that has a unique relationship with its audience". In the TV world as he sees it, Sky is cheap, ITV delivers reach and C4 provides quality - with an edge. "Channel 4 is not wallpaper television, and that is the beauty of it," he says.

Back to the tatty umbrellas on Horseferry Road, which Barnes plans to replace with something more uplifting, something representing "vibrancy, life, youth" and - you guessed it - "change". "Channel 4 is not better, it is just different, and that is what we have to retain," he says. "If it becomes the same, we will die."


Whether TV trading is looking ‘creaky’

"We have been talking about the TV trading mechanism changing for the past 30 years, but the truth is it has become more and more ingrained, and other media want to change to the way TV works.

The Sun, for example, is looking to sell on a cost-per-thousand basis rather than a cost-per-centimetre basis. There are many things in it that are logical and make sense and many things that are counter-intuitive, but I don’t think anyone believes 2011 will be traded in a very different way to 2010."

Richard Desmond’s entry into the TV market

"Richard Desmond has a history of being incredibly successful at what he does, but is he a viable competitor in the TV market? You need to look at Channel Five’s share of impacts - next year, we will have almost one third of the 16-34 year-old impacts, but Five will have maybe 5%. I like Channel Five but it has got to grow. That is what Desmond has seen and that is why he wants to change it."

Moving into pay-TV

"It is on the agenda. But if you pursue that strategy you go from universal coverage - because everyone has access to Freeview - to reaching only those people who have access to pay-TV. If you are on Sky, you can’t be on Freeview, so you immediately lose all those viewers and you reduce your adspend and therefore your impacts."