Media: All About ... The future for Five

Will the ailing broadcaster find a life-saving soulmate?

Love hurts. In fact the whole relationship business can be terribly cruel - as indeed was amply illustrated during Five TV's most talked-about programme of the year to date, the edition of The Wright Stuff last week, where one-time pop star David Van Day dumped his girlfriend, The Sun reporter Sue Moxley, live on air.

Harsh. But perhaps it is better to have loved and lost than rarely to have loved at all - lonely, mocked and reduced in desperation to fluttering one's lashes at every prospect that passes by, no matter how unlikely (though we speak from no personal experience of this, it must be understood).

Which is, of course, exactly the sort of situation that lovelorn Five has found itself in. It all began back at the tail end of last year when deteriorating market conditions increased the desperate determination of Channel 4 to ends its (not always entirely splendid) isolation.

Channel 4 needs to find a way to plug what had already been identified as a widening gap between its income and its aspirations to produce distinctive public service programmes - and the solution it favoured was to find some sort of union with the BBC.

By the turn of the year, however, with Five realising it was facing similarly horrendous deficit problems, it began spoiling this fine romance by setting its cap at Channel 4. This seemed an unlikely proposition. And not just because Andy Duncan, the chief executive, and his counterpart at Five, Dawn Airey, would make an extremely implausible couple - the two institutions are (if you believe the gospel according to Channel 4) as culturally incompatible as oil and water.

But it wasn't long before that water was muddied - and a low point was reached when the executive chairman of ITV, Michael Grade, not previously known to be an advocate of troilism, proposed a menage a trois, with ITV, Channel 4 and Five becoming one.

Again, unlikely. And not just because of the monopoly concerns that would arise, but also because BSkyB still holds a 17.9 per cent stake in ITV, a holding initially acquired back in 2006 to block a proposed merger between ITV and Virgin Media.

A pantomime? No, of course not. Not yet, at any rate. On the other hand, it is true that, last week, cruel stepfather Thomas Rabe, the chief financial officer of Five's ultimate parent company, Bertelsmann, decreed that if Five didn't make a suitable marriage in double quick time, it might find itself cast out upon the street.

Rabe was pursuing the inexorable logic of the current business climate. "Everybody agrees that there will be further consolidation in the UK TV market and we are deeply convinced we will be part of it. There is no doubt that in that consolidation, Five will have a value," he stated.

The bottom line is that Bertelsmann and its television division, RTL, no longer regards Five as sustainable in its current form - but all of its merger options are, to say the least, highly problematic.

1. Five was given the go-ahead in the mid-90s (eventually launching in 1997) in response to lobbying from advertisers desperate to gain some relief from rampant airtime inflation in the days when ITV had a virtual monopoly of the commercial broadcast market.

2. It was initially owned by a consortium including Pearson, United Business Media and RTL. But when the European TV powerhouse RTL acquired full control in 2005, this was seen not just as a guarantee of Five's future, but a signal it may now be given more ambitious targets.

3. This new optimism was underlined when Five poached back its former chief executive, Airey, from ITV, where she had run its global content arm. She took up her new position at the end of October 2008, following a period of gardening leave.

4. In early March, Airey announced that 87 staff would be made redundant from a total workforce of 350. Proposed changes at the broadcaster, in response to a rapid decline in ad revenue, include a merger of on- and off-air marketing into a new creative unit and a merged commercial and legal affairs department.

5. Bertelsmann, which has a 90 per cent stake in RTL, announced on 24 March that it was writing off £309 million on the book value of Five due to difficult trading conditions in the UK advertising market.

WHAT IT MEANS FOR ...

COMMERCIAL TELEVISION

- If Five were to disappear, the main issue would be the fate of its premium US programming such as House.

- Five's owner, RTL, currently buys US programming in agreements embracing its whole European-wide network of stations - so it's able to leverage a good deal.

- Neither ITV nor a BBC-owned Channel 4 could seek to replicate that leverage. So on this issue alone, if Five were to decline as a force or disappear altogether, Sky might be the broadcaster best placed to benefit.

ADVERTISERS

- Sadly, if Five were to disappear tomorrow, it would not overly upset advertisers - as can perhaps be gauged from last year's annual negotiation season, when the broadcaster suffered a torrid time at the hands of airtime buyers.

- No matter what it does in terms of programming and scheduling, it has never been able to shake off the unappetising demographic profile it acquired (deliberately) in its earliest days. Its share of adult viewing across all its channels rose slightly in 2008 to 6.2 per cent, but observers say that, despite successes such as CSI and new series The Mentalist, it is failing to consistently attract the more upmarket TV viewers that eased its profile problems in years gone by.

- As Neil Johnston, the head of TV at OMD UK, puts it: "I think, in the past, many agencies have invested in Five on a promise of what's to come. There comes a time when you have to start questioning whether there is anything to come."

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