Media Headliner: What Discovery can borrow from American Idol

Chris Shaw hopes that lessons learned from Simon Fuller can help him build ad revenues at the broadcaster.

The commercial TV market has been fogged by uncertainty throughout 2009. Questions have surrounded everything from the future of Channel 4 to constant rumours of sales house consolidation. Yet not a great deal has changed. With the likes of ITV and Channel 4 still lacking clear leadership and Contract Rights Renewal set to remain in some shape or form, the status quo has largely been maintained.

One thorny issue, however, has been resolved. The responsibility for selling airtime across Discovery Networks' 13 UK channels will remain with Sky Media. This follows months of negotiations against a backdrop of legal action that was set to reach the High Court next month. The legal case, thought to relate to bonus payments Discovery felt it was owed by Sky for exceeding audience targets, has now been dropped as Discovery has committed itself to a relationship with Sky for the next four years.

Good news for both parties because Discovery gives Sky greater clout in trading negotiations (its contract is thought to amount to around 15 per cent of Sky's impacts) and Sky lends Discovery a greater voice in the market.

Managing negotiations on Discovery's behalf throughout all this has been Chris Shaw, the former head of Universal McCann in London and then across EMEA, who has just been confirmed in the new role of Discovery's senior vice-president for business development across EMEA and the UK.

Having worked as a consultant for Discovery for several months, Shaw has agreed to take on a permanent role and will report to, jointly, David Rey, Discovery's EMEA chief operating officer, and Dee Forbes, the incoming UK managing director.

So what convinced Shaw, who left UM back in 2006 and then joined Simon Fuller's 19 Entertainment business, to join Discovery full time? He says: "Discovery is a growing business and, in TV, at the moment, that's unusual. We've fundamentally got some very good global brands, but there is work to be done in the UK because the industry doesn't know there are 13 brands in the UK market."

Shaw says that Discovery's reach of 3.2 million viewers each day is already strong, but that the focus for advertisers, with Sky leading negotiations, will be on "quality of viewer rather than quantity" and that Sky is incentivised on how successfully it sells hard-to-reach "lighter" TV viewers as part of the Discovery portfolio.

Discovery, which has been among the largest providers of pay-TV audiences in the UK for 20 years, is one of the few broadcasters to be investing in content, with the recent launch of its Quest channel expected to build its audiences. In addition to managing the ad sales relationship with Sky, Shaw will be responsible for maximising Discovery's revenues from areas such as branded content - something it has had on the back burner for the past three or four years despite award-winning documentaries, such as its 2004 Virtual History strand, backed by HP.

Shaw's background should help achieve this - at UM, he was responsible for launching its branded content arm and, in his latter days at the network, seemed most at home among the production community at the MIP conference. He then joined 19, where he was briefed with overseeing Honda's promotional deals with Formula One.

Most of all, though, he learned from watching Fuller's approach to a brand such as American Idol, where only a small amount of the revenue stream comes from advertising. He says artist management, music rights, books, merchandise and tour deals were all more lucrative for Fuller and that his model of partnerships and joint ventures will work in the TV sales world.

Shaw envisages greater co-operation between the smaller multi-channel broadcasters in managing ad sales. He says: "In terms of ad sales, that's exactly what will happen - as smaller broadcasters enter into joint ventures to share the costs and the risks."

And while he's keen to build Discovery's involvement in branded content, Shaw suggests that product placement, should the UK rules be liberalised, won't be as significant as some observers suggest. "A lot of nonsense is talked about product placement. There's a lot of hype, but it's big in the US because there is scale in the market. But product placement is only important when it's a key part of an integrated campaign," he says.

In light of this and the wider downturn in UK TV ad revenues, Shaw will have a tough job in growing Discovery's commercial business. And he believes the way in which the UK market trades doesn't help matters. "We can't escape the fact that pricing has fallen dramatically across the board and, as long as station average price remains in place, then that will continue to be the case," Shaw says.

He also believes that the UK is lagging behind other markets in areas such as IPTV development, with the likes of Russia having a more open approach. Shaw says: "I was perplexed by the decision to block Kangaroo. This won't stop IPTV happening because Hulu will come in and we've already got YouTube - we've just stopped our own from producing it."

That said, Shaw is enthusiastic about Discovery's opportunities in the UK. "The new ad sales structure with Sky is defined around growth and encourages us to develop," he argues. Whether agencies are willing to buy into this argument is another matter.

THE LOWDOWN
Age: Old enough to remember HR Pufnstuf with Jack Wild
Lives: Pinner
Family: Wife and two daughters
Most treasured possession: You can't possess children, so my Fender
"Eric Johnson" Strat
Favourite TV shows: American Chopper, House, Top Gear and TJ Hooker
Alternative career: Bernie Ecclestone's replacement when he retires

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