NEWS: Channel 5 to make pounds 99m in first year

Channel 5 will achieve ad revenues of pounds 99 million in its first year, mostly at the expense of Granada and Carlton TV, a study by the stockbroker, Goldman Sachs, says.

Channel 5 will achieve ad revenues of pounds 99 million in its first

year, mostly at the expense of Granada and Carlton TV, a study by the

stockbroker, Goldman Sachs, says.



The new station, which is expected to launch in January 1997 and

initially cover 58 per cent of the UK population, should take a three

per cent share of total TV viewing, or 5.6 per cent of commercial

impacts, in its first year. Goldman says this will rise to 4.5 per cent,

or 8.2 per cent of impacts, in 2002, when its coverage will rise to 72

per cent.



Channel 5 should start with a 3.8 per cent share of total commercial ad

revenue, based on an initial 35 per cent discount on ITV, and achieve

7.3 per cent by 2002, by which time the discount will have narrowed to

15 per cent.



Granada and Carlton will see their profits shaved by pounds 12 million

and pounds 16 million, respectively, as a direct result, the report

predicts.



MAI Group, the other major ITV force, will be less affected because

Channel 5’s penetration will be minimal in its broadcast regions of

Anglia and Meridian.



The report received a mixed reception from media buyers. David Cuff,

broadcast director of Initiative Media, labelled it ‘very pessimistic’.

He added: ‘GMTV, which only broadcasts for three and-a-half-hours in the

morning, will take pounds 93 million in 1997. [This report] is saying

Channel 5, with 24 hours at its disposal, will only take six or seven

per cent more. I think it will be very disappointed if it does not get

pounds 150 million.’



However, Bill Barker, broadcast director of J. Walter Thompson, took the

opposite view, predicting first-year revenues of between pounds 65

million and pounds 85 million.



The award of the Channel 5 licence to Channel 5 Broadcasting is

currently the subject of a judicial review, which was instigated by one

of the losing contenders, Virgin Television. It could delay Channel 5’s

launch by up to one year.



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