This is definitely the spring cleaning season in the television
business. Days after ITV tidied up its various properties into a neat
new structure, Channel 4 goes and launches 4 Ventures, a neat and tidy
new structure to accommodate all its non-core activities - FilmFour, E4,
the FilmFour Channel, plus its online activities, international
programme sales division, its Go Racing joint venture and various other
commercial activities such as publishing. The rationale is to bring an
increased focus to the management of these business activities, and that
new focus will go hand-in-hand with a more aggressive investment
strategy. Non-core business (in other words, everything outside of the
main Channel 4 terrestrial television operation) accounted for 4 per
cent of expenditure last year. That will rise to 10 per cent of the
budget - roughly pounds 200 million.
Its horizons, in other words, will continue to broaden. Is this
Shouldn't Channel 4, which has historically been far more comfortable
swimming with the dolphins, think twice about climbing into the shark
tank? And are there any implications here for advertisers?
Actually, the best parallel here perhaps isn't so much what's been
happening at ITV but the situation at another broadcasting institution
It's strangely reminiscent of the approach taken by the BBC, which has
imposed a nominal Chinese wall between its public service,
state-supported media properties and its commercial ventures stretching
from the web through digital TV to magazine publishing.
The analogy isn't perfect - paradoxically, the BBC is far more
aggressively commercial in its ambitions and Channel 4 is far more
public service in its instincts - but few doubt that the BBC has been
spreading its talents too thinly or, indeed, that it is not finding its
internal contradictions extremely painful. And perhaps we are already
seeing signs that Channel 4's golden era (which began with its economic
independence from ITV in 1993) is coming to an end. No longer can we
assume that its stature will grow steadily with its audience. At least,
that seems to be the implication behind a comment by Channel 4's chief
executive to the effect that recent audience successes might be hard to
Does the launch of 4 Ventures signal the end of an era? Don't jump to
conclusions, Andy Barnes, the commercial director of Channel 4,
counters. He can give reassurances that Channel 4 won't neglect its core
business. 'Our programme budgets are up in line with ad revenue
increases,' he points out. 'To say that Channel 4 should just be a
terrestrial broadcaster would mean we were being asked to preside over
decline.' The organisation as a whole has no intention of doing
He adds: 'We have to be valid in all the environments we can. We have to
exploit our secondary rights. We don't really have an option. In five or
ten years we want to be able to hand down a legacy of a channel that is
still up-to-the-minute and has a licence to do things in an innovative
way. If the main channel isn't successful then everything else would
have to fall by the wayside but in buoyant times we can invest more in
reaching people in different environments.
'I think all the evidence is that people are happy with the fact that
we've launched E4. If we'd launched a gameshow channel, people would
have said 'what on earth are you playing at'. And they'd have been right
to. But something like E4 cross-fertilises what we do on Channel 4.'
But isn't the warning on future audiences exactly the sort of thing
guaranteed to set alarm bells ringing at ISBA? It has, after all, been
vociferous in urging that the BBC sticks to its public service knitting.
Doesn't it believe that Channel 4's remit is incompatible with wider
Not necessarily, Bob Wootton, ISBA's director of media and advertising
affairs, says: 'Channel 4 is similar to the BBC in that it is a
statutory corporation. But the difference is that it is a commercial
venture - it doesn't get any mandatory tax revenues. It's also the case
that, while Channel 4 might be investing aggressively, it isn't doing so
to the same degree or with the same degree of flagrancy as the BBC.
If Channel 4's main broadcast channel was falling over we might be down
there to say 'Oi! Stop frittering it away'. But the core product isn't
And, in general, advertisers tend to recognise that mainstream
broadcasters are in a philosophically awkward spot these days.
Fragmentation, after all, is a very real phenomenon and broadcasters
have to make some provision for its impact. But that said, it's also
true that the broadcasting establishment responds well to pressure.
Wootton adds: 'The BBC, ITV and Channel 4 haven't declined as much in
audience terms as some might have expected. So setting targets, even
what may be considered unreasonable targets, does seem to yield
Chris Hayward, the head of broadcast at Zenith Media, agrees that there
is an inescapable logic at play here: 'This type of venture is
inevitable given the way that the TV market is developing. If you want
to be a major player in the future this is the sort of avenue you have
Almost all of the major players have sought to develop in this way.' But
isn't he worried that it always seems to come hand in hand with attempts
to get in early excuses about the difficulty in maintaining audience
Especially, in Channel 4's case, the young and upmarket audiences on
which it has based its revenue success. Its core constituency, in other
It's difficult, Hayward agrees. 'The whole business is difficult. The
truth is that unless you can do something to stimulate overall viewing,
even the more successful parts of the audience will be eroded.'
But Paul Parashar, the broadcast director of New PHD, says that it's
wrong to focus on the potential downsides. He states: 'These days we are
always looking to extend value beyond traditional advertising spots and
that may involve doing deals across the various aspects of what a media
company such as Channel 4 is about. We might want to do a deal that will
bring together things like online, books, broadcast and pay per
Channel 4 as a whole may appeal to a certain set of consumers that
advertisers are keen to get closer to and we will welcome anything that
enhances the ability to do that. Of course, they need to set it up
carefully given the Channel 4 remit. In many respects they need a brand
champion at Channel 4 - someone to ensure that compromises aren't made.
If you're asking me if Channel 4 has a strong enough culture to achieve
that, then I'd have to say yes.'