MEDIA: FORUM - Can Channel 5 make a leap into the mainstream? Where now for Channel 5? It has a new senior management team and the prospect of much bigger programming budget. Is this the start of an ambitious new era, Alasdair Reid asks

Several months ago, in the wake of the Viacom-CBS and AOL-Time Warner deals, there was more than a touch of frenzied merger speculation on this side of the Atlantic too. People started thinking big, really big - and realised that where the United States of Europe is concerned, there is only one mainstream broadcaster in the premier league. It's called RTL.

Several months ago, in the wake of the Viacom-CBS and AOL-Time Warner deals, there was more than a touch of frenzied merger speculation on this side of the Atlantic too. People started thinking big, really big - and realised that where the United States of Europe is concerned, there is only one mainstream broadcaster in the premier league. It's called RTL.

It was only natural that people would start speculating about the possibility of RTL buying up the major European broadcasting properties it didn't already own. Like, for instance, ITV. But RTL sources had a ready answer for such idle speculation. 'Why should we want to buy into ITV,' they argued, 'when we already have a British channel that we could turn into something far bigger?'

Did they mean Channel 5? Channel 5? Yeah, right. This notion was just so obviously bizarre that most people tended to ignore it. This was clearly an example of what passed for a sense of humour in non-Anglo Saxon countries.

Now we might see who was kidding who. With the departure of its chief executive, David Elstein, Channel 5 is poised on the threshold of a new era. There's a new senior management team. Dawn Airey, previously the director of programmes, has been confirmed as the new chief executive; and the sales boss Nick Milligan becomes the deputy chief executive. But that's not all. RTL, the channel's majority shareholder, is in talks to buy out United News and Media (UN&M), which owns 35 per cent of the equity.

There is already talk of RTL boosting Channel 5's programme budget.

Just how ambitious should Channel 5 be? Do advertisers and agencies want to see big changes? Andy Zonfrillo, the broadcast buying director of MindShare, feels that everyone would welcome another strong, high-rating national channel.

He says: 'They could certainly keep growing by looking for more programmes like Zena and Hercules, which have been pretty successful. But while that might improve audiences, it would leave them roughly in the same place in the market. I think they might want to look at a broader strategy to take them forward.

'When you have BBC1 and ITV fighting over the nine o'clock slot, they might want to look at whether sticking with films at nine is the right strategy.'

Zonfrillo argues it needs more appointment-to-view programming. He says: 'It's going to get Home and Away, but is that enough? Everyone knows that you need regular soaps and dramas around which to construct the rest of your schedule. We'd also like to see less of the smutty and grubby stuff at 10 or 11 o'clock. The truth is that G-string Divas and European Blue Review are not necessarily the sorts of programmes that mainstream advertisers want to be associated with.'

David Crawley, the media director of Scottish Courage, agrees that the ratings war presents an excellent short-term opportunity. He says: 'With Nick Milligan's elevation, they can marry commercial astuteness to programming expertise - which can only enhance the Channel 5 offering as it stands. They will be astute enough to realise that the nature of the ITV and BBC ratings war - merely moving existing programmes to different slots - creates plenty of opportunities. Channel 5 can box clever around that. I think they know where they need to attract audiences and how they should go about satisfying the demands of advertisers.'

Advertisers such as Scottish Courage have always valued Channel 5's relative strength against the 18- to 34-year-old male demographic. There seems to be little concern that this point of difference would be diluted. The widespread attitude seems to be that any sort of commercial audience growth has to be welcomed.

Mick Perry, the vice-chairman of Universal McCann, subscribes to that view. He says: 'Channel 5's arrival has been very good news for advertisers in that it has increased commercial television's share of the audience cake and that has helped to hold prices down.'

Perry says: 'In an ideal world you would like to see stronger movies. It has done pretty well so far and, though there's this perception of Channel 5 purveying soft porn, the reality is that it's only a tiny percentage of programming and I don't think that in itself is a problem. However, in a multichannel household there isn't enough to make Channel 5 stand out. It's fairly obvious they need more programming that people will seek out. They need some decent comedy and some strong drama.'

Perry adds: 'Its audience has a younger profile relative to most of commercial TV but, as its audience has grown, its profile has become older and more downmarket. We shouldn't be too surprised at that - that's what happens when your audience grows.'

Most observers argue that there's an awful lot more in the way of politics to play out between RTL and UN&M. They also say that it isn't a breeze turning cash into ratings. Viewers are more channel loyal than they are given credit for - and loyalty takes decades to acquire. Therefore, sceptics argue, Channel 5 will remain third in the commercial pecking order behind ITV and Channel 4.

We'll see. Meanwhile some observers feel that Channel 5 should be focusing on bigger, more structural issues than programming budgets. Paul Parashar, the broadcast director of New PHD, says: 'They should be looking at what's going to happen to broadcast revenue streams in the future. I think we can say with some certainty that, as a percentage, ad revenue is likely to decrease slightly. I think we're going to see more coming from areas like subscription, pay per view, product placement and transactional TV.'

Parashar adds: 'It's important that Channel 5 convinces us that it has a strategy that takes it beyond spot advertising. Channel 4 has e4; Sky and the cable companies are developing this area and the two ITV companies have ONdigital and other interactive and broadband plans. I'm not sure where Channel 5 stands in all of this - and it has leased its digital capacity to someone else. At the outset, Channel 5 wanted to be seen as being innovative on the commercial side and I think people expect them to continue to innovate. You could argue that they now need a broader innovation strategy with the business backing to follow it through.'



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