Magazine article Marketing

Amanda Andrews on Media: C4 Is Back on the Shelf

Magazine article Marketing

Amanda Andrews on Media: C4 Is Back on the Shelf

Article excerpt

The 'Digital Britain' report has left a raft of unanswered questions about the broadcaster's future.

The tie-up between Channel 4 and BBC Worldwide was set to be the perfect marriage. It was the favoured route of communications minister Lord Carter for the future funding model of Channel 4, which is expecting a shortfall of pounds 150m a year from 2012.

The idea has been in the offing for a long time: first officially suggested in Lord Carter's interim report and Ofcom's review into public-service broadcasting, it was in fact mooted months before.

Talks between the pair were apparently progressing well. We knew there would not be a full-blown merger, but this was inconsequential as long as the tie-up helped Channel 4 achieve its goal of being able to produce better content and a more compelling offer to advertisers.

However, last week's 'Digital Britain' report has again left the future funding model of Channel 4 up in the air. It is now a question of if, rather than when, they will strike a deal.

The report acknowledged that further work is needed, as a deal would require structural separation of BBC Worldwide. It determined that 'changing the terms on which Channel 4 acquired content rights' would be necessary before a deal could be agreed.

In the past few days, some in the industry have, fairly, questioned whether the alternative option of a merger with RTL-owned Five would have been a better solution. I am not saying this deal is the answer, but is there at least good reason to think otherwise? Recent revelations have caused me to question whether the government has really thought through its options.

Sources have revealed that the offer from RTL included a five-year guarantee against losses, a programming budget of pounds 418m a year for five years and more public-service broadcasting on both channels.

Channel 4, however, insists the numbers do not stack up and that Five's ad revenues have been hit worse than its own. It insists it would be better off remaining independent than merging with Five.

However, if Channel 4 does stay independent, programming budgets are likely to be cut further, and its appeal both to consumers and advertisers could suffer significantly.

Whatever the case, a merger between Channel 4 and Five would have created a purely commercial, large-scale broadcaster, which, unlike a BBC Worldwide tie with Channel 4, would be free from the shackles of state ownership. …

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