David Prosser: The screams will get louder and louder in the Five horror show
Thursday 12 August 2010
Outlook Well, what did they expect? Judging from the anguished squeals from staff at the television channel Five yesterday, the £20m cost-cutting programme unveiled by their new boss Richard Desmond – 80 job losses and seven board members departing – took them by surprise. It certainly should not have done.
Mr Desmond's modus operandi has been honed at Express Newspapers, where costs were slashed even more brutally within days of his arrival in 2001 – and then slashed again and again in further rounds of blood-letting. Just as he now talks of making huge investments at Five, Mr Desmond once promised to plough money into the Express titles. It never happened.
This is not to be snooty about the media mogul, even if some of his antics in the past have hardly inspired reverence. However much sympathy one might have for the victims of the Five job cuts, they did not have the right to assume their employers would simply go on covering the business's losses ad infinitum. This, after all, is a company that has not made money since its launch 15 years ago.
The real mystery is how Mr Desmond thinks he will ever be able to engineer a turnaround. The cuts will reduce the losses of course, and the remarkable increase in frequency with which Five's programmes seem now to appear among the recommendations of the TV critics of the Express titles might drive a few more viewers its way. But what is the strategy here?
It should be said that despite the widespread scepticism about Mr Desmond's commitment to invest £1.5bn in the business during the next five years, he has in the past been prepared to put his hand in his pocket. Big money went into OK! magazine, for example, and also into the launch of an American edition of the title.
One could, however, see the commercial logic in those decisions. Five, on the other hand, is a bit-part player in an industry that is in decline – in its traditional format at least.
Last week, Adam Crozier presented a damning assessment of a similar business where he is now at the helm. ITV, he pointed out, is seeing its audiences shrink in a multi-channel environment and thus has a weaker and weaker claim to the advertising revenues on which its business model is so dependent. These revenues are themselves also declining in any case – outside of the online and digital environment to which ITV has limited exposure. That about sums up Five too, except that as a much smaller business, the challenges are far greater.
It's possible there is some sort of future in handing back the public-sector broadcasting licence in order to focus on a family of digital channels and maybe even some pay TV. The business will also benefit from being part of a larger group, through, say, cost synergies and ventures with the OK! titles. But while some cost reductions are possible, Five is tied into some expensive shows on long-term deals and without an unexpectedly strong rebound from the advertising market, it is difficult to see revenues rising markedly any time soon. Sad though yesterday's wielding of the axe may have been, this may be only the first of several "bloodbaths" to come.
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