Mathew Horsman looks forward to Channel 5

If appointing adept and intelligent executives is enough to guarantee commercial success, then the new Channel 5 will be a sure winner. Peruse the line-up: Dawn Airey, the wunderkind former controller of Arts at Michael Grade's Channel 4 (who was so upset at the prospect of her departure that he made her work out nearly her entire notice period); Corrine Hollingsworth, the producer of BBC1's Eastenders; Nick Milligan, formerly the advertising director at UK Gold and UK Living, and before that at Thames Television; David Brook, the marketing man behind the Guardian's unexpectedly strong showing in the depths of the cover price hostilities. And the list goes on.

But putting the right people in place is only the first step in what is likely to be a long, risky slog toward profitability for Britain's newest (and no doubt last) "free" terrestrial television channel.

The first challenge is already proving prickly, according to C5 insiders. The company needs to retune three million VCRs in order to allow viewers to receive the new signal. That requires on-site visits to millions of homes in the UK, meaning there is a real risk of a raft of fake "retuners" showing up at your home and removing various items of commercial and sentimental value.

And even if the criminal element is kept out, C5 is already running behind schedule in its retuning plans, having put off until August the start of its home visits, just six months before the service is meant to become operative.

Insiders insist that there is no panic. There is every expectation, they say, of being able to provide something like a full service by the time the channel is scheduled to launch on 1 January 1997.

Cleverly, the backers of Channel 5, including Pearson and MAI, have made a virtue of necessity, seeing the retuning exercise as the perfect excuse to market the new service to millions of potential viewers. Brook, the marketing man, is already at work on the information pack that will be left with every household visited, extolling the quality and range of C5's offerings. Thereafter, it will be a question of blanket publicity to ensure there isn't a relevant British home unaware of the launch.

Then the going gets really tough. Channel 5 will be launching into a television market where ITV, BBC, Channel 4 and cable and satellite are already fighting it out for viewers. The new service is looking to pinch some of commercial television's revenues, which totalled about pounds 1.6bn last year. They would be happy with perhaps pounds 100m in the first year, but would hope to double that within a few years.

Break-even for the new service is difficult to estimate, and the company itself is unwilling to elucidate for quite understandable reasons. Suffice it to say that C5 will have to spend moe than pounds 100m on its retuning programme, and has set aside about pounds 110m a year for programming. This is not going to be a Cadillac service, clearly. ITV spends a cool pounds 750m a year, while Channel 4 budgeted pounds 270m in 1995. But the new station's backers point out that the service is meant to be cheap and cheerful, heavy on soaps and entertainment, light on high-quality drama and investigative current affairs.

So what does pounds 110m a year buy? A soap five days a week for a start. Likely to go out at 6.30pm every night, the low-budget series will be set in the UK, outside of London, and centre on a group of young people. Airey, head of programming, intends to try to pick up audience from Home and Away, ITV's popular early evening soap, so expect similar plot and characters. Also scheduled for early evening will be an entertainment magazine show, heavy on Hollywood, followed by news and a movie (usually made for TV).

The programmes will be weighted toward those taken from Pearson's extensive production and library assets, which include Thames and Grundy Worldwide, the makers of Neighbours.

The backers are assuming they can do little against the competition in peak viewing hours, when the big guns are brought in. Indeed, one senior insider says, cockily, "We don't want ITV's tired old audience." Instead, C5 will target the daytime schedule, looking at providing fare more entertaining than The Oprah Winfrey Show and other lifestyle tripe.

ITV and Channel 4 are unlikely to take the challenge of C5's launch lying down. You can expect some aggressive counter-scheduling in the daytime as a spoiling tactic. Actually, competition is going to be fierce throughout the schedule. ITV and Channel 4 are facing a commercial rival in the terrestrial sphere for the first time. Which will benefit advertisers, already upset at spiralling rates and complacent attitudes.

It won't require much for C5 to turn a profit. All it needs is perhaps 7 or 8 per cent of the national TV advertising market, rising to perhaps 10 per cent by the end of the third year. Not everyone thinks they can do it. Some pessimists forecast revenues of just pounds 80m in the first year, not even enough to cover programming costs, let alone overhead and a portion of the retuning budget.

But C5 has a 10-year franchise to get it right. Provided things don't go hopelessly wrong this summer when the retuners begin to make their rounds, there is every reason to believe the new service will attract viewers. Certainly with a stellar line-up of commissioning editors and - a first for terrestrial television - proper marketing people, the results should bear out the enthusiasm of the channel's well-heeled owners.

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