Conor Dignam On Broadcasting: Cutbacks by Channel 4 look like a strategy to get more public funds
Monday 15 September 2008
Channel 4 has let it be known to producers and journalists that belts are being tightened at Horseferry Road and that cuts are on the way. There's no great surprise here, everyone in the world of commercial media is feeling the pinch and pressure on budgets will be an inevitable consequence of a downturn in the advertising markets. But how hard is C4 really being hit – and how much is its "budget cutting" part of its long-running strategy to persuade the Government and regulator Ofcom that it needs access to public funds?
Well, the downturn in the advertising market is real enough. C4 insiders are suggesting that commercial revenues are set to be down 15 per cent in September compared to last year, with a similar fall expected in October. According to C4, the first cuts will be around the edges of the programming schedule and budget – with Cutting Edge and Dispatches (public service flagships) protected, but the Sunday teen strand T4 (not much pubic service there) taking the first hit.
C4 will air fewer new shows this year, increase its level of repeats and cost cutting will be felt across the C4 family of channels, C4, E4, More 4 and Film Four, which between them account for a commissioning spend of around £600m. Last year C4 said it was cutting the amount it spent on US imports to pump more money into original commissioning. Now it is saying that the original commissioning budget is going to decrease, and that decline is likely to continue for the next few years.
C4 has some scope for moving its numbers around to look like cuts are being introduced when the real amount of money being spent with independent producers has not immediately dropped. The cost of a programme being made is only counted in the broadcaster's annual budget as a true "cost" if the programme has been aired.
That means C4 can effectively show "savings" this year, despite not reducing its real spend with independent producers. But C4 maintains that in the end, next year, if not this, it will be spending less money on original production – and these are real cuts.
It's pretty grim stuff, and a sign that the credit-crunched housing market is really beginning to bite when it comes to advertising revenues. But where other commercial broadcasters such as ITV and Five might be trying to talk up the market as much as they can, it clearly suits C4's purposes to use the economic downturn to drive home its message that it can't sustain its public service role without new public funds. There is a PR push going on with C4 and, while this warning may in many respects be real, it also plays strongly to the aim of that campaign.
All of which brings us back to the question of why C4 is planning to spend millions on a new digital radio venture, while at the same time cutting back in its core function. C4 has resisted being pinned down on exact numbers on what it is spending, but the investment plan for its new digital radio offering is understood to have come down from somewhere around £20m to less than half that figure now.
C4 bosses will insist that in the great scheme of things this is not a huge investment and it should not be diverted from a strategy that makes sense to move its media brand into different markets. C4 has form here too, as David Elstein pointed out in a speech at the London School of Economics last week. C4 has spent around £200m over the last decade or so on pay-TV ventures that are all now all free to air, and film ventures that have been dramatically downscaled. These investments have been far from transparent, and C4's later strategic U-turns have not been widely remarked upon by politicians and regulators.
Now C4 wants to move into digital radio, while threatening cuts to funding in its core purpose and public remit of providing television content.
Radio was notably absent from the Next On 4 strategy presentation C4 made a few months ago about how it was rejuvenating its public role and purpose. The E4 radio channel will be the first to launch – and the signs are that this will still go ahead. But I suspect the chances of C4 launching a speech radio service – one of the key things that won them the licence from Ofcom in the first place – are now much reduced. On one level that would be a shame. C4 would bring something new and hopefully innovative to speech radio. But there clearly comes a point when the cost outweighs the advantages of the new areas C4 can enter. It can no longer plead poverty with one breath and talk about spending millions of pounds entering new markets with another.
Spending millions on new radio ventures while cutting spending on television content simply isn't acceptable; at some point soon C4 will have to significantly reduce or scrap its radio plans – reflecting the economic realities it keeps reminding everyone else about.
Setanta nets an own goal with England fans
Who would have thought it? England fans up in arms because they can't see highlights of England in a World Cup qualifier; Gordon Brown getting involved in the row; and ITV screening highlights of the game – more than 24 hours after it was played.
Setanta took some brickbats last week after failing to do a deal with a terrestrial broadcaster to allow the highlights of England's match with Croatia to be shown on the night of the game. Setanta, which has paid many millions for the rights to these games needs them to turn into subscription drivers, so it's little surprise that they were hanging tough in negotiations with terrestrial broadcasters. In the end, 1.5m watched the game live on Setanta and 220,000 watched unencrypted highlights that the channel broadcast late on Wednesday night – but which the majority of viewers couldn't see.
England fans were upset before the match that there would be no free to air highlights, but the expectation was England would disappoint, and there wouldn't be much to miss. But then of course England did something, well, completely out of character – they played incredibly well and won 4-1. Then everyone, after the event, wished they'd seen those goals go in, and bemoaned the fact that the BBC and ITV, who can both lavish millions on rubbish, couldn't find enough down the back of the sofa to stump up to watch the three lions roar. England fans apparently chanted "We hate Setanta" from the terraces of the match in Croatia (Sky must have loved that).
Finally, a deal got done and ITV showed the game Thursday night. Setanta will have learned its lesson from this episode and won't want to incur the wrath of the football watching nation again, so deals for the other qualifying matches played abroad will probably get done more easily. And the good news for Setanta is that with England finally finding their form, passionate England fans will want to watch the other matches, hopefully meaning far more subscriptions. After all, England couldn't possibly go back to being a team of underachievers, floundering around without a clue, could they?
Conor Dignam is digital content director of Emap Inform
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