Last week’s worst-kept secret in media was confirmed on Friday pm. If you’re a PR with a love for anything celebrity, this acquisition and meeting of OK!, Daily Star and Five TV has POTENTIAL written all over it!
To give it some context though, to follow are some key points to consider from our communications group client, Starcom MediaVest Group and its UK Head of Trading, John Davidson. This is one media move which all PRs should watch with interest…
Northern and Shell’s brave entrance into the TV arena is to be welcomed but also partly cautioned. It is noteworthy that the winning bid was apparently significantly ahead of any rival bids and that an early joint offer with Endemol failed to materialise.
Despite likely Ofcom and House Commons Culture committee scrutiny, we expect the deal to be waved through. Five TV is likely to become a very different animal compared to its current form, which is likely to have a moderate impact across the broadcast market. The new owners will be reliant on a continued upswing in TV revenues, as any return to revenue falls seen in2008/2009 will seriously reduce the chances of commercial success.
Richard Desmond’s team has a reputation for being very astute and have enjoyed success with OK Magazine and Express Newspapers. However, the parameters are very different with Five TV. The business has already been through numerous restructures and cost cutting programmes. It is difficult to see how much more outsourcing and contract renegotiation can be used to drive further efficiencies. The majority of revenues are generated through traditional TV advertiser investment with no standard subscription income or obvious assets like there were when buying Express Newspapers. There are also significant broadcast licence requirements until 2013.
Cross negotiation or leverage with other Northern and Shell properties is unlikely to carry much weight, but there could be interesting joint sponsorship opportunities. However, advertisers and agencies are likely to pay more attention to an increase in Five TV audience volumes and an improvement in programme environment and demographic profiles. Given that annual TV deals are negotiated in arrears, it would be make sense for Five TV to have some new news (e.g. Big Brother continuation / new format) in the run up to the next negotiation season.
Aspiration to be a challenger to ITV is admirable. However, it will take significant cross promotion and arguably substantially more than the outlined extra £100m a year for the programme schedule to advance market share. The channel will need to invest wisely in order to deliver the next raft of hit programme formats. Whilst a focus on celebrity and music genres has been intimated, the jury is out on nation’s appetite for more celebrity programming. Certainly, the success of Jordan, Peter, Jade et al on ITV2, Living and E! suggests there is still some potential in this genre. However, building a credible music audience will be more difficult as the market is more complex and relatively over supplied.
The broadcaster will also need to develop further Video on demand capability. A more developed OK TV Video portal could have potential with some audience segments. However, perhaps the greatest challenge to the broadcaster will be the current consolidation of airtime sales points which will create significant competitive pressure in the UK market.