Thames puts faith in C5

NEVER has the prospect of a new television channel met with such disinterest. A coveted terrestrial franchise should have bidders chomping at the bit, but the only time this limp lettuce came to life was through the involvement of star names — Bruce Gyngell, David Frost and Silvio Berlusconi.

But, one by one, [Mike] Bolland’s Channel X, Justin Dukes’ Channel 5, and The Entertainment Channel fell by the wayside.

As if to confirm this trend, the only remaining bidder, Five TV, has been forced to submit a partially financed bid after key backers Sony-owned Columbia studios and the Canadian broadcaster CanWest withdrew.

The two members of the consortium, now renamed Channel Five Holdings [CFH], were given until July 3 to commit, but in the end they couldn’t decide one way or another.

Thames TV passed the crisis off as a last-minute hitch.

Izzy Asper’s CanWest wanted management control. But Thames, which has taken over the driving seat from Five TV founder Chris Rowley, decided that a foreigner at the helm would damage its chances of success.

The withdrawal of Sony was attributed to the difficulty of getting lawyers from the US and Japan to agree the application in time.

Moses Znaimer, president of City TV, also remains committed. But as he is investing in a personal capacity, he is not expected to take more than three per cent of equity.

A letter from Thames’ bankers, which accompanied the application, says the project is bankable.

And Channel Five Holdings says that it hopes to reconcile its differences with CanWest and Sony and woo Conrad Black, Associated Newspapers, Silvio Berlusconi and Time Warner.

In the midst of the maelstrom last week Five TV founder Rowley remained calm, claiming that the bad press C5 had received was in the consortium’s interest: it had scared rivals off, leaving Five TV to submit an uncontested bid.

“Jeremy Fox [chief executive of the abandoned The Entertainment Channel]… Bless him. He has worked terribly hard for the last five or six weeks. But we have been working on it for almost two years. Had it been easy, we’d have had lots of rivals,” said Rowley.

He, along with Thames chief executive Richard Dunn and deputy chief executive David Elstein, is convinced that their application is robust and workable.

Moreover, they believe C5 has a more promising future than ITV.

“What is the start-up cost of Channel 5? Excluding re-tuning, £100 million over 10 years, for 74 per cent of the population. The entry cost for a London franchise is £700 million and that’s broadcasting four and a half days a week to only 20 per cent of the population” — that is the compelling logic of Thames executives.

But, if The Entertainment Channel pulled out because the risk associated with the cost of re-tuning was too great, how can Channel Five Holdings claims to fare any better. Even the ITC has said it is not sure how many video recorders will need to be re-tuned.

Although it would not disclose details CFH claims to have a foolproof plan that will reduce the confusion created by its launch. It is based on “factual” research conducted throughout the last year by Ellis Griffiths and will involve the Thorn EMI rental chain in a nationwide re-tuning campaign.

CFH is prepared for the worst possible scenario, estimating that 80 per cent of VCRs would have to be re-tuned, compared with the ITC’s projected three million.

CFH also recognises the extent of the problem of reception and admits that up to 40 per cent of homes will need new aerials. Once again it claims to have a “secret weapon” that will reduce that figure considerably.

Its third trump card is its programming, which will indulge the UK’s belief in opt-outs, providing up to 40 hours a week of local programming.

CFH also plans to complement rather than compete head-on with ITV and BBC, with what Rowley describes as an “unstoppable schedule”, including “thousands” of films — first run, classic and continental.

It has enlisted Alan Shiach, managing director of whisky manufacturer McCullen Glenlivet to the board. Better known as Alan Scott, one of the UK’s best known script writers in Hollywood, he will spearhead investment in British film, in the hope of making C5 the UK’s first movie-buff channel.

But the quality threshold CFH must pass is threefold — technical, programming and financial — and it will be difficult to shrug off its lack of backers.

As with Channel 3, a bid can be partially financed, but if it lacks more than 30 per cent of equity its credibility will be damaged.

“There is no bench-mark that says they have to have X per cent in place, but overall we have to be convinced that the money is there. We will be looking for credibility,” said an ITC spokeswoman.

The ITC has reserved the right not to award the licence and if anything, it will err on the side of caution. The last thing it wants is another BSB on its hands.

Thames admits it will be an “uphill struggle” to get the channel off the ground, but is absolutely convinced that its detractors don’t know what they are talking about.

Indeed, one insider is so convinced of its viability he reckoned Thames executives probably wouldn’t have bid so much for Channel 3 had “they known what they know now about Channel 5”. All that remains is to convince the ITC.

In December 1992 the Independent Television Commission said that the Channel Five licence would not be awarded as the Channel Five Holdings application had a deficient business plan and lacked investor commitment.