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Fast Food TV

How Viacom’s Channel 5 purchase changes UK TV

 

Viacom’s acquisition of Channel 5 brings fast food TV and product placement to UK screens. But could it also start a feeding frenzy on British TV channels and independent programming? Stuart Lauchlan and Chris Middleton hear from Viacom President and CEO, Philippe Dauman.

ORGANISATIONS SHORTTo its UK audience, Channel 5 is the terrestrial-born station whose principal claim to fame has been breathing life back into the Big Brother format, as well as providing a home for Australian soaps Neighbours and Home and Away. But for US media giant Viacom, Channel 5 is both a profile-raiser and a stepping stone into what it hopes will be strategically important new markets.

For Channel 5, its £450 million purchase by Viacom will provide avenues into a number of new areas: greater UK/US content partnership; multichannel programming; bespoke content for advertisers; increased product placement on UK screens; and even content for fast food restaurants.

Richard Desmond

Former Channel 5 owner, Richard Desmond.

For the past four years, Channel 5 has been the property of Richard Desmond, owner of Northern & Shell, whose stable includes the Daily Star, the Daily Express and OK! magazine, as well as adult TV programming. The sale gives Desmond a quick profit of nearly £350 million.

Desmond had been rumoured to be selling off Channel 5 for some time, with 20 or more suitors, including BSkyB, reportedly waiting in the wings. However, the unexpected announcement of the sale to Viacom means that this is the first time one of the UK’s ‘Big Five’ channels will be owned by a US company.

Viacom already holds MTV, Comedy Central and children’s network Nickelodeon in its portfolio, all of which have a presence in the UK via digital platforms, so what will it do with its new asset?

A ‘bucket of programming’

“We don’t see any big transformative transactions in our future, but we do look for targeted opportunities in the international environment,” says President and CEO Philippe Dauman. “As a global company, we have the ability to take what is a local business into being a much bigger player.”

The move is part of a global strategy, he explains. “Channel 5′s diverse programming slate will complement Viacom’s popular pay-TV network. We believe that we will be able to invest in more programming for Channel 5 that will make the channel even more vibrant and [give us the opportunity to] utilise [elements] of that programming on our UK pay channel, and even more on our existing and future networks around the world.

Philippe Dauman

Viacom President and CEO Philippe Dauman.

“That’s what we are doing around the world, where our production activity has increased the mix of original programming. That will allow us to grow the UK business and will provide us with another bucket of programming that we can distribute across Continental Europe and around the world, including the US.”

If that is the case, it will represent a major shift in Channel 5’s own content strategy, which, with a few exceptions, has been built on buying in content rather than developing it in house.

“There is a lot of acquired programming there,” agrees Dauman. “The Big Brother franchise is very popular, as is CSI. But there is some original production taking place. It’s just been a recent investment on their part in that regard. We are going to continue that direction as we look for programming, [and we] commission programming from the very diverse creative community [in the UK].

“We will look for shows that will work first and foremost on Channel 5, but we will have an eye on the kinds of shows that will also live well in different windows in the UK [and] on our other networks around the world. We think there is a lot of possible cooperation between the US and the UK, in both directions, for Channel 5.”

Multichannel opportunities

Another avenue of exploration is the expansion of content delivery platforms, taking Channel 5 far beyond its terrestrial broadcast roots and onto mobile devices and even, suggests Dauman, into fast-food restaurants. “We see opportunities in the mobile environment, not just in the US but around the world, and we have geared our whole organisation to play successfully in that world.

“When we look at the competitive environment that exists in mobile, wireless and electronics, and in quick-service restaurants, all these competitive categories do provide strength for us… as well as the integrated marketing capabilities that we are providing to our advertisers.”

For those advertisers, Viacom has been experimenting with custom-branded content, launching a dedicated division, Viacom Velocity, to create ad-revenue-friendly output that connects with existing shows on its networks.

This has attracted the interest of several multinationals – most notably Unilever, which product-placed its Klondike candy bar into Comedy Central show Workaholics, both in the main programme and in special online episodes. This, believes Dauman, is where the big spending in TV advertising will be.

“That is exactly what advertisers are looking for,” he says. “We are going to them with those offerings. We are getting more deeply embedded with social media in providing entire packages.”

The big question mark

In the US, bespoke content and product placement are the norm – they are the roots of the soap opera format, of course – but whether UK audiences will respond so positively is a different matter.

Also lurking in the deal is an implicit risk for quality programme makers and independent voices. While Viacom’s promise to invest in original content is good news for UK programme makers and production talent, offering global platforms for their work, the deal may distort the UK market in favour of advertiser-driven content and away from supporting independent programming.

Another question mark hangs over the impact on Sky’s relationship with Viacom. BSkyB’s SkyMedia arm currently acts as a media seller for Viacom and chalks up around £40 million in revenues.

Channel 5

Channel 5 Big Brother logo.

On the face of it, it would make sense for all the media buying for Viacom’s UK interests to be funnelled via Channel 5’s sales operation, although the current ad deal arrangement is locked in place until 2017.

On the other hand, if Viacom decides to stick with the existing arrangements and at the same time boost Channel 5’s profile and investment, that would mean a healthy rise in SkyMedia’s UK market share.

All that is to come, and the devil will be in the detail as the acquisition is completed, says Dauman. “We have some ideas on how we can grow and invest in that business, and certainly our good executives on both sides of the house have some good ideas,” he says. “But in the months to come, as we move to close the transaction, we will gel a plan to see how we can grow that UK base business.”

He concludes: “Viacom is in great shape. We are positioned for an era of growth for our company. We continue to invest in programming and films that resonate with audiences worldwide and drive the businesses of our marketing and distribution partners. We remain focused on mining the many growth opportunities at hand for content creators, both at home and abroad and on new devices.

“As reflected in the Channel 5 investment, we are committed to growing our international business, primarily organically. But where we see opportunities that are very additive, like Channel 5 – and these opportunities do not present themselves often – we will take advantage of that, and that will certainly accelerate our growth.”

Other cash-rich US media interests will undoubtedly follow the progress of Viacom’s gambit with interest. ITV might make a comfortable landing pad for a US network such as CBS, especially given the ongoing prohibition on BSkyB mounting a takeover bid. TS

Stuart Lauchlan is co-founding editor of diginomica.com, a Strategist media partner. Chris Middleton is founder and editor in chief of Strategist magazine. 

The Strategist says

Channel 5 has perhaps come to be seen as the channel that was, since its terrestrial launch, always closest to the ethos of digital and satellite broadcasting. Viacom’s promise to develop original content for the channel is good news for UK talent, and for increased UK/US partnership. But at the core of this deal will be the increased cross-pollination of programming and advertising content, and an extension of product placement into UK homes. Whether that proves popular with British audiences is another matter. There is also the risk that it will encourage more advertising investment into advertorial-style experiences and less into supporting independent programming.

 

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