C4 shores up its future prospects

Never let it be said that Channel Four is dull and uncontroversial. The ability to shock, entertain and impress in equal measure has hallmarked its quirky success right from the start – a success not even its detractors would seriously question.

Without doubt that success owes a lot to symbiosis, editorial and commercial skills playing a complementary role. A recent string of BAFTA awards is eloquent testimony of the blockbuster innovation of such programmes as Big Brother – widely imitated, widely exported. Equally, C4 has demonstrated considerable commercial nous – best exemplified perhaps in its imaginative repackaging of cricket – which has helped it to punch well above its weight in ad sales. This, despite competition from the multi-channel environment and a deteriorating economic situation.

Is C4 an enviable example of private/public collaboration, which provides a model for other areas of business and public service? Or is it a freak and unstable coalition of forces which will eventually crack under pressure?

Support for the latter point of view has recently been voiced by David Elstein, a respected former TV executive. Elstein launched a withering attack on what he regards as C4’s financial irresponsibility. He believes investments in new digital age ventures such as E4 will, or perhaps have, created ‘a runaway train’. It’s true that C4’s financials do not look very impressive on paper. An operating profit of &£34m on turnover of &£716m compares unfavourably with &£45m on sales of &£642m in the previous year – itself a not terribly impressive tribute to sharp financial management.

C4, of course, can retort that financial management is not what it’s about. A unique position – it pays nothing to the taxpayer for its use of spectrum and owes nothing to any shareholders – is also a unique opportunity. It is precisely this cocooned environment which enables it to nurture creative ideas (by their nature prone to a high failure rate) and to take a balanced long-term view on such risky, but possibly essential, ventures as digital and Internet channels.

There’s more than a nugget of truth in this argument. But it is also evident that C4’s management has realised it’s gone beyond the pale by allowing the issue of ‘wayward’ financial management to trigger a highly sensitive debate on its nebulous corporate status. The nightmare scenario would be if C4 had to surrender its present agreeable state for accountability to a group of humourless joint-stock company shareholders in order to achieve financial solvency.

This, at least, would be a plausible explanation as to why C4 has taken the unusual, and presumably expensive, step of bringing in a City hotshot to manage E4 Ventures, which comprises all the high investment risks it is engaged in outside the main channel. If Rob Woodward, who joins C4 from UBS Warburg, does his job properly he will not only have spared C4 from financial meltdown. He will quite possibly have rescued a unique and successful experiment in British television from the clutches of greedy and myopic shareholders. Now there’s an ironic role for a former City man.


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