Convergence strategy at U.K.’s Channel 4

New execs merge content operations

Under new management, the U.K.’s ad-funded pubcaster Channel 4 has embarked on a quest for “creative renewal” at a time of economic stagnation.

In its 28th year, the once hip, innovative channel has hit its mid-life crisis early. Running a swathe of digital channels — including movie web Film4, teen-focused E4 and the worthy but dull More4 — the network was ill-equipped to cope with the recession-driven ad downturn and the swivelling of eyeballs away from traditional TV and toward online.

Enter the new brooms: CEO David Abraham and chairman Terry Burns, who see an opportunity to reinvent the network. Convergence is the name of their game.

Unveiling its financial report Wednesday, Abraham said that, for too long, the net has been divided into “silos,” in which commissioning, ad sales and digital media operated separately.

One of his first moves is to introduce the post of chief creative officer, who will combine the roles of director of TV and content and head of Channel 4. The exec will be responsible for a new single content division, bringing together digital and traditional TV commissioning and production.

There is also another new post: The director of audience technologies and insight is the first technology-based customer relations position in the exec team and will oversee all activities relating to research, data capture and database management analysis and its commercial use throughout the organization.

“We are going further than any other broadcaster has yet gone to fully integrate our commissioning and content teams as we anticipate the tipping point in the convergence of television with other media,” Abraham said.

The strategy seems justified by the net’s ratings.

Audience share at its core channel sank last year to 7.5%, compared with 9.7% in 2005, but its digital channels were up from 1.3% to 4.1%, which gave its portfolio a total audience share of 11.5% in 2009 vs. 11% in 2005.

In fact, its digital channels, video-on-demand operation and Web presence have grown to the point where the broadcast arm is merely a front for a larger digital and new-media operation.

In 2009, 218 million full-length programs were viewed via C4’s on-demand service, up 60% year on year. And 230 million folk visited and, up 31% year on year.

“We need to fundamentally evolve the way we work in response to this convergence, becoming leaner, more efficient and blending a multiplatform approach into the center of the organization, rather than leaving ‘new’ media in its own isolated silo,” Abraham added.

Meanwhile, on Wednesday, C4 reported that the U.K. advertising market rose 8% in the first quarter of 2010 to £731 million ($1.09 billion), of which it held a 25% share.

Last year was a different matter, with the programming budget slashed 8%, or $75 million, and staff cut to 696, down 23% and reducing the wage bill by $13 million.

Last week, C4 went further and cut the number of senior management posts by a quarter and cut the number of execs reporting directly to Abraham from 13 to six.

C4 said it broke even last year, with ad revenue at $1.24 billion and program investment at $820 million.

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