Commercial duds sink pubcaster C4

Expansion into E4, FilmFour may have led exex to neglect main biz

LONDON — Blighty’s other pubcaster, Channel 4, recently posted its first loss in 10 years. But that’s the least of its problems.

Infinitely more worrying for the web, publicly owned despite being funded by advertising revenue, is a growing belief that it risks squandering its reputation as the U.K.’s most creatively successful broadcaster.

Its heavy investment in digital stations E4 and FilmFour, plus expanding movie production arm FilmFour Ltd. into a stand-alone production and distribution biz, may be leading execs to neglect the main business.

“There’s a real danger that, by taking its eye off the ball, what has happened to ITV (falling ratings and a lack of hit shows) because of ITV Digital will occur at C4, too,” reckons an industry insider.

Those who questioned the wisdom of a pubcaster investing in commercial ventures may have the last laugh after a series of flops from FilmFour Ltd. and now that ITV Digital’s closure has jeopardized the growth of digital TV.

It was these initiatives, grouped into commercial arm 4 Ventures, that pushed C4 into the red a total of $28 million last year. (Despite the ad famine, the main channel made an operating profit of $50.4 million, down half on 2000.)

“It’s easy to call impulsive behavior far-sightedness when you’re making great wads of money,” says a senior advertising figure. “That no longer applies. Now of all times, Channel 4 cannot afford to be complacent. The BBC has upped its game; Channel 4 needs to do likewise. ”

New CEO Mark Thompson, who arrived in March after Michael Jackson’s exit to Universal Television and USA Films in the fall, insists that expanding the C4 brand made sense — up to a point.

“In future I would like to see a greater emphasis on Channel 4 itself,” he says. “It is far and away the most important thing that we do.

“It is vital that it is the center of our creative and management effort,” he continues. “Channel 4 is the source from which everything else flows.”

Program suppliers and advertisers will welcome these sentiments. For Thompson, an ex-BBC high flyer with little experience of the private sector, the questions are how to re-balance the company’s activities and reposition the main web.

Right now, he is taking stock of the situation. A review of 4 Ventures is under way, with rumors rife as rivals accuse C4 of being “awash with cash,” despite the recent loss.

Two months ago, C4 paid $1.4 million an episode to prevent “The Simpsons” from being swooped up by C5. Critics saw the move as an example of C4 extravagance, a charge denied by Thompson even as staff numbers have almost doubled in a decade.

“Walking into Channel 4 today, it doesn’t feel like a complacent, flabby place,” he says. “Our investments have been quite prudent, but we’re looking at every aspect of what we do. If we find there are ways of taking money spent on the Channel 4 machine and putting them onscreen, then we’ll do it.”

Audience share is steady at around 10%, not bad in such a competitive market. Yet as ITV1 loses audiences, it is BBC2 (successfully pitched at middle-aged viewers) and Channel 5 (popular with the under-35s) that are benefiting the most — and squeezing C4 from both directions. The pair are threatening to steal C4’s reputation for buying the sharpest U.S. shows.

As a symbol of C4’s sagging reputation for cutting-edge fare, the new breakfast show “RI:SE,” speaks volumes. The program it replaced, “The Big Breakfast,” helped redefine small screen creativity in the ’90s; by comparison, “RI:SE” looks pedestrian.

So poor was the response to the show that its editor was fired four days after launch.

Thompson has admitted the station needs to improve drama and take more risks. Entertainment, critics argue, needs fresh thinking despite the success of reality series “Big Brother,” soon to air for a third season.

C4’s biggest show in recent years, it is hard to see how Thompson, an Oxford-educated practicing Catholic who lectures on theology, relates to “Big Brother” and, by extension, the more vulgar side of the station’s sometimes tacky and trivia-obsessed schedule.

Says a former C4 executive: “It’s difficult to see how the channel can move out of some of the more unsavory aspects of what it does without losing parts of its audience, (and) Mark is not a vulgarian. He is much more of a traditional public service broadcaster than either Michael Jackson or Michael Grade (Jackson’s predecessor) — but is there a place for that kind of sensibility in the 21st century when the expectations many people have of Channel 4 are now so different?”

For Thompson, also fighting to prevent the go-ahead of BBC youth station BBC3 (which he helped mastermind in his previous job), it looks like a long, hectic summer.