The Money Programme reports on the launch of Channel 4 (31st October 1982)

A few days prior to the launch of Channel 4, The Money Programme reports on concerns about the longer-term financial viability of the channel.

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[00:00:00] PROGRAMME: an excerpt from an edition of The Money Programme, featuring a report on the launch of Channel 4.

On Tuesday, the UK’s fourth terrestrial TV channel launches. With investment in the region of £100m, Channel 4 is aiming for a 10% market share in the short term – an ambitious target in recessionary times.

Mark Rogerson reports on the business of Channel 4.

87% of the country would receive the channel from launch. The first new UK TV channel since the launch of BBC Two 18 years ago.

We see final preparations in various technical areas. The launch is still going ahead as planned on 2nd November 1982, in spite of two serious industrial disputes.

Unlike the BBC and ITV, Channel 4 will have virtually no studios of its own. It won’t be in the business of making programmes. Instead it will buy in programming – either from the other ITV companies, or from independent programme-makers.

The Broadcasting Act 1980 says that Channel 4 must cater for tastes and interests not generally covered by ITV. It must contain a suitable proportion of educational programmes, and it must encourage innovation and experimentation.

In short, the Act says Channel 4 must have a distinctive character of its own.

To the dismay of advertisers, Channel 4 wants to broadcast programmes that have struggled to get on air slots in the past. At the same time, it’s providing a bonanza for independent programme-makers.

The reality is that Channel 4 programmes must pull in an audience of 10% if Channel 4 is to pay its way.

The most optimistic view by Channel 4 bosses is a 12% share in 3 years – the same as BBC Two. They believe 10% is a reasonable target by then.

If their gloomy outlook of 3 – 4% in year one came to pass, advertisers might turn nasty.

Roy Langridge, media director, J. Walter Thompson takes the view that the channel’s proposed programmes are not commercial enough. They are “boring” and not attractive to an advertiser.

The existing ITV companies are providing the money for the new channel. They each pay a subscription – based on their size – to the Independent Broadcasting Authority. This will come to c. £100m/year.

The ITV companies can recoup that money by selling advertising on Channel 4.

Channel 4 is planning a “horizontal” schedule. In other words, the same type of programming in the same timeslots each day. For example:

• 5pm Education
• 6pm Comedy
• 7pm News and Comment
• 11pm Feature Films

Michael Peacock from the Independent Producers’ Association believes viewers are used to a vertical schedule. Whether or not viewers will bear in mind the Channel 4 schedule structure remains to be seen, he says.

Chris Horsley, media director, Ted Bates Advertising also expresses concerns about the specialist nature of some of the programming and the challenges there will be persuading clients to pay for slots against that type of programming.

The reporter points out that advertisers also have reason to knock the channel, in order to force advertising costs down. Chris Horsley suggests the channel could find itself £30m short within a year.

That’s money that would be coming out of the pockets of the ITV companies. They could then demand more popular programming.

There have been consistent concerns of low ad sales for the channels. But so far, the ITV companies are putting a brave face on it.

Ron Miller, sales director, London Weekend Television, comments that some programmes may be boring to a number of big advertisers. But for manufacturers trying to target young people, he believes the channel has possibilities.

Mr Miller points out that ad revenue for Channel 4 needs to be new money and not seepage of funds from ITV companies’ existing ad revenues.

Hugh Henry, sales director, Scottish Television says Channel 4 must eventually generate enough revenue to pay for itself. But it will take time. He references the initial struggles for ITV when it first launched – it took a long time for it to pay its way.

Jeremy Isaacs, chief execute, Channel 4, refutes speculation that Channel 4 will be forced into more popular programming, along the lines of ITV 1. He cites the Broadcasting Act, which clearly stipulates that Channel 4 must offer a distinctive schedule.

If the channel doesn’t generate enough revenue, it won’t just be the other ITV companies who feel the pinch. Since their profits are taxed, by a levy, it means that ultimately the treasury and the tax payer will be footing the bill.

Another current concern: two industrial disputes – either one of which could seriously affect the channel’s long-term prospects.

One of the disputes centres around the channel’s transmission chain. The technicians’ union ACTT want it routed via the ITV companies – thus giving the union more industrial leverage. Channel 4 wants to control its own signal. If this dispute boils over, it could take programmes off the air.

The other dispute is about payments for actors who feature in commercials broadcast on the channel. Currently, they’d be paid according to the number of times a commercial is shown. But now, advertisers want fees aligned with the size of the audience – which will obviously be lower on Channel 4.

Negotiations have broken down – to the great concern of the advertising agencies.