September 03, 2009

Forget creative renewal, Channel 4 will need a cash cow to replace Big Brother.

So Big Brother is dead on Channel 4 - thank goodness for that. While C4 insists the Endemol format is still commercially lucrative, working out its value to the broadcaster is complex.

From averages of 7 to 8 million viewers at its peak (and up to 10 million when Jade Goody racially abused Shilpa Shetty), the series this year has averaged around 2 million viewers overall.

In 2006, the show accounted for 10% of C4’s turnover according to researchers Madigan Cluff/ETS, when its ad revenue peaked at £85m. But the overall fall in TV revenue and the show’s waning popularity have meant diminishing returns: in 2007, BB ads were worth £72m, in 2008 it was £47m and this year it will be just £32m, says MC/ETS.

Even so, the show is still valuable. Over the last five years, BB has earned 8% of C4’s ad revenues - the next biggest contributors are Deal Or No Deal (7%) and Hollyoaks (4%), and C4’s top 12 programmes generate 40% of its revenue.

Dropping BB is a financial gamble, but one that Kevin Lygo says is worth taking because it will free up £50m of the C4 budget and open the creative floodgates in a number of genres, including drama and comedies. He is looking for 20 to 30 new programmes to fill the BB gap in 2011.

All well and good, but what about the BB income? BB has been a hit with advertisers: it stood as the summer barricade for C4, giving the channel a USP and a brand for advertisers wanting to attract the 16 to 34 audience. Last week, several agency executives said that BB still has a big appeal to this younger age group, so maybe the show will turn up again on Living or a UKTV channel where a 2 million audience is big news.

Migration difficulties

But that strategy can be dangerous. UKTV’s difficulties migrating the Richard And Judy brand from C4 proved that transferring audiences is no easy task, even with a high-profile show. Sometimes formats naturally reach their sell-by dates.

Whatever the future for BB, the pressure will be on C4 to find another commercial hit. According to MC/ETS, UK formats were the most lucrative of TV exports in 2008, attracting big advertising revenue as well as big format fees. Who Wants To Be A Millionaire clocked up £172m in ad revenues across the biggest European ad territories last year (excluding the UK), while Come Dine With Me came in at an astounding £88m in ad revenues, beating Pop Idol at £28m (again, excluding the UK).

As it looks for replacements for BB, C4 will be keeping its eyes peeled for the next big thing in formats, as well as drama and comedy. It can’t afford not to.