Money to spend, but how?
By Kate Bulkley
For Broadcast May 19, 2011
C4 shouldn’t be too reserved with its reserves, writes Kate Bulkley.
Last week at Tate Modern, Channel 4 staged a press conference to reveal its annual report, the first under chief executive David Abraham, now a year into the job. At the same time, ITV was holding its annual general meeting north of the Thames at the QEII conference centre.
The clashing date of the events was underscored by their headline message. Both talked about the state of the advertising market over the next few months, and it doesn’t look good: “flat” said C4; “down” ITV warned. Both said advertising should be up later in the year - but by only 2%.
Other than the gloomy ad forecast, the big story from C4 was a show featuring people taking Class A drugssuch as heroin live on TV - a return to the kind of edgy stuff we expect from the broadcaster. But there was even more surprising news about C4’s handsome bank balance.
Posting a profit of £38.6m (yes, million) last year, up from a paltry £300,000 in 2009, the ghost of Andy ‘begging-bowl’ Duncan has been well and truly exorcised.
C4 chairman Lord Burns said the broadcaster aims to “come out flat over a period of time” on its profit line, but “in a time of market instability, we don’t want to be moving our programme budget totally in line with budget variations”. Translation: we didn’t know it was going to be such a lot of money and we don’t want to spend it willy-nilly. Very laudable.
But that’s not the end of the story: cash reserves now sit at a whopping £261m (yes, that’s million again), an unusually heavy purse for C4. And with all the cash swimming around, even the big £2.6m pay-off for ad sales boss Andy Barnes after his 20-plus years didn’t raise one question from the press corps.
But is all this money a good thing? With the advertising environment iffy at best, Abraham is right to keep his powder dry in case of a rainy day. With no Big Brother to pay for, there was always going to be a lot of money looking for a home, and having arrived only recently, chief creative officer Jay Hunt will need funds. She can even afford a few disasters and have millions still left to spend.
Abraham was clear that of the cash on hand, £100m is an operating buffer, while another £100m is to fund producers up front for their commissions. That leaves around £60m in a ‘transitory fund’ that could be spent on all kinds of things, including new audience research tools that could reinvent how C4 is traded in a rapidly changing advertising market.
Abraham has already taken the first steps - making sure that the online and TV commissioners sit in one team. But some big questions remain: How do you make money from the internet? How do you best navigate the powerful digital distribution platforms and make the most of social media’s amazing influence on viewing? And how do you address all the other ‘unknown unknowns’ of the modern media world? He isn’t alone in trying to find answers to these.
So, having a little cash in reserve has got to be a good thing. Just don’t take the mickey, David.