Five seeks digital surge

RTL-owned broadcaster Five is not what one would call a pioneer in the field of digital broadcasting. Having introduced its analogue channel in 1997, just a year before the arrival of digital TV in the UK, last week Five unveiled plans to launch two digital spin-off channels this autumn - five years after ITV and Channel 4 brought us ITV2 and E4.

Dubbed Five US and Five Life, the two free-to-air networks will join the other 400 digital channels battling for fractions of percentage points of audience share. With space already guaranteed on digital-terrestrial platform Freeview, the aim is for the channels to also be available on cable platform NTL and satellite platform Sky by launch.

Between them, ITV, C4 and the BBC already have 13 digital channels, not including '+1s', joint ventures or broadband offerings. However, Five's chief executive, Jane Lighting, is not fazed by the network's late arrival on the scene, insisting that now is 'the time that audiences are becoming used to terrestrial broadcasters having a multiple channel offering'.

Nonetheless, the reality is that RTL would have moved faster had it not been preoccupied with finalising complete control of Five (see box).

'Moving to a family of channels is critical for Five because its audience is plateauing,' says Nick Theakstone, UK chief operating officer of media investment management firm GroupM. 'When you see the success that ITV and C4 have made of their digital portfolios, it is clearly the right way for Five to protect and grow the existing business.'

Digital dividends

While Five has done well to keep its audience share at about 6%, its move into digital could reduce this figure.

This is borne out by viewing trends between 2002 and 2005, when - as more UK homes went digital - viewing of the five terrestrial channels dropped from 78% to 70%. At the same time, viewing of BBC, ITV and C4's digital channels increased from 3% to 6%.

'Half of the viewing that the terrestrials lost over those three years was gained by their junior channels,' says Lighting. 'Having a multi-channel strategy has been an essential way for each of them to counter the sector's growth.'

So, what can Five offer the viewer who has everything? The answer is more of the same. Five US will 'celebrate the best of US television', offering dramas, movies and comedy. Initially broadcasting in extended primetime, it will eventually move to 24-hour transmission.

Five Life, meanwhile, will be a general entertainment channel for women.

Broadcasting almost around the clock from launch, its programming will resemble existing Five content such as lifestyle show Diet Doctors and chat show Trisha. The channel will also be used to extend Five's popular kids' strand Milkshake.

This more-of-the-same strategy is fine up to a point, since the UK digital business is built largely with the bones of recycled or extended series.

But if Five is to compete with ITV2, E4, Sky One and Living, it must do two things, according to Theakstone: put the right programming in place and develop a launch with impact.

Five US' success will be dependent on the group's ability to outbid Sky, C4 and Living for rights to top US shows - an expensive business. Lighting, whose background is in TV distribution, believes Five is well-placed, despite the fact that it has already been the victim of costly flops such as Joey.

'More people watch CSI at 9pm on a Tuesday than any other US show on any other channel,' she says. 'In the past year we have expanded our reputation, becoming the home of series such as House and Grey's Anatomy.'

The key to Five Life's performance will be two-fold, says Starcom UK group trading director Chris Locke. First, it will need the budget for original programmes to enable it to stand out. Second, Five itself needs more flagship entertainment shows that can be extended, in the vein of Pop Idol and Big Brother.

'A hit reality show would fill a lot of hours on the digital network cheaply,' he says. 'It would also feed other media, which in turn would raise awareness of the channels.'

Lighting will not comment on launch line-ups, but according to a spokesman, Five has returned from the LA Screenings, at which US studios tout their wares, with some strong shows, and has a 'substantial budget' for acquisitions and originations to back the launches.

If Five can get its programme and marketing strategy right, it will have two advantages in the digital space. First, says Theakstone, it will be able to cross-promote from the main channel. Second, it will be available in 7.1m Freeview homes, which Living and Sky One are not. 'If there is a gap in the digital market, it is for a women's channel on Freeview,' says Locke. 'I can see that being of real interest to FMCG advertisers, which may affect ITV1 and Channel 4.'

While Five's late arrival is likely to be offset by the strength of its core brand and Freeview platform, Theakstone sounds a warning. 'My main concern for Five Life is the impact that regulation on kids' advertising might have on its Milkshake block,' he says. 'As for Five US, it has to make sure it doesn't just end up taking audience from Five. Five has to continue to be the lead channel.'

DATA FILE - FIVE

RTL took control of Five on 20 July 2005, when it paid £247.6m for United Business Media's 35.4% stake. At the time, Five was generating £288m a year in revenues and a profit of £19m.

Five's share of adult impacts rose from 4.7% in 1997 to 11.1% in 2005.

Its share of TV revenue in 2005 was 8.6%.

In 2005 Five's audience share fell from 6.7% to 6.4% year on year. Its biggest (non-film) audience was for the launch of Joey, which attracted 4.56m viewers, a 17.1% share. But by March 2006, Five's share was 6%, leading agencies to suggest it would go into reverse in 2007, something its digital debut may prevent.

This article was first published on Marketing