UK broadcaster Channel 4 has announced plans to launch a £ 30 million (US $ 40 million) Global Format Fund to target a bigger drop in international content sales as 40% of its revenue comes from non-TV Advertising sources should be generated.
The Format Fund, which will be described in detail today as part of Channel 4’s Future4 strategy, will involve the broadcaster, which is investing early in the development of non-scripted shows with international potential. Think of Gogglebox or Come Dine With Me, which started on Channel 4 in the UK and enjoyed success on the world stage.
Channel 4 will work with producers at an early stage and support ideas with guaranteed minimum series runs and recommissioning triggers in advance. It will also commit to some level of marketing support for the shows selected under the biennial program and provide information to the audience to bolster the global sales material. The producers retain control of the international rights, but in return for their upfront commitment, Channel 4 expects half of its revenue from the sale of finished tapes and formats.
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Channel 4 wants 10% of its total £ 985 million sales to come from non-commercial sources over the next five years and also plans to double digital sales to 30% of all revenues. This brings you to the 40% number that Channel 4 is targeting. Currently, almost 80% of Channel 4’s total revenue comes from traditional television advertising, which has proven to be extremely volatile during the Covid-19 crisis.
The ambition is part of Channel 4, which advocates its future sustainability. The broadcaster, which is 100% owned by the UK government but is commercially self-sufficient, has been hit by the coronavirus pandemic, forcing it to cut costs and take staff on leave. It has since recovered, but the UK government has asked questions about whether Channel 4 can continue in its current form and again raised the prospect of selling the company.
As part of the Future4 strategy, which was presented to employees and the industry on Thursday, Channel 4 announced that it would concentrate significantly more resources on its streamer All 4. In addition to doubling sales, Channel 4 aims to double its viewing from All 4 by 2025, which has garnered a billion streams this year, powered by hits like The Great British Bake Off.
Growing All 4 means putting digital go-live before ordering shows that would work on traditional TV, although CEO Alex Mahon emphasized that “this doesn’t mean giving up our linear channels”. Channel 4 offered little detail on how to do this, but it will likely reflect similar work currently being done at the BBC and ITV, which also includes putting online commissioning first. Channel 4 added that leveraging the data it generates from its 24 million registered users will also grow in importance.
Another goal of the Future4 strategy is to increase the scale, investment and impact of the manufacturing investment initiative, the Indie Growth Fund. Channel 4 has invested in 18 producers and generated returns since the fund was launched in 2014 after, for example, the producer of Sexual Education Eleven was sold to Sony Pictures Television – a deal that was first announced in April. The Channel 4 Ventures digital investment program could also expand, but Mahon added that Channel 4 is not about to “move into in-house production.”
Summing up the revenue diversification plan, Mahon said, “Our new Future4 strategy is to underpin our economic sustainability and ensure that we have a clear plan to transform ourselves into a digital media organization for the public service that is for the future delivers across the UK. ”
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