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Wednesday 24 September 2014

UTV Ireland bets on soaps to help clean up in ratings war

Due to launch on January 1, UTV Ireland aims to become the country's most-watched TV channel after RTE 1, writes John Mulligan

Published 28/08/2014 | 02:30

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John McCann and Pat Kenny

'I'm not a natural media luvvie," jokes UTV boss John McCann, as his curry lunch-in-a-box goes cold on the table.

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Funny then, that he's been with the media group since 1983, having been appointed chief executive in 1999.

He's just after introducing broadcaster Pat Kenny to surprised luvvies at a packed function room in Dublin's Marker Hotel as UTV unveiled more details of its new Irish channel.

You can almost hear the Celtic feline everyone thought was extinct begin to purr again. The booze is flowing and bright young things who've, by and large, only ever known austerity in their adult lives are doe-eyed at the razzmatazz.

UTV Ireland is due to launch on New Year's Day and Kenny will front a new show at the station from early next year.

"It's a cliche to say it but when there are challenges it actually helps to get you out of bed in the morning," says McCann (61). "There's always something interesting going on."

"Something interesting" at the moment involves eventually stuffing money into the new channel.

First announced by the group last year, UTV Ireland will add TV to the group's communications quiver south of the border, where it already owns radio stations including FM104 and Q102 in Dublin, as well as 96FM in Cork. It has seven radio stations across the island.

Behind the glitz is a tight timetable that includes hiring 120 staff, kitting out a station HQ in Dublin, sealing content and platform deals, and much more.

Releasing interim results this week, UTV said that it charged start-up costs of £500,000 (€628,000) related to UTV Ireland during the first six months of this year.

It expects the new station to make an operating loss of between £2m and £3m (€2.5m and €3.7m) in its first year but to have moved into profitability during the second half of 2015. It's an ambitious target that McCann insists is achievable.

"All start-ups are potentially hazardous," he says. "This one is less hazardous than other television start-up channels simply because I can predict with a certain amount of certainty what the ratings are going to be for a significant proportion of the programming."

UTV Ireland has secured the rights to air ITV shows Coronation Street and Emmerdale here, poaching the ITV programmes from TV3, the independent station that's majority owned by private equity group Doughty Hanson (UTV had initially agreed to take a large stake in TV3 almost 20 years ago, before it began airing, but later pulled out of the deal).

Pickle

That's undoubtedly put TV3 in a pickle, although it has insisted that it loses "millions" of euro every year by paying for the rights to show the two popular soaps.

Conversely, McCann, whose group also owns the hugely popular Talksport radio station in Britain and a number of others there, insists UTV Ireland won't be losing money on them.

"Key for us was to do a deal with ITV," says McCann. (That deal to air the soaps was secured the day before plans for the channel were unveiled last year).

The agreement with ITV also gives UTV Ireland access to other popular shows, as well as a back catalogue. "We're the most-watched television station in Northern Ireland by a considerable margin. The plan was a very simple one: to take what we do in the North and to replicate that in the South, but to focus on the Irish audience and the tastes and preferences of people in Dublin, Cork and so on. No, we'll not lose money on them. We're only doing this because we think we can make a lot of profits out of it."

Programming will be localised, as it is in Northern Ireland, in an effort to appeal to viewers here. It's unashamedly targeting a more mature audience and wants UTV Ireland to be the second most watched channel after RTE 1.

UTV Ireland lured executives from TV3 and also hired former RTE executive Mary Curtis as head of channel. She had left the State broadcaster in August last year.

"I don't think I would have been critical of what TV3 was doing, but I certainly felt that we could do a very good job if we could acquire the right programming."

Would the new channel have gone ahead if UTV Ireland hadn't got the rights to Coronation Street and Emmerdale, for instance?

"Without that it would have been difficult," admits McCann. "It's very difficult to find programming that works as well as that. If TV3, for the sake of argument, had continued on with Coronation Street and Emmerdale, we would have to be finding programming which would be better than that. They deliver big ratings."

UTV is also launching the new channel just as the country is moving back into a growth phase. The economic engines are firing again, consumers are spending a bit more and, importantly for media, advertising revenue is back on a (mostly) upward trajectory.

There's been speculation that UTV Ireland will generate revenue of between €20m and €30m a year, with up to 60pc of that being captured from TV3 and chunk of the remainder coming from money that's currently spent with RTE. "We don't actually try to capture from anybody," says McCann. "You make your pitch and create a schedule that's attractive to the audience and, in turn, which is attractive to the advertisers. Where that money comes from remains to seen, but it's not that we're actually targeting TV3 or RTE."

The UTV group generated revenue of £107.8m (€135.4m) last year and a £20.1m (€25.2m) operating profit. The figures were down 4pc and 14pc respectively on 2012. TV accounted for £34m of that revenue and its British radio stations £51.2m.

"I think the Irish economy has been through a very rough patch," says McCann. "We've been through a rough patch here as well. It's been a very tough environment - much tougher than in the UK. All the macroeconomic data now is positive. Confidence is what economies are all about. It takes time for that to be regained."

"Advertising revenue has been hammered but the economy is on the mend. Life has become much more competitive for all of us. There are lots of other channels out there that people can watch. There's lots of other media. So you have to be able to deliver something attractive to the advertiser, and that's a large audience."

TV3, which will undoubtedly be hit hardest by the advent of UTV Ireland in what is a small market, has been trying to fight back.

It announced its autumn and winter schedule yesterday. It's also signalled increased collaboration with Communicorp, the media group owned by billionaire Denis O'Brien (who owns almost 30pc of this newspaper's publisher, Independent News & Media). Communicorp owns radio stations including Newstalk and Today FM.

McCann knows the UTV Ireland launch is probably his last big hurrah as he edges towards retirement.

"It's important for me to get it right," he says.

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