Monday 26 September 2016

Changing channels: ganging up on RTÉ in new telly wars

Would TV3-UTV juggernaut end national broadcaster's old dominance?

Published 10/07/2016 | 02:30

International success: TV3's Red Rock is an example of the new sort of challenge facing RTÉ.
International success: TV3's Red Rock is an example of the new sort of challenge facing RTÉ.
John Malone

Irish television is braced for upheaval with rumours that the US-based owner of Virgin Media and TV3 is to swoop for UTV Ireland, potentially creating a broadcasting colossus.

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In recent days, the chatter in Dublin, London and New York is that Liberty Global, the cable giant presided over by 75-year-old Irish-American billionaire John Malone, is to bid for the fledgling channel, which has steadied itself after a rocky 2015 launch. Were that to happen, the TV landscape could be changed utterly.

An alliance between TV3 and UTV Ireland would have the financial clout to take on RTÉ and the infrastructural nous to capitalise on changing viewing habits. "It makes absolute sense from Liberty's perspective," said an insider with knowledge of the players involved. "I can absolutely see why they are mulling a bid."

Sentiment may play a part in Liberty's interest in Ireland, as Malone takes long-standing pride in his links to the old country. In 2013, the Milford, Connecticut native paid €8m for the neo-Gothic Humewood Castle, in Co Wicklow, after it had caught his "wife's fancy". "We call it our green banana project because at our age, you don't buy green bananas," said Malone, whose brutal negotiating style led him to be variously dubbed "Darth Vader" and the "Road Warrior" in the US. "It's going to take a number of years to get it restored."

Yet there are canny commercial reasons, too, for Liberty Mutual doubling down in Ireland. In RTÉ, the company may see a sluggish established player whose market share is ripe for the plundering. Consider what TV3 has accomplished with far fewer resources than its Montrose rival with hits such as Red Rock (carried internationally on Amazon Prime and made in association with a production company in which Liberty has a stake) - and then add to the equation UTV Ireland, with its older audience base.

"It all depends on what the ­objective is here - I'm assuming they are looking at the advertising potential," said another commentator.

"If Liberty Global was to come in and make a play for UTV Ireland and it wasn't subsumed into TV3 - that is, it were to remain a separate entity - then it would have the biggest share in terms of market share. It would be clear number one and would have more reach than RTÉ on certain audiences. On the face of it, this could be a smart move."

The speculation must be seen in the broader context of Virgin Media's ambition to stand toe-to-toe with Sky in the premium cable market here and in Britain. Already in the UK, Virgin has spent on exclusive content for its cable service, including the highly-rated American horror-comedy Ash Vs The Evil Dead and the Nick Jonas drama Kingdom. Virgin wants to eclipse Sky, both in Ireland and the UK; ownership of both UTV Ireland and TV3 would help it assert its dominance.

"There would be opportunities in terms of the data Virgin would have access to on their set-top boxes," said the analyst. "That would give them opportunity to be more targeted in their advertising."

Significantly, Virgin has announced it is going to create its own original programming in conjunction with production company All3media (co-owned by Liberty and the parent company of the Discovery Channel). This is seen a direct response to Sky's ratcheting up of its drama division and acclaimed shows such as The Last Panthers and ­Fortitude (Sky has to date plunged $6bn into new content across its European operations).

Those with an in-depth knowledge of cable TV say Liberty's Irish strategy may be part of a wider mobilisation. "[An] indicator that [Virgin] is planning to step up its TV service: the company is allegedly in talks to acquire TV channel UTV Ireland," wrote Broadband Choices' Duncan Heaney this week. "ITV bought UTV last year, and is by all accounts trying to offload UTV Ireland as it doesn't make any profit. Liberty Global already owns Ireland's biggest commercial broadcaster, TV3. Getting hold of UTV Ireland would give the company a major boost in the country."

If a bid for UTV Ireland makes more sense to overseas players than in Ireland, it may have to do with the distorted perception that the channel, unveiled with a fanfare at the start of 2015, is a flop. True, it didn't live up to its pre-launch pledge to unseat TV3 as the second biggest presence in the market and has bled cash (€18m in 2015). Yet an 11pc audience share is regarded as far from disastrous and it has established itself among over-35s, the demographic least likely to watch TV3 and traditionally loyal to RTÉ.

"It's an odd one," said one industry analyst. "UTV delivered a strong core audience - which we always knew it was going to. It isn't strong among the under-35s. But among the broader audience - housewives, older people - it has delivered a significant share.

"The problem is that they had gone to market talking up much bigger numbers in terms of viewership. So everybody says it as a failure. The reality is that any station that launches and has double-digit share is a big success. Everyone was quoting the figures that came out in advance." A takeover of UTV Ireland by TV3's parent needs to be seen in the wider context of television transforming into an on-demand medium. In just a few years, most of our viewing will be via streaming, across platforms similar to Netflix. In that environment, content will be all important, which may be one of the reasons TV3 has invested heavily in Red Rock - a well-reviewed crime drama suitable for binge-watching (it is a big hit on Amazon Prime too, with US viewers praising it as "captivating" and "more addictive than potato chips").

This is important as home-produced programming is relatively rare, on UTV Ireland especially. In the looming future of internet-based television, it will be critical for Liberty to have a broad range of shows with which to go up against RTÉ. "Content is important - and in the Irish market, local content will always be really, really crucial," said one industry figure who spoke to ­Review. "Liberty is a major player and will have access to a lot of content."

What does this mean for RTÉ? In the medium term, it will simply have to produce better programming. In an environment where a global corporation such as Liberty is a ­rival, dead-on-arrival fare such as the lamentable Bridget and Eamon or the pulseless Rebellion simply won't cut it. Mediocrity can no longer be the watchword at Montrose.

Moreover, RTÉ cannot take its primacy in the broadcasting landscape for granted. Sky already challenges its dominance in GAA while just this week eir Sports, the newly rebranded Setanta Sports, secured the rights for the majority of 2019 Rugby World Cup matches (eir Sports owners Eircom will make the new service available for free to its 370,00 broadband customers). This will leave RTÉ and TV3 to scrap over the 13 guaranteed free-to-air games, including Ireland's pool matches and all the knock-out ties.

In Irish TV, the tectonic rumblings have only just begun.

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