Gambling big bucks doesn't guarantee a positive reception
UTV's move to challenge RTE and TV3 by creating a brand new Irish television station is courageous. Without a compelling and fresh line-up, television start-ups are a high-risk venture.
Deep, deep pockets and some heavyweight partnerships with other broadcasters are crucial. UTV has already landed a significant coup by inking exclusive deals for 'Coronation Street' (pictured left), 'Jeremy Kyle' and other shows. This will cause massive damage to TV3, which has close to 15pc of the market.
The logic of UTV's move to invest big bucks into a new start-up is fuzzy at best. There'll be economies of scale, and a lot of back-office and production costs can be handled centrally. But where are the advertisers and viewers?
Last year, RTE's commercial revenues fell to €156m – that's the same level as 2003. Mainstream Irish TV stations like RTE 1, RTE 2, TV3 and TG4 had just over 50.7pc of peak viewers last year. That fell sharply from 2011 as viewers switched to niche stations, netflix or other platforms for content. It's a global trend. UTV is betting millions that it'll be able to reverse consumer habits.
However, UTV needs to expand its TV presence as the North's market is too small for the €170m-valued firm. The Republic is an obvious step. UTV is understood to have looked at a move for TV3, but kept its jim-jams on. Its TV operations have barely made a dent in the Republic, with a 2.9pc market share of peak viewing – down from 3.2pc in 2011. Clearly, investors such as TVC Holdings and FL Partners want more bang for their buck.
The Irish television landscape resembles Stalingrad, with a number of highly ambitious ventures ending in bloody failure over the last decade. Backed by high-rollers, including Feargal Quinn, Barrys Tea and Gowan group, Channel 6 was launched in 2006.
Viewers and ad money didn't materialise and the station lumbered from one crisis to another before being mopped up by TV3 for €10m two years later. It now exists as 3e. Former 'Crimeline' presenter David Harvey also had a stab at the local TV market with City Channel, which went dark last year after six years on air. Even the giant Sky operation failed in Ireland, with its Sky News Ireland project axed in 2006 after just two years.
The announcement of the new Irish station failed to gee up investors, with shares flat in London. However, UTV is tapping into an increased positivity about the Irish economy.
Investors have been buying into the media space as a recovery play on Ireland. UTV's share price has risen 19pc over the last month. In television, timing is everything.