Can Viacom intensify competition in the UK TV market?

Now that Viacom has sealed its £450m deal for Channel 5 – what does it plan on doing to shake things up in the UK? Raymond Snoddy hears from the company’s CEO, Philippe Dauman.

Of the big three American media players – Rupert Murdoch, John Malone and Sumner Redstone – it is Redstone, the executive chairman of Viacom, who is both the oldest and the least well-known.

The reason is partly because Sumner, who is in his nineties, and the man who runs the $14 billion a year media giant, Philippe Dauman, don’t go in for the big flashy takeover bids that generate endless headlines. They tend to launch channels and take them round the world – good old steady, boring, organic growth.

Then, without warning earlier this year, they paid Richard Desmond £450 million for Channel 5 in a deal that just recently closed.

Apart from the rare acquisition, this is an even rarer move into free-to-air television for the owners of MTV and Nickelodeon.

Why did they buy it? If they were interested now why did they not buy it a few years ago when Desmond was able to get the business for a song – or £104 million to be precise?

Most important of all what will Viacom do with C5 and its associated channels and will it mean a new intensity of competition in the British television market?

Some of the answers were forthcoming yesterday from Dauman who is in London this week to press the flesh, meet Culture Secretary Sajid Javid, announce the launch in the UK of Spike – its successful US basic cable channel – and meet the company’s 1,100 UK employees in “a town hall meeting.”

Spike, which is already available in more than 100 million US homes, will launch on Freeview early next year and make use of Channel 5 factual programmes such as Police Interceptors and Cowboy Builders.

The aim is to make Spike Viacom’s next global network following in the footsteps of MTV, Comedy Central and the Paramount Channel.

The acquisition of Channel 5, the largest in Dauman’s eight year reign as Viacom president and chief executive, happened now because “at this juncture there was a lot of forward momentum in the company.”

The deal presented a “unique opportunity” for Viacom, a company that is also a “big believer” in expanding its international footprint.

The UK will be an important creative hub for that international expansion in a tale of three pre-eminent media cities: New York, Los Angeles and London.

For Channel 5, which will, in time, move across London to join its sister companies in Camden, the Desmond days of cost-cutting are over and a period of expansion and increased programme budgets are dawning. Viacom content will also be added to Channel 5’s associated channels on Freeview, 5USA and 5*.

As an indication of the Viacom approach Spike will be managed from Channel 5 and the new channel manager will report to the Channel 5 programme director Ben Frow.

The international reach and weight of Viacom could help Channel 5 way beyond programme budgets.

Asked about the row with Omnicom which has taken its £30 million advertising spend with the channel to ITV, Dauman noted that John Wren, the Omnicom chief executive, was a friend he had met just a couple of days ago and Viacom had good working relationships with Omnicom around the world.

Asked whether Channel 5 would now seek to overtake Channel 4 in the ratings, Dauman commented: “That’s the first step,” adding that the company didn’t set boundaries to its ambitions.

What about the attack by Channel 4’s chief executive David Abraham in his MacTaggart lecture in Edinburgh on the “parade of Americans” buying into the UK television market?

Dauman noted wryly that Viacom had been in the UK since 1987 – almost as long as Channel 4 has existed.

Apart from the 1,100 British employees, Viacom’s UK networks commissioned programmes worth around £300 million a year, half accounted for by original British programming, a proportion that would increase in future.

In an indication that Abraham may have misjudged the political winds with his speech, Dauman said Culture Secretary Javid was very happy with what Viacom was doing in the UK.

Rather more controversially, under Viacom ownership Channel 5 will continue its programme-making relationship with Group M, the WPP company which has been financing Channel 5 programmes in return for intellectual property rights. Some reservations have been expressed at the implication of advertising companies getting so closely involved in programme-making.

Group M is involved in a new headline Channel 5 series under way at the moment – 10,000 BC, a show about how people today would cope in the stone age.

Viacom in fact has always taken a pioneering view of new distribution outlets such as Netflix and was one of the first media majors to deal with the OTT company – thereby turning apparently worthless library material into a new stream of revenue.

The company has also recently done a programme deal with Sony, which is launching a new virtual, multi-channel cable company.

Did Dauman and Viacom have any interest in the sale of All3Media which went to Discovery and Liberty Global in a deal worth more than £500 million.

“No,” was the answer.

The Endemol-Shine merger?

“No.”

Any interest in buying ITV?

“No,” Dauman insisted.

But one thing is virtually certain, Viacom will continue to increase its investment in programmes, through good times and bad, by low-to-higher single digit numbers every year.

Oh, and the US company says it plans to own Channel 5 “forever.”