Freeview: The rise and rise 

2 June 2005 tbs.pm/2075

ITV’s purchase of SDN brings analogue’s status quo to digital terrestrial

In April 2004 shopping channel Ideal World launched on Freeview. It took the last slot owned by multiplex operator Crown Castle – a space which had remained empty since the launch of Freeview in October 2002.

The slot had originally been designated for CNN, Boomerang and TCM, which would run at different times of the day, but channel owner Turner pulled out of the deal. Later it was to go to CBM – a channel offering old movies and minority sports. But that didn’t happen and after months and months of delays, the plug was finally pulled. The slot remained empty for months afterwards, until the only occupier that could be found was a shopping channel.

Roll on twelve months to April 2005. Crown Castle release two more slots. ITV snaps up one for a price estimated to be £5-6m. Channel 4 is then rumoured to have bagged the second slot for a similar price.

ITV had already unleashed ITV3 in August 2004 and set about arranging for its new extra slot to become a revamped Men and Motors – the one hangover from the old Granada Sky Broadcasting business.

Then Channel 4 announces that it’s about to withdraw E4 from Top Up TV, and will launch it on Freeview along with E4+1.

Just a day after announcing that move, ITV plays another card. It spends £134m buying multiplex operator SDN – giving it ownership of multiplex A, which houses Five, S4C, shopping channels and several streams used for Top Up TV.

All that just a year after Ideal World finally took a space that, seemingly, it hadn’t been possible even to give away.

The rise and rise of Freeview is, of course, in sharp contrast to the days of 2002 when it was widely believed that the platform was at a dead end following the collapse of ITV Digital. However the BBC-backed plans for a free-to-air replacement took off – leaving both Channel 4 and ITV out in the cold. Of course both had channels available on the platform, but neither seemed particularly keen on joining in in any big way.

Rag-bag to big player

Fresh from having their fingers burnt, Carlton and Granada spent most of their time concentrating on their core business, as well as trying to merge the two companies together. It was only once the two had come together that they really began to focus on the future.

ITV plc inherited somewhat of a rag-bag of digital channels. As well as now owning all of ITV2, it also had a shareholding in Granada Sky Broadcasting, a company originally set up in the mid-1990s by Sky and Granada, though by 2004 its channel portfolio contained just Plus and Men and Motors.

Some months before the takeover of SDN, ITV3 had been announced, to launch on Freeview. This left Plus in limbo until Sky were eventually bought out of the partnership at the last minute, before ITV3’s launch in August 2004. Plus was closed down just hours before ITV3 came on-air on the same DTT channel.

The decision to go free-to-air with ITV3 was no doubt in response to the success of ITV2 – the ever-rising success of the Freeview platform no doubt helping. And maybe the string of failed pay-TV business ventures had a little impact too.

As a decision it quickly paid off. Within six months ITV3 went from nothing to being the sixth most-watched digital TV channel. In Freeview homes, it was the second.

This just left Men and Motors as pay-TV, showing its mixture of motoring shows and soft pornography. Rumoured initially to be re-badged as ITV4, it was later announced that the channel would be relaunched as a men’s lifestyle channel – arriving on Freeview at the same time, 2 May 2005. Adding to the line-up of motoring programmes was to be The Sweeney and comedy. Oh and the soft porn would be going.

With that in the bag, ITV came full circle with the announcement that it would be buying SDN. Digital television through an aerial was big again.

4 More Reasons

For Channel 4, the tale was slightly different. Its More4 channel had been first mooted in the spring of 2004 as a Freeview channel, but it wasn’t until the arrival of new Chief Executive Andy Duncan in July 2004 that the idea of making E4 free to air was first proposed.

That it should have been first suggested after he arrived is perhaps not that surprising. During his time as marketing director at the BBC, Andy Duncan had been one of the architects behind making Freeview a success in the first place.

But there was more at play. Channel 4 was already looking at preparing itself for the digital future – a future it believed would become increasingly fragmented, and one where Channel 4 would receive far less revenue from advertisers. Bids for public money in the future were already being made, but the commercial ventures of the organisation were sitting slightly at odds with the public service vision that would hopefully give the channel public service money.

In February 2005, 4Ventures, the commercial arm of the organisation, was restructured. As part of the move, the digital channels (E4, FilmFour and the forthcoming More4) would be re-integrated into the main organisation, decreasing their need to be solely about profit.

By this point, a Freeview E4 had already been discussed (although not confirmed), with a view to launching in the Autumn of 2005, but just three months later the plans were confirmed and moved forward. E4 would go free with the launch of Big Brother and would be joined by E4+1.

The Status Quo

Whilst the current success of Freeview must have been in both ITV and Channel 4’s eyes, no doubt both had a vision of the future as well. And it was a vision that placed them both at risk.

For both of them, part of that risk was a certain company called Sky. A world full of smallish, niche pay-TV channels had been the future portrayed by analysts for years, but as Channel 4, Carlton and Granada had found out to their cost, it was an area fraught with difficulties. The failure of almost all of Granada and Carlton’s pay TV channels must have been in the minds of some execs as they grappled with the future. And even more importantly, that future would see the main (and expensive) channels slowly decrease in importance.

Yet this world of small channels had been challenged by an upstart that rose from the ashes of pay-TV. The public appetite for free-to-air television made it look more financially viable both now and for the future. And more importantly, if they took action before it was too late, both Channel 4 and ITV could ensure they would have a stake in the future.

Of course the events of the last year make Freeview itself an even better consumer proposition, but ironically it also leaves digital free-to-air TV pretty much where it was on analogue. There may be far more channels, but a large proportion of them will now be in the hands of the ‘big three’ from the analogue world.

Yes there will be other companies too – Sky, UKTV, Disney and Flextech are all involved in Freeview as well, but are pretty much bit-players in the market. It didn’t seem like it was going to be like this five years ago, but the big guns of the analogue world – BBC, ITV, and Channel 4 – look set to be sitting down to an even longer status quo in the digital one.

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