4 VENTURES 4 VENTURES 4 VENTURES
Channel 4 is a multi-channel, multi-platform media business with free-to-air and pay TV channels, online and mobile services, a film production and distribution company, a print publisher and an international distribution subsidiary. 4 Ventures is the new holding company for all Channel 4's businesses other than the main channel, 4 Learning and 124 Facilities.
The following pages (30 to 37) contain Channel 4 brand. The company will have future as a single, terrestrial-only a report of the activities in 2000 of its own Managing Director, who will also network. It must grasp the opportunities Channel 4’s new media businesses. sit on the Channel 4 Board. presented by digital television, interactivity, Segmental analysis of these businesses broadband and the internet, if the can be found on pages 49 and 50 in The creation of 4 Ventures is the next Channel 4 brand is to remain as visible the financial section of this report. stage of Channel 4’s strategy to transform and relevant in the next ten years as from a single television channel into a it is now. As well as managing Channel 4’s network of media businesses on a range existing businesses – the FilmFour of platforms. This strategy is parallel By consolidating these business activities and E4 channels, FilmFour Ltd, to those adopted by the BBC, ITV and into one company, they can be managed Channel Four Interactive, Channel Four BSkyB in response to the rapid spread of more aggressively to ensure that targets International and Commercial Development digital technology, which is transforming are surpassed and that they become – 4 Ventures will also develop new ones television and opening up new means of a net cash contributor to Channel 4, based on Channel 4’s core purpose, distributing content. In a universe of 200 moderating the competitive pressures designed to strengthen and extend the channels, Channel 4 has a declining of the digital era.
CHANNEL FOUR TELEVISION CORPORATION
CHANNEL FOUR TELEVISION 4 VENTURES Ltd
124 Facilities Ltd 4 Learning FilmFour Ltd Channel Four Interactive
FilmFour Channel Four ■ Ultimate holding entity channel International Ltd ■ Division ■ Wholly-owned trading subsidiary of Channel Four Television Corporation E4 Commercial Development ■ Wholly-owned trading subsidiary of 4 Ventures Ltd 4 VENTURES
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FilmFour Ltd achieved considerable success on the production side of its business in 2000, with 12 feature films FILMFOUR LTD and three low budget FilmFour Lab films commencing production, with FilmFour funding £33 million of their production and development spend. Together with external co-finance, this enabled FilmFour to participate in films with total production costs of £102 million.
The production slate in 2000 helped most frequently rented of all films FilmFour deliver on its strategic aim of released in 2000. In the independent titles working with more established and proven top 10 for the year, FilmFour had nine film talent and funding bigger budget films titles. FilmFour was awarded the status of greater ambition. Star names signed of Video Distributor of the Year at the 2000 to FilmFour’s productions in 2000 included RIVA awards, the first time this award has Cate Blanchett, Billy Crudup and Gillian been given to a non-major. Armstrong (Charlotte Gray); Peter Cattaneo (Lucky Break); Ian Holm (Emperor’s New On the awards front FilmFour garnered Clothes); Andie MacDowell (Crush); and nominations and prizes across the world. Joaquin Phoenix, Ed Harris, Scott Glenn There were 131 nominations for 24 different and Anna Paquin (Buffalo Soldiers). films and 33 prizes. Notable results included Dancer in the Dark, winning two The raising of FilmFour’s profile has been awards at the Cannes Festival (Best Actress matched by improved working relationships and Best Film) and three at the European with overseas partners, who are helping Film Awards (Best Actress, Best Director to co-finance and distribute the company’s and Best Film). East Is East picked up films worldwide. The key development in a total of nine awards including Best Film this respect in 2000 was the establishment at the Evening Standard Awards and the of a relationship with US studio Warner Bros, Alexander Korda award for the year’s which will be distributing Charlotte Gray outstanding British Film at BAFTA. Red Violin in North America and with whom FilmFour won an Oscar for best original score. has formed a partnership for further projects. Universal also picked up many of the A major initiative in 2000 was the launch of rest-of-the-world rights on Charlotte Gray, Spirit Dance UK – a joint venture with Forest FilmFour’s most expensive film to date. Whitaker’s US company Spirit Dance. The FilmFour’s long-term output relationship with company’s purpose is to develop and make Senator in Germany continued to work well. feature films with British ethnic minorities. This partnership, with someone of such In 2000 FilmFour made further strides stature in the film business, will encourage towards its goal of achieving worldwide and develop the talents that undoubtedly lie distribution for its films, especially in the in the UK’s black and Asian communities. most difficult market – the USA. To assist its US production and distribution business Six low budget feature films were the company opened an office in Los Angeles committed to in 2000 mostly through the based on the Warner Bros lot. This is FilmFour Lab initiative, all of which involved expected to contribute significantly in 2001 first time directors and some with first time to finding US partners and in sourcing new producers. Two of these, Jump Tomorrow projects and finance for films. and My Brother Tom, have already been rewarded with selection for the Sundance FilmFour’s UK distribution arm had and Rotterdam festivals in 2001. a difficult year theatrically and despite considerable effort there was no break Another new talent initiative was launched out hit on a par with 1999. As a result, through the commissioning of 30 one-minute the company recorded a loss of £3 million digital short films, made by musicians and in 2000, compared with a profit of artists, as well as by established filmmakers. £0.5 million in 1999. The real success Artists of the calibre of Michael Stipe and story in 2000 was in video distribution Howie B have contributed and the films and DVD rental. FilmFour had a 5.2% premiere on the filmfour.com website. share of the video rental market (up from 1.8% in 1999) – its highest ever figure. East Is East led the way, heading the Lucky Break weekly charts and becoming the fourth
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FILMFOUR CHANNEL E4
Hilary and Jackie Banzai
The FilmFour channel continued to grow its subscriber base in 2000 and again ended At launch E4 was available in 6.5 million homes with distribution on Sky Digital, the year ahead of forecast – with more than 405,000 subscribers – and substantially ONdigital, ntl digital and Telewest’s digital and analogue networks. ahead of budget.
The channel recorded some exceptional to less than £15 million in 2000, and are In April 2001, FilmFour launched three E4 is provided at no additional cost to basic of which will be incurred in 2001, reducing increasingly fragmented and competitive viewing figures during the year thanks forecast to decline to £11 million in 2001 new digital services – a time-shifted tier multi-channel subscribers. Part of the to £20 million in 2002 and profitability television landscape and reinforce to its continued strong emphasis on and £7 million in 2002. version of the existing channel and two basic tier on all digital platforms, E4 will by 2005). The channel represents a major Channel 4’s reputation as the home British and non-formulaic films together themed channels dedicated to extreme rely as much on advertising as platform investment in new talent and entertainment of cutting-edge entertainment and with a commitment to more challenging FilmFour contributes to the funding and world cinema. These three new subscription fees to pay its way. programming, with a programme budget the best new comic talent. and controversial material, foreign of Channel 4’s film production business FilmFour channels will be provided of more than £40 million in its first year language films and shorts. Highlights and promotes the take-up of digital to subscribers for no additional cost and Launched on 18 January 2001, E4 required and £13 million annual spend on original in 2000 included the television premieres television. To this end, more than will be financed within FilmFour’s original months of collaboration and planning, with commissions – a 25% increase in Channel 4’s of Human Traffic and the award winning £15 million of the total £66 million overall business plan and projections. departments from across Channel 4 involved commissioning spend on prime time FilmFour productions Elizabeth and investment will contribute to film in its conception alongside the dedicated entertainment. Through E4 commissions Hilary and Jackie, and the month of production and more than £13 million pay TV team. The channel burst on air in 2001 Channel 4 is also doubling its new November devoted to extreme cinema will contribute to Channel 4’s cost of at 8.15 pm with opening links from Ali G entertainment output. including Ai No Corrida, Driller Killer operating its digital terrestrial multiplex. and an exciting new programme genre in and The Texas Chainsaw Massacre. the form of interactive game show Banzai. Like FilmFour, E4 is operated as a fully FilmFour is proving to be one of the It scored a remarkable 1.5% share of viewing costed, separate business and aims FilmFour was launched in November 1998 most successful channels on the ONdigital in multi-channel homes on its first night, to drive the take-up of digital television with a fully costed business plan that platform and, in the move towards digital, topping Sky One with the highest rating in UK homes. projected a total maximum investment in 2000 it ceased analogue transmissions programme on a multi-channel service for of £66 million and breakeven by 2005. on satellite and Telewest. Channel 4 the day – Friends with 628,000 viewers (6% Offering the same, distinctive brand Results to date and latest projections undertook arrangements with those share of viewing in multi-channel homes). of cutting-edge entertainment pioneered leave Channel 4 confident of meeting platform operators for FilmFour channel over the last two decades by Channel 4, these targets, so that the film channel to be used as a digital only incentive E4 was launched with a business E4 is the next logical step in Channel 4’s will become a net cash contributor. to encourage customers to switch from plan that projects maximum total net cross-platform strategy. It will protect Losses of £20 million in 1999 reduced analogue to digital television. investment of £80 million (£42 million and develop the Channel 4 brand in an
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GO RACING CHANNEL FOUR INTERACTIVE
filmfour.com
Cheltenham Gold Cup channel4.com e4.com 4car.co.uk
Channel 4 has pioneered an integrated rights proposal for horseracing – covering The online highlight of 2000 was the success of the Big Brother website, which terrestrial, pay and interactive television and the internet. Channel Four Interactive steered from its inception through innumerable technical and creative challenges. For the nine weeks of the show, the site was Europe’s most visited destination, generating more than 200 million page impressions.
At the start of 2000, in partnership At the time of writing this report, Go Racing Channel 4 also transmitted its first television Other notable events last year included Revenue generation for these interactive with cable operator ntl, Channel 4 was in advanced negotiations with the RCA and web simulcast, with Show Me the Money the launch of cricket site, cricket4.com. sites is the top priority for 2001. Exploiting bid against BSkyB for all media rights and anticipating issuing a rights contract being simultaneously available for viewing opportunities in advertising, sponsorship, to the ‘Super 12’ group of leading to Britain’s 59 racecourses. on both media. The online trading game The focus for Channel Four Interactive e-commerce (on web, television and racecourses. This Channel 4-led associated with the show was a great success in 2000 was building a solid foundation mobile platforms), content syndication consortium won a period of exclusive Together with our consortium partners, for channel4.com and proved how interactive for the future. Channel Four Interactive and pay-per-view will be on Channel Four negotiation with those 12 courses BSkyB and Arena, Channel 4 aims to build platforms can take television viewers into has made a significant investment in Interactive’s agenda. but that deal could not be concluded Go Racing into a major business, developing deeper relationships with programming. the development of a technical platform because it did not gain acceptance new revenue streams through interactive that will support its operation and In 2000, Channel 4 invested £15 million by the whole racing industry. betting on television and online. In addition Together with E-world, Channel Four launch of businesses in the online, in its interactive activity. This will rise to normal annual rights fees for its main Interactive and the Commercial Development interactive television, broadband and to £23 million in 2001. Whilst small In November, Channel 4 re-entered channel coverage, Channel 4’s proposed department have created a leading destination mobile arenas. in relation to its competitors, that the fray as part of the Go Racing financial commitment to Go Racing’s on the internet for car enthusiasts. The site expenditure is carefully focused and has consortium alongside former rival BSkyB funding is £23 million. is focused on providing useful information 2001 is a key year for launching and delivered significant success and impact. and racecourse-owner Arena Leisure plc. to consumers purchasing a new or used establishing Channel Four Interactive The joint venture was pitched against Go Racing represents an exciting opportunity vehicle and now delivers two million page businesses online. e4.com is a In a market of considerable dot.com Carlton Communications, a late entrant to develop Channel 4’s longstanding impressions per month and supports standalone entertainment destination. uncertainty, Channel 4’s ability to to the bid battle which was waged long coverage of British racing. Channel 4’s motoring programmes. Offering The relaunched filmfour.com extends harness terrestrial television to create and very publicly before the Racecourse a blueprint for other online ventures, the FilmFour brand online to become new cross-platform brands and events Association (RCA) recommended to its 4car.co.uk is operated as a joint venture with a significant film portal. 2001 will see will become increasingly important. 59 members that they enter a period E-world, a subsidiary of Ideal World which the launch of innovative interactive of exclusive negotiation with Go Racing. produces Driven and Deals on Wheels. television content.
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CHANNEL FOUR COMMERCIAL INTERNATIONAL DEVELOPMENT
4 Play – The Samuel Beckett Season
Channel Four International ended 2000 with a healthy 23% increase in turnover from Producing significant hits in all genres across all areas of rights exploitation, £19 million in 1999 to £23 million. The profit contribution, after payment of £13 million Channel 4’s Commercial Development department proved itself the partner to Channel 4 and independent producers for the rights sold, was £2 million. of choice for independent producers in 2000 and ensured the ubiquity of the Channel 4 brand off air.
Top selling programmes of the year included co-production deal with US network NBC. Turnover rose significantly to £7.6 million single publication was the Big Brother the original eight-part series of Queer as (1999: £2.5 million) and Commercial book, which sold 302,000 copies and gave Folk, which was also remade during 2000 for Channel Four International scored a coup Development contributed net profit the imprint its first number one paperback. US cable channel Showtime; Anna Karenina; by securing international distribution to Channel 4 of £2.2 million (1999: loss Channel 4 Schools’ innovative 90-minute rights to the 19 plays of Samuel Beckett, of £0.3 million). In August, Commercial Development set version of Cinderella, directed by Beeban which have been produced for television up the Channel 4 shop, to offer viewers Kidron and starring Kathleen Turner; by Irish state broadcaster, RTE, in a major Music activities expanded beyond licensing the opportunity to buy Channel 4 and two episodes of True Bible Stories: co-production partnership with Channel 4. to include the establishment of Channel 4 merchandise both online and by phone. Sodom & Gomorrah and The Lost Ark Music as an independent record label, which More than 25,000 products have been of the Covenant. In 2000, Channel Four International showed sold 377,000 CD units in 2000 achieving sold and orders received from more other distributors the way forward in income of £1.9 million. The highlight of than 19,000 customers. Channel Four International also continued marketing and client relations, by creating the year was the release of the Big Brother to broaden its sales portfolio to include and launching a unique website that allows theme which reached number four in the Commercial Development also manages rights to third party programming as well buyers to order screening cassettes and view singles charts, selling 193,000 units. the provision of premium and non-premium as one-offs, series and serials that have clips of shows directly from the internet. rate telephone services for programmes. appeared on Channel 4. In 2000, Channel The company also pioneered an innovative Channel 4 Video enjoyed its best ever Again the most notable success was Four International was the international approach to marketing, introducing portable year with five major releases – Ali G Innit Big Brother with 20 million calls to the sales agent for several ITV dramas and viewing kiosks that travel to international (615,000 units), Trigger Happy TV (235,000), vote lines during the series. Programmes also represented a strand of biographies sales markets and can be used to browse Ali G, Aiii (261,000), So Graham Norton as varied as Test Cricket, Collectors Lot Cinderella for US cable channel, Bravo. The company the current Channel Four International (63,000) and Queer as Folk 2 (37,000). and The Big Breakfast all used premium now has a number of international strategic sales catalogue. rate telephone numbers to provide partnerships with networks and media Channel 4 Books, an imprint established competitions, votes and live-to-air services. companies worldwide, including Discovery in 1998 with Macmillan, passed sales of and A&E, and the company’s first 2.9 million books since launch. The biggest
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