There could be trouble ahead for Ireland’s TV3 television station as Northern Irish media company UTV recently announced plans to open its own station in the Republic of Ireland that will directly compete with Ireland’s first commercial broadcaster.

UTV

UTV’s deal with ITV

The move comes on the back of UTV’s deal with UK network, ITV, for exclusive rights to broadcast popular soaps such as Coronation Street and Emmerdale – programs currently shown by TV3. It’s a move that could have disastrous repercussions for cash-strapped TV3, which has been criticized in the past for its lack of original programming. TV3’s chief executive admitted it was a blow, but also said that the shows had become too expensive to be sustainable, adding that the station had plans to start making its own soap.

Meanwhile, the state-funded broadcaster, RTE, said the launch of a new channel with “very clear commercial aspirations” only further emphasized the need for a public service broadcaster. However, the move is likely to put the national broadcaster under pressure too, as it would give UTV more bidding power when it comes to the rights to international programs.

Strong foundations to build on

UTV already has a foothold in the republic. Its flagship Northern Irish station is readily available to viewers there and it owns several radio stations in the south, including two of Dublin’s biggest, FM104 and Q102. John McCann, Group Chief Executive for UTV, announced the launch of the new channel:

“The audience in Ireland has known the UTV brand for more than 50 years through our station for Northern Ireland and we’re delighted to announce our plans for a new dedicated channel for viewers in the Republic of Ireland.”

“UTV Media already has a very strong presence in the Republic of Ireland, employing more than 300 people in our various businesses including our market-leading Irish radio stations. We look forward to building on that success with the launch of a new Irish TV channel.

UTV has already lodged an application for content provision with the Broadcasting Authority of Ireland and is planning to be on-air early in 2015 and profitable by 2016.

Is there enough advertising revenue to go around?

Most industry analysts welcomed the decision, saying that it was a vote of confidence in the Irish advertising market and the economy in general. But the market is still tough and isn’t likely to recover much by 2015. TV3 and its subsidiary channel, 3e, generated €58 million from advertising last year, compared to €62 million in 2008. Gavin Kelleher from Goodbody Stockbrokers commented on the figures:

“This revenue performance highlights that there is significant advertising revenue potential for an established channel of this nature in the republic.”

Clearly, however, UTV will be aiming to take a big portion of this advertising revenue away from TV3.

McCann said: “You can take the view that there’s going to be an eternal decline in advertising – and it’s admittedly a very fragile market – but ultimately the Irish economy will recover and we want to be in a position to take advantage of that.”

Is this the end for TV3?

Many will say that the incumbent stations only have themselves to blame. A lack of competition in the Irish market has led to criticism over quality and TV license funding for RTE. Consumers say they don’t get value for their license money and should have the option to opt out, if they wish. Most Irish TV viewers, unsatisfied with the limited choice offered by RTE, pay for cable and satellite subscriptions.

If the existing channels had any doubts about UTV’s intentions, Michael Wilson, UTV’s managing director, spells it out:

“In terms of where we see our sights, let me be absolutely clear – we are a mainstream public service broadcaster; we are aiming to go head-to-head with RTE and TV3.”

It is highly doubtful TV3 will survive the challenge from UTV. As for RTE, this should be a wake-up call. With their virtual monopoly gone, the focus should be on offering better value for viewers.