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Channel 4 is planning to plough £75 million into its new digital channel, E4. The broadcaster believes the venture will turn a profit within five years.

When it launches next January, the channel will offer the first UK screenings of some of Channel 4’s biggest hits including Friends, ER, Sex and the City and The Sopranos.

There will be a mix of new commissions, more series of existing shows, C4 spin-offs and another chance to see the best of its entertainment programming.

The broadcaster says the new venture will be 50% home grown, with all shows aired on its terrestrial channel later in the year.

The plan is for E4 to be available at no extra cost in all 6.5 million digital homes by its launch date. However, so far it has only signed up NTL, which has pledged to offer the service on its digital cable platform for the next three years.

Filling the gap

Negotiations are said to be continuing though, namely with Telewest, SkyDigital and ONdigital. But some observers feel that the fact that E4’s positioning puts it into direct conflict with Sky 1 means that there will need to be some tough negotiating before the channel gets access to Sky’s four million digital homes. A January launch date will also give it a head start on the BBC’s planned youth offering BBC 3.

E4 is aiming at an upmarket audience of 16-to-34-year olds, who usually watch “C4-type entertainment”. Chief executive Michael Jackson said the launch was a response to the changing TV environment.

Speaking at the launch of E4, Jackson said: “In less than 10 years’ time, two-thirds of UK homes will have digital television and so C4 can’t afford to stay still. Our goal with E4 is to protect our relevance in this new world. We are the most ambitious terrestrial broadcaster.

“There is a gap in the digital market for a high-quality, intelligent entertainment channel and C4 is uniquely placed to fill this gap.

The nature of multichannel television allows E4 to provide a constant stream of quality entertainment and develop new formats and talent which are ultimately going to be beneficial to C4.

“E4 will capitalise upon our impeccable entertainment pedigree.The launch of the new channel will undoubtedly enhance perceptions of the Channel 4 entertainment brand in digital homes.”

Strong agency audience

David Cuff, broadcasting director at Initiative Media, agrees with Jackson: “C4’s audience share plummets in digital homes to under 7%, which is poor. In this way E4 is going to mean good news for advertisers – taking any audience share away from BBC 1 and BBC 2 is obviously excellent news.

“I think E4 should aim for a 1% audience share in its first year, this would be a good result and would help maintain C4’s 10% market share in terrestrial homes.”

Tim Nelligan, joint managing director of CIA, is also excited by the prospect of E4. “E4 is a great opportunity for advertisers as it will be a good product to sell. It will not just be another satellite channel amongst legions of others,” he says.

“The launch of E4 seems better organised than the launch of ITV 2. C4 seems to be completely behind it and wish to make it a success.”

Something different

Sources at Channel 4 say advertising revenue during E4’s first year is expected to be between £10-£20 million. Additional revenue is comes from subscription income.

Neal Hampson, sales controller at C4, believes E4 offers a new opportunity to advertisers. “E4 will will penetrate a young and upmarket audience. Unlike Paramount or Sky, 50% of the programming will be British. Also, 50% of the programming will be first runs and 50% will be repeats,” he says.

“Media agencies have responded well to our presentation of the channel. Advertisers who already sponsor programmes on C4 could be sponsoring the same programmes on E4.”