The niche channel of the Greek Antenna Group

It was clear from the outset that, in the acquisition of Gedi, the Greek Antenna Group’s primary interest did not lie in the newspapers. And indeed, just a few months later, following a somewhat unlikely attempt to strike a deal with DAZN to produce a news service, rumours circulated throughout the summer of a more ambitious project to launch a channel – likely an all-news channel – under the CNN brand and featuring Enrico Mentana. For a while, it seemed that the deal would involve the use of Channel 9, in order to have a general-interest base; however, partly due to the difficulties Oracle is facing with its acquisition of the Warner group, this possibility faded, as did the idea of acquiring (or using) Channel 8 from Sky. At this stage, the focus may be returning to the idea of an all-news channel broadcast on digital terrestrial channel 52 – currently occupied by DMax – alongside the other Italian news channels. Naturally, with little concrete news emerging over these summer months, rumours are rife; however, it is possible to consider the economic viability of such a venture. It must be said straight away that the economic scope is very limited and its profitability is doubtful. However, there are some ‘buts’ – potential positive knock-on effects, both on the demand and supply sides – which could change the overall picture.

Let’s start with the basic analysis. Setting up an all-news channel costs little more than producing a news programme because the schedule needs to be filled around the clock, even though there are generally many in-house repeats. The editorial team would probably consist of between 80 and 90 journalists, along with a similar number of technical and administrative staff. Overall, therefore, labour costs could amount to around 13–14 million euros a year, assuming an average cost of 90,000 euros per journalist and 60,000 euros per administrative staff member. Labour costs account, on average, for half the costs of an all-news channel or a news programme; this excludes investment in technology (studios, teleports, cameras, editing), the costs of external services and expenses for correspondents. The total budget therefore amounts to around 25–28 million euros. We are talking about a plan stripped down to the bare bones, based on the assumption of many versatile young staff and a very frugal approach to costs. A major Italian news programme, where senior staff are plentiful, can easily cost twice as much.

The situation is becoming difficult in terms of revenue. The figures from the competition explain why. Rai News 24 and Tgcom24 are hovering around a 0.5 per cent audience share, whilst Sky TG24 stands at 0.3 per cent. A new channel would likely fall within this range, though probably not straight away. The average audience shares are razor-thin, not because Italian news channels are making any particular mistakes. Even CNN, in the US market – where it averages 500,000–600,000 viewers per minute during peak time – achieves a share of around 0.5 per cent. All-news channels generally have a very short average viewing duration, namely 15–20 minutes, compared with more than double that of general-interest channels. There is also a technical reason for this. The idea is that when a viewer tunes into an all-news channel, they get a summary of the latest news in a very short space of time. This drives the channels to use a highly repetitive schedule where, every half-hour – and sometimes every quarter of an hour – there are news bulletins with the latest updates; interviews and debates are very brief and repeated frequently. The aim is to focus on the latest news, and competition from online media has accentuated this feature. The price paid is a very short viewing time, as viewers quickly find something they have already seen and switch channels.

Naturally, there is a trade-off. It is possible to produce more in-depth features or debates, which extend listening time, but at the expense of reduced timeliness. With a shorter dwell time, even if many people tune in to the channel (i.e. penetration or reach increases), this naturally results in a lower audience share. Revenue per share point – that is, how much advertising revenue I generate for each point of average daily share – tells me how effectively I convert audience figures into advertising revenue. In Italy, this ratio varies greatly, ranging from Mediaset’s 70–80 million euros per annum down to 20–25 million for a single share point of a small digital terrestrial channel. Of course, the quality of the target audience also matters, but in television, advertisers prioritise reach; consequently, small channels – those with a share of less than 1 per cent – are severely penalised. Half a share point is therefore worth around 12–13 million in annual advertising revenue, roughly half the costs required for an all-news channel to generate that audience. Consequently, initially, the project is bound to operate at a significant loss.

Of course, if half a share point is generated by programmes bought mainly from abroad or by repeats of old series, the economic balance may be different, even if it is difficult to get rich from small digital terrestrial channels. There are, however, a few ‘buts’ – that is, a few points that could help make a difference.

Firstly, the ‘Mentana effect’, which has already been observed. When he arrived at La7, although he did not find a high-performing editorial team, Mentana built a news programme which, in its early years, achieved an 8 per cent audience share on a channel that, on average, achieved just over 2 per cent. It was a unique case, demonstrating remarkable appeal, and one that proved beneficial for him given that a significant portion of his salary was variable. We do not know whether this effect is permanent, nor whether it would be replicated today under different conditions. However, if it did exist, it would make Mentana a hard-to-replace asset in a project of this kind. Secondly, the format could be hybridised by incorporating talk show elements – both traditional and innovative – which would increase viewing retention and, consequently, the average audience share, naturally at the cost of some loss of news timeliness. However, the live broadcasts on La7 suggest a certain ability to regain timeliness. The problem is whether this is possible whilst keeping costs low. A high-production-value traditional talk show (with live links, guests and complex reports) can cost 200–300 thousand euros per episode, which is incompatible with the cost structure of an all-news channel. So the challenge here lies in the ability to innovate with low-cost production formats and to revamp the programming schedule whilst maintaining the delicate balance of news channels.

It must be said that the experience gained by Mentana and La7 at the crossroads between news, in-depth analysis and light-hearted debates lies precisely at those junctures where such product innovation might be possible. Of course, if the package were to include the production of a proper news programme for a general-interest channel, such as Nove, this would mean additional revenue or cost-sharing. This is a possibility that has been little explored in Italy, but is relatively well developed in other countries. In Spain, for example, Telecinco’s news programme has been outsourced and provides news services – including turnkey news programmes – to other channels, predominantly smaller ones. Furthermore, the publisher could explore potential synergies with Repubblica, modelled on what Cairo has done between La7 and Corriere della Sera, but in theory taken much further, involving promotional cross-promotion, cost-sharing and service sharing. Although theoretically possible – and probably even desirable – given the current crisis in the daily newspaper market and the onset of the decline of traditional television, these synergies appear rather difficult to achieve, both because of the newspaper’s history and the editorial team’s somewhat rebellious streak. In theory, they could reduce the channel’s costs (by featuring guest journalists), boost the newspaper’s sales, and, together, further develop its digital presence. But those journalists are not very used to working in both digital and video formats (and would probably want additional remuneration). And such an integration project would require a newspaper and an editorial team open to hybrid approaches, something that does not seem to be the case at La Repubblica.

Synergies would be organisationally easier to achieve with radio stations, but the group’s radio stations do not focus on news and talk shows, and their target audience appears quite different from the potential audience for a new all-news channel. An initiative aimed at integrating radio, newspapers and television would be difficult and ambitious; whilst success might offer potential solutions to declining markets, but it would require rare managerial skills and the ability to operate at the intersection of organisational processes, cross-promotion and journalistic content – skills that are uncommon amongst Italian managers in the sector and are severely hampered by the presence of unlikely, and globally unique, relics such as the Order of Journalists. One area of externalities that is often underestimated is that of synergies with the group’s other broadcasters, which operate in 15 countries, mainly in Eastern Europe. The development of a significant initiative in a major European country could have positive knock-on effects and synergies, but at present the subsidiary broadcasters appear to be very focused on their respective domestic markets and operate with a high degree of autonomy. Furthermore, there should be at least a partially international focus in both the programming schedule and the content – something that does not seem typical of Italian journalism and which, above all, is quite difficult to achieve in the talk show segment.

All in all, these would essentially be synergies with a rather uncertain outcome, and exploiting them would require a comprehensive strategic approach to the group’s product portfolio – something that is both difficult to achieve and uncertain in terms of results.