BusinessCompany NewsAnalysis – Keeping Faith in the market.

Analysis - Keeping Faith in the market.

Adam Faith may have lost a stake once worth #30m when The Money Channel collapsed in May, but he remains convinced there is a gap in the market for selling financial services through TV

Back in May when the two-year-old Money Channel went to the wall, it did not come as a massive surprise. The dotcom bubble had already well and truly burst, and for many it was only a matter of time before some of the niche players in the fledgling world of digital television followed suit.

But at 7am on 7 February 2000, it had all looked so promising. The Money Channel went live that morning promising a continuous diet of consumer-oriented financial programmes broadcast on cable, satellite and the internet.

Advertising and sponsorship revenues were well ahead of expectations and a potential audience of six million had been identified.

‘Considering that we raised the money for the venture only last June, this is a fabulous achievement,’ said Money Channel chairman Paul Killick at the time. ‘In the last eight months, we have built our own studios, recruited 140 staff, developed 24-hour programme content and launched on time.’

The Money Channel also had the advantage of a profile that far exceeded its revenues and viewing figures, though this was not uncommon for a business operating in what now seems like a very different era.

That reputation was down to the CV of its chief executive, described on company press releases as someone who had ‘spent more than 30 years investing in the stock market’ with a financial background that spans ‘his previous work on television for the highly successful BBC2 programme Working Lunch; two series of the much-acclaimed Channel 4 programme Dosh and a highly popular money advice page called Faith in the City which he edited for The Daily Mail’.

But despite his impressive business credentials, in most people’s eyes Adam Faith will always be an actor and pop star.

In the space of the last two years, on paper at least, Faith made more money than most of the biggest pop stars do in their entire careers. That he lost it does not appear to bother him unduly.

When the Money Channel floated on the Alternative Investment Market in May 1999, its shares were priced at 22p. Within six months they had shot up to 540p riding on the crest of the dotcom inflation wave.

At one stage the company was worth #240m. ‘Within six months of it reaching that level it was back to practically zero,’ Faith told the Guardian Edinburgh International Television Festival in August.

‘My shares that I had had for nothing were suddenly worth about #30m. And in what seemed a blink of an eye they were back to wallpaper.’

Speaking to Accountancy Age, Faith is sanguine about the company’s collapse.

‘The timing of it was out of kilter with the digital television climate as it stands now and as it stood then,’ he shrugs. ‘Digital TV will take a little while to take off.’

Though he is often credited with creating it, the idea for the Money Channel was not Faith’s but Killick’s.

Some 12 years ago Killick, then a stockbroker, suggested putting a version of Faith’s Daily Mail column on to TV. Back then, though, with digital a distant dream, costs were prohibitive.

‘We couldn’t afford it and the figures just didn’t stack up,’ Faith explained in Edinburgh. ‘When digital was announced it suddenly opened up a window of opportunity. The costs came crashing down.’

Completing a business plan cost Faith and Killick #400,000. The company set out to raise #6.5m, and to win the support of the City institution that was providing the final tranche of backing, listed on AIM.

The rest is history.

Nevertheless Faith remains confident that something will give to allow the return to the airwaves of a son of Money Channel – his or someone else’s. ‘There is a need for people to access financial products through their TV,’ he says. ‘It’s the piece of technology people are most comfortable with.’

Crucially, though, he argues that the creation of a new channel would require regulators to make a call on whether they think television is a suitable medium through which to sell financial products.

Regulation, he maintains, ‘would have to be on a different footing’.There are legislative problems in putting money on TV. There needs to be discussion between the financial services authorities and people in television to try to figure out a new code of conduct.

‘The code would need to satisfy regulators but still offer broadcasters something. It would have to give a television channel the chance to make enough money to pay for its running costs.’

But it is not all about regulatory relaxation – the content of any new financial channel would also have to be changed. ‘There is always the opportunity for the Money Channel to be successful but it has to be delivered in an entirely different way,’ he says.

‘You have to use it as an information service not as an entertainment service. When it gets down to money you have got to be an information service.’

Faith sees the Travel Channel (‘basically a shopping channel’) as something of a model for digital financial channels. But the closest relative to the Money Channel was – or at least should have been – another shopping channel. ‘QVC was the benchmark,’ he says, while acknowledging fundamental differences. ‘Financial services are much more difficult to sell than a #3 watch or a bit of jewellery.’

The ghost of the Money Channel was finally laid to rest in September when the administrator, PricewaterhouseCoopers’ Michael Gercke, finalised for an undisclosed sum the sale of the company’s assets to Digital Interactive Productions.

Very little is known about the new owner and the price paid was never disclosed. Reports this week suggested #1.7m was paid by the DIP consortium which included Freeserve founder Peter Wilkinson, though neither party would confirm this. What attracted DIP to a failed digital broadcaster was clear: the Money Channel’s hi-tech studios in Wapping, a costly investment that some say brought the channel to its knees, but at the same time ultimately the company’s most valuable asset.

Faith is not daunted by his experience of digital broadcasting. He is still involved in business (Ticketplan, a company offering insurance on theatre tickets) and is planning a return to TV as well, in front of the cameras this time.

‘The few of us that were pioneers are picking the arrows out of our backs,’ he adds, before firing a parting shot.

‘There is enormous potential for a money shopping channel. But it has to be a financial shopping channel.’

For more information on the rise and fall of the Money Channel, see www.accountancyage. com/News/1125997



7 September: PricewaterhouseCoopers finalises sale of Money Channel assets to Digital Interactive Productions for undisclosed sum

9 May: Shares deleted from AIM

4 May: PwC appointed as administrators

1 May: Shares suspended ‘pending clarification of the company’s financial position’

21 February: Company reassures market that it has #2.6m cash in the bank as share price falls

30 January: Launch of interactive advertising service; viewing figures since launch reach 1.4 million


3 November: Interim results reveal turnover of just #294,000

30 June: Preliminary results reveal pre-tax loss of #4.1m; company announces plans to raise #10m

7 February: Money Channel launches at 7am


25 November: Company reports #638,388 pre-tax loss and confirms plans to go live in new year

4 October: Company signs deal with BSkyB

29 July: Money Channel granted broadcasting licence by Independent Television Commission

11 May: Money Channel seeks admission to AIM.

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